one



New York, 1984
Count Lorenzo Corelli certainly didn't look anything like his name. He was balding and stout, with a jowly face that receded into a weak chin. He dressed more like an old economics professor than an Italian nobleman—understandable, as he actually spent eight months a year teaching microeconomics at Columbia Business School. His students were obligated to sit through Corelli's tedious examinations of "the dismal science"—today, that meant how bananas would theoretically be priced on an island with no other products and only monkeys as consumers. It was left to the students to figure out how this model might someday be applied to an actual job in the real world. For his part, Corelli rarely tried to enliven the material, having long before decided that, even in so inexact a discipline as his, he would grade generously those who simply recited his lectures on all exams without thinking or dissension. This practice would, he reasoned, prepare them well for life in most of corporate America.
At the front of the amphitheatrical classroom, Corelli sat at his desk, occasionally rising to scribble on the blackboard, while some of his students took notes, others dozed, and a few at the back whispered and giggled. One of the members of this group was Warren Hament, his long brown hair and black jeans distinctly out of step with the pervading aura of a working weekend at IBM headquarters. Hament was twenty-five, about five feet ten inches, with an athletic build and wide, even features, his blue eyes lending his face an intensity that did not match his sardonic, easygoing manner. The remnants of a deep suntan made him appear much healthier than most of the other students, many of them a pale, greenish white in the harsh fluorescent lighting. The only times that Warren seemed to focus on Corelli were during his occasional segues into a disapproving pontification on the economic policies of the new president, and his prediction of a powerful and lasting depression by the end of his first term.
"The so-called Reaganomics solution to the middle and underclasses' problems," Corelli was expounding, "is ‘trickle down'—simply to put so much food on the tables of the wealthy that a few crumbs will fall to the floor, where the huddled masses may fight for the scraps."
"He sounds kind of bitter," Hament whispered to Eliza Roberts, who sat to his left.
Eliza smiled and brushed back her short, black hair, leaning closer to Warren. "From what I hear, Reagan's going to sign an executive order deporting all economists to Haiti to work on banana hyperinflation."
The last provoked a stuttering laugh from Chas Harper, a seat over from Eliza. "Jesus, Eliza, if he did that, there wouldn't be anybody left in Cambridge." Harper's voice held a mixture of Old New York and the Maine Coast, and his white-blond hair, prominent forehead, and ice-blue eyes confirmed the lineage of forty-room cottages and Hobe Sound winters.
"No loss," Eliza, an MIT graduate, responded, "except that I'd sell my L.L. Bean stock."
Corelli stopped in midsentence and peered over his glasses at the group in the back of the classroom. "If you three in back have a dissenting opinion, you'll get every opportunity to express it on the final exam. I might remind you that all three of you may have to delay your careers a few months if you don't amuse me as much as you evidently amuse yourselves." Corelli's scathing tone perked up the front rows, and faces turned to see what response might come from the clique. Warren was one of the few students who dared to disagree with the professor during classes, taking issue with him on economic as well as political points.
"Thank you for pointing that out, Professor Corelli," Warren responded, not wanting to disappoint the crowd. "Any more delayed careers in this room and we'd be able to start an economics think tank."
More than a few titters broke out.
Corelli stared at Hament for a moment in indecision and chose to laugh with the joke. His expression betrayed mild annoyance, but he'd usually seemed to enjoy the occasional debate. "Mr. Hament, if we had a department in playing the dozens, I would nominate you for the chair. If you don't mind, though, I would like to get on with this class."
"By all means, sir. We are anxious to hear how it all winds up on Monkey Island."
Corelli heaved an exasperated shrug and went back to his dissection of Reagan's tax cuts and policies.
After class broke, the small group made its way out to the lobby of Uris Hall. Harper poked Warren on the shoulder. "Hey, Hament, I hear you're quite the tennis player." A slight gap-toothed smile crossed Harper's face.
"Oh, boy. Am I about to get invited to play doubles against you and some ringer?" Hament knew that Harper, despite his collegial and somewhat goofy manner, was intensely competitive and generally a good athlete. He'd worn Warren down to a gasping wreck on a morning jog and had a Junior Olympics ski-racing jacket that Warren assumed was real.
"No, I thought you might want to visit me over spring break down in Florida. My grandfather's got a place, and I'm going to need a doubles partner for the tournament at the club." They were walking through the main gate to the campus, heading across Broadway.
"C'mon, Chas, you're going to import a New Yorker to knock balls around at Hobe Sound? What if we win? Wouldn't that look great on the trophy? I can see it—1924 champions: Tilden and Cravath; 1974: Laver and Wickersham; 1984: Harper and Hebrew." Hament was grinning. He'd heard about Chas's family having palatial vacation homes and was excited to be invited to see one.
"C'mon, there's no way anyone would know, except for that hair." Chas pointed at the locks trailing down Warren's neck.
"Right! But what about this?" Warren pointed to his nose as the pair stopped to look for a taxi.
"Hah! Doesn't seem to hurt you with the ladies! Besides, mine's twice as big and busted. Listen, Eliza and a friend of hers are going to be coming down for a few days. Oh, I forgot to mention that there's also a Swedish family next door with four incredible-looking daughters who like to hang out on our beach." Harper's smile was now big enough to sail in.
"You know, it's funny. Ever since my great-grandpa came over, it's been an overriding goal of the Hament family to collect the Hobe Sound Blue-Blood Title Belt. Or whatever." They flagged down a cab and gave the driver Chas's address on East Eighty-Third Street. The two had discovered during orientation week that they lived six blocks apart and shared a ride up and back every day. Chas lived in an expensive high-rise with a doorman, while Warren's apartment was a walk-up in a dark brownstone, but it was much cheaper, and he loved the high ceilings, big windows, and elegant mouldings.
"And maybe meet a few hot blondes?" Harper smiled and gave him a shove.
"That too. That too." Warren nodded. Harper was known to never tire of chasing girls.
* * *
Warren Hament had come to Columbia Business School almost a year and a half ago, on what seemed like good advice. His childhood and schooling had hardly trained him for any productive employment. His father, a tennis coach, had given him the only education he knew—a game good enough to make him admired at country clubs around Millbrook, New York, where he'd lived until he was ten, and the scourge of junior tournaments in East Hampton, where they'd moved when his parents divorced. But once he'd come up against the California and Florida kids with their personal trainers, nutritionists, and entourages, his casual work ethic and big topspin shots were simply not enough.
After four years at Brown, idly infuriating the tennis coach and barely passing his courses, his first paid job was as an intern two days a week at a Madison Avenue art gallery. He had learned a lot about the cutthroat art world, and a lot more about the gorgeous, well-dressed socialite art-history majors who gravitated to the Madison Avenue milieu. As an attractive, and straight, young man, he got a fair share of attention. He'd struck up a brief friendship with one woman, Roxanne Nahid, whose father was an immensely successful commodities broker. They'd met in the lobby of Christie's, where she worked in Special Client Services, a group of dilettante private shoppers for serious collectors. He was there to deliver a check for the gallery, and she was intrigued by the bright, fit young man with an honest and open face.
Although she'd lost interest in Warren after several nights in her family's Fifth Avenue apartment, he had ventured to look for breakfast one morning while she slept in and encountered her father in the spectacular glass-enclosed terrace overlooking Central Park. Lucien Nahid, an intense, white-maned Iranian, had taken an instant liking to Warren, who asked endless and intelligent questions, and invited him to see the world of commerce at perhaps its most fundamental level. "You don't need an Ivy League pedigree for this world, young man. That is only necessary for my daughter" was his startlingly frank evaluation. The next day, Warren met Lucien in the lobby at seven o'clock and rode down to the World Trade Center in the backseat of a navy-blue Rolls-Royce.
With a visitor's badge pinned to his jacket, Warren quickly learned the language of the commodities exchange's trading pits. It was an elemental world of bids and offers, winners and losers. In few jobs was success or failure so clearly defined at the end of every day, where office politics were distilled to the unbridled pushing and shoving of bodies immersed in the frenzy of screaming that accompanied the sustained hysteria of the open markets. Nahid was right—it seemed to require no special training or degrees.
Warren visited the exchange several times over the next few months, and Nahid, who seemed disappointed his daughter had moved on, even allowed him to enter a few orders for gold futures contracts after opening an account for Warren with his life savings of $6,000. Warren was surprised to see that he started to make some money. One morning, a rumor of a major artillery attack on Israel had driven gold prices straight up, and Warren had made a quick $4,000. That was more than his father made in a month of eight-hour days on the court. Within two months, Warren's account held almost $40,000.
In that same span, he'd seen several faces come and go, like high rollers at a casino. Henry Greenberg, an overweight accountant from upstate New York with a Fu Manchu mustache, had come into the pit on a Monday as a new member of the Exchange. He told Warren over breakfast that he had sold his bookkeeping practice to buy the seat, convinced that his method of graphing price movements could accurately predict short-term market trends. After two days of carefully marking each trade on a sheet of graph paper, he had suddenly exploded in a flurry of action, arms flailing and his shrill, nasal shout booming, buying contracts wildly. He was right—the market had "broken through long-term resistance" on the chart and was climbing. By the end of the week, Henry's account had swelled from $200,000 to almost $2 million. When he got to $5 million in just a few more weeks, Warren asked him why he didn't just quit. Henry admitted he was hooked and wanted to make $50 million. Within two months, his account was in negative territory, and his membership was sold the following week to settle his debts. The four Cadillac Sevilles he had bought for his family were repossessed. Warren never saw or heard of him again.
There were others, such as an ex-fireman from Brooklyn who was tied in with a big broker at Montgomery Trading, and who always seemed to know in advance when the big customer orders were coming. Jimmy would suddenly buy fifty or a hundred gold contracts, and a moment later, Montgomery's heavy hitter would appear with an order to buy five hundred or a thousand, always allowing Veneziano to sell him the last lots at the highest price. Warren figured Veneziano's front-running made him at least $700,000 in the time Warren observed, and he only wondered how much of this was passed back to the Montgomery broker in a fat envelope.
He was quickly instructed that no good could come of discussing what was happening so openly. "Warren, all markets incur ‘friction,'" Nahid had said. "All transactions have costs, whether it is a fee, a tax, or fraud. It will always be this way. It would be unwise, or even dangerous, to interfere."
For the honest brokers, executing customer orders at $3 a contract could be a nice and honest living, but only the traders with their own cash at stake made the big money—or lost it. It didn't matter to Warren. Despite the money he was making, he had no real taste for the pit, just as he hadn't enjoyed the trip to Atlantic City he'd taken with a few other traders. His grandfather, a bookie, had inoculated him against gambling in all forms, and what he was doing was almost purely gambling. He figured out a way to make a reliable income trading "spreads"—relatively safe trades that exploited small changes in the relationships between different delivery months, and he found his strategy made him a tidy income without the big swings that could wipe him out.
The real change came for Warren one afternoon when he'd started a conversation with a well-dressed man who came to the floor only occasionally, one who seemed to command the respect of all the traders and brokers, and the only person on the floor who consistently wore suits made of natural fibers. Ned Johnstone worked for Merrill Lynch, and over a Diet Pepsi in the lunchroom, he'd patiently explained the difference between an investment bank and a stock brokerage house and told Warren the key to getting a good job on Wall Street was to go to a top business school. Brokerage houses made most of their money selling investments to middle-class individuals, mostly at big markups. The investment banks were the "class" of the Street, the middlemen between the biggest corporations and financial institutions and the vast pools of capital that were held for investment by insurance companies, pension funds, and big professional money managers.
"The question is," Johnstone said, "how important is money to you, really? All of this is based on the same drive—greed. You're not saving lives or making art."
Warren leaned back in his chair. "I never really thought about it before. But now that I've made some, I like it. But this place is just plain nuts. It's all risk, no certainty. I don't know how these guys can stand it."
"Warren, you can make over a million dollars a year at an investment bank if you're any good at it and never risk a cent of your own money. You might get fired, but even then, you'll probably get hired somewhere else." Johnstone smiled a little. "The best thing that ever happened to me was getting fired by Smith Barney."
Warren let out a low whistle. A million dollars a year? That was as much as Ivan Lendl made playing tennis! "Jesus. You think I'd have a shot at a decent school?"
"You went to Brown. With your experience down here, you'll walk in. You're a good-looking kid and Lucien Nahid likes you." Johnstone waved at Warren. "I'd get out of here as fast as I could if I were you."
Like so many things he did on impulse, Warren had called Columbia University that afternoon and asked about the admissions process for the Business School. He was told to take the GMAT, a standardized test used like the SATs to evaluate applicants. Another call to the Educational Testing Service in Princeton got him the registration forms, and four days later he went as a walk-in to an auditorium at Pace University. The majority of the other people in the testing room looked dead serious and slightly nervous. A nice-looking, tall brunette came and took the seat next to Warren, smiling at him. The proctor checked everyone's ID and went through the rules. Warren realized he hadn't brought any pencils! He raised his hand, and when he asked the proctor if any were available, the girl reached over and poked him, then tossed him a crisply sharpened pencil with the International Paper logo printed on the shaft.
"You wake up late or something?" she asked him. He shrugged, smiled, and thanked her. Warren knew he had a knack for standardized exams and finished each section quickly, comfortable that he had done well. After he finished the last section with fifteen minutes to spare, he'd run across the street and bought a $60 roller-ball pen and managed to catch the brunette before she got to the subway.
"I wanted to return the favor," he said, extending the Montblanc box.
"Are you kidding? That's like a confirmation gift or something!"
He liked her big smile. "I'm Warren." He leaned toward her and put the box in her hand. "And I wrote my phone number on the bottom … there."
"Well, Warren, I'm Deborah." She was still grinning and opened the box. "Give me your hand."
"My hand? Jeez, we've just met!"
He let her take his right hand in her left. She turned it over, opened the top of the pen with her teeth, and wrote her phone number on the meaty part of his palm. "Maybe you can give me a call and explain to me how you finished every section of that test half an hour before me. Did you actually answer any of the questions?"
"I guess so. Who knows? Are you free for dinner tonight? Does International Paper let you out for meals?" She really was pretty, and he liked the way her hair fell across her eyes.
Deborah stepped back and gave him a long once-over. She nodded. "You're pretty cute. Pretty sure of yourself too. You think you can figure everything out so fast?"
Warren smiled and looked down, a little embarrassed. "I'm not that quick, and I don't get phone numbers from girls like you very often. I didn't want to let you get away."
"You're good! Modesty and flattery are a lethal combination. I live on Forty-Ninth and Second. Call me at six thirty and we'll meet at seven thirty. You got that, Warren?"
"I'll be early."
Deborah looked at him for a second and smiled. "I just hope you're not always in such a rush!"
* * *
His almost perfect score on the exam, together with a nice letter from Johnstone, and a pleasant interview through which Warren remained charming and enthusiastic, had secured Warren a place in the January class at Columbia despite his slightly lackluster grades from Brown. His date with Deb had also gone well, and he had seen her once or twice a week in the three months since the test. She was hoping to go to Kellogg at Northwestern University in Chicago or UC Berkeley Business School, so they both knew it wasn't likely to last. She got in to NYU and Berkeley, and Warren was disappointed when she told him she would be moving to California. IP had an office where she could work part-time across the Bay and would pick up her tuition. He always liked having a girlfriend and couldn't stand going to parties or out to clubs to try to meet girls. Deb was smart and funny, and with her long legs and high energy she was a lot of fun in bed. But, he was in New York for good, and he couldn't convince her to stay.
When he got the acceptance letter from Columbia, he called his dad, who had moved back to Millbrook, New York, after he'd left for college. He taught at an indoor tennis club four days a week and also worked with the team at the Millbrook School. "Jesus, Warren, I never thought you'd have any interest in business. You only read the sports pages and the funnies."
"I think you're the only person left alive who calls the comics funnies," Warren had said into the phone, smiling.
"Well, your mother thought you'd do something in the art world. She figured you had a nose for it—the ‘commercial instinct' is what she called it."
"Dad, I think the only people less honest than art dealers are probably commodities traders," Warren said with a tinge of disdain for the thievery he'd witnessed.
"Warren, I'm not sure you're going to run into a whole lot of honest people in the finance world. My pops always told me the only straight people he'd ever met were bookies. They told you the odds, paid when you won, and you knew up front what the vigorish was."
"Yeah. Don't I recall Grandma saying something about being able to buy a mansion with all the dough Gramps blew on the horses?" Warren loved the way his dad used the language of the twenties and thirties.
"Nobody ever said you could beat a straight game. That's probably why everyone's trying to get the fix in all the time. And Pops never bet on anything."
Warren laughed a little and thanked his father for the advice. His own grubstake had grown to almost $75,000, which, even after taxes, meant he had more than enough money to pay his living expenses and tuition. Money wouldn't be a problem, at least until he figured out what he would actually do with an MBA.
"I always figured you'd be okay. Maybe I didn't hand you a lot of money or a family business, but at least I didn't beat you up over your lousy grades, kiddo. I remember someone telling me Albert Einstein flunked math."
"Yeah, well, that wasn't exactly right, Pop. He was a brilliant student. But your heart was in the right place. And besides, money would've just made me miserable. Look at all the rich kids we knew. And how will I ever get rich if I didn't start out poor? Where's the motivation?" In college, he'd had several friends who went on to run their family businesses. All of them complained about it, yet most of them also immediately sprouted huge egos and paychecks while everyone else was struggling just to pay the rent. His resident adviser at Brown had moaned and whined about the soul-deadening work at his family's multibillion-dollar Midwestern real estate company, but three years later he had abandoned linguistics for a senior job with his dad, a giant penthouse on Lake Michigan, and a seat on the board at the Art Institute of Chicago.
Warren also got to see firsthand the problems of kids with lots of money but bad family lives. He spent his junior year at a private high school in Manhattan, and of the twenty-one boys, almost all from immense wealth and old families, four had committed suicide before graduation. His dad saw it too. A garment executive had built three tennis courts at his Long Island home so his son could practice on the same surfaces that the Grand Slam tournaments were played on. The boy's total winnings as a professional wouldn't have paid for the fences. Warren's father, Ken, had tried unsuccessfully to get the boy interested in his family's clothing business, but having been told all his life how great an athlete he was, and then realizing that he was not even average among the elite, the boy became a coke and heroin user and almost killed himself in a car accident on the European tour stop at Bordeaux. The boy's father had shrewdly taken advantage of the trip to the French hospital as an opportunity to buy and ship home a few dozen cases of wines from the great château, and a new Porsche the boy crashed soon after his recovery, killing a Yale undergraduate.
"Yep, well, maybe you're right there, kiddo," Ken said, sharing the unspoken thought. "I guess I always had a master plan and just didn't know it! Anyway, let me know how you're doing. I've always heard economics is a regular joy."
"You bet, Pop. Listen, all I know is you've got to suffer if you want to sing the blues."


Copyright © 2014 by Mike Offit