For the Love of Money (12 page)

He was silent for a second and then asked me quietly, “Is there a reason that you don't drink that you don't want to talk about?”

I was startled but after a moment said simply but firmly, “Yes.”

He looked at me as if he recognized something.

Then he said, “Okay,” and turned back to his monitors.

CHAPTER
22

The Ice Melteth

¤

W
hen Marshall reacted to the news of my not drinking with gentle respect rather than the ridicule I anticipated, I didn't know what to make of it. I walked away from that conversation grateful but puzzled.

Marshall started asking me to walk with him for coffee every couple of days. He asked questions about my family and told me stories about his. He didn't ask me directly about my drinking, but he hinted that he understood I had a history, and he was okay with that. When he was in New York, he'd call the desk and if I picked up we'd chat. I didn't think much of it, except that I was pleased I had earned the attention of the boss.

A few months later, end-of-year bonuses were given out. Because I was in the analyst program and had only been working six months, I wouldn't receive my first bonus till next August. I watched, racked with jealousy, as the traders went into a conference room and came out with bonuses several times what I'd earn that year.

Bonus time on trading floors is when personnel changes happen. Traders will wait until their bank accounts are fattened with their year-end bonuses before announcing that they've accepted new positions elsewhere. This year, the first
to leave were Neil and
TJ
, who'd scored huge contracts with
CSFB
and Morgan Stanley, respectively. Neil had backed up Marshall, who was often away from his desk in risk meetings or traveling to meet with clients. So Marshall called me and asked me to serve that role, in addition to my responsibilities with Hoff. I was thrilled to be allied with two powerful men.

The next week, Hoff's desk was empty, and a trading assistant told me he'd resigned the night before. He'd never even told me he was thinking about leaving, and I felt betrayed. But I also knew this was good for me.

That afternoon, Marshall called me. “I want you to trade Hoff's sectors until we find a replacement,” he said. “It's temporary, but it's a big opportunity. Are you ready, Sammy?” he asked. No one had ever called me Sammy before, but Marshall had started to, and I sort of liked it.

It seemed crazy that Marshall wanted me to become a trader so soon. First-year analysts were almost never allowed to trade. Traders worked with hundreds of millions of dollars a day. The risks were simply too big. There were guys on The Street still fetching coffee in their fourth year. I felt like a nurse being asked to perform heart surgery.

No
, I thought. “Yes,” I said.

“I want you to call me five, six times a day,” Marshall said. “Ask all the questions you come up with. I am going to teach you how to trade.”

All of a sudden grown men were screaming at me, people were calling me from London, and I wasn't fetching anyone's coffee. I spent hours every night writing out what I would say on the morning call that was broadcast over loudspeakers in London, New York, Charlotte, Chicago, and Los Angeles, so I might sound like I knew what I was talking about. While the other traders spoke from memory, I hid a piece of lined notebook paper on my lap with my entire speech written out.

I made some mistakes, but Marshall supported me. A few
times I heard salesmen complain about me to Marshall. Marshall said, “Give him time, just you watch,” and never said a word to me about it.

When Marshall was in New York, I'd speak to him on the phone a dozen times a day. Usually the calls lasted ten seconds or less—the rapid-fire staccato traders learn to speak in—but at the end of the day, he'd take a few minutes to teach me trading protocol or tell me stories about being a young trader himself.

After a month or so, I was getting the hang of trading, so when Marshall called to tell me he was moving a senior trader over to work with me, I was crushed.

“Haven't I been doing a good job?” I asked.

“Yes,” he said. “You did great. You're going to learn a ton from McMahon.”

“Why are you taking this away from me?” I asked.

He let out an exasperated snort. Then he paused.

“Sam,” he said, “this is
good
for you. Trust me.”

“What if McMahon takes all the sectors and doesn't let me trade?” I said.

“He's the senior guy, Sam,” he said, gently but firmly. “What he says, goes. I fetched coffee for three years when I started on Wall Street.”

I set the phone down and stared across the trading floor at Brendan McMahon with the hostility of a stepchild. Brendan was a trim, clean-cut thirty-five-year-old. UNC Business School graduates didn't often make it into Wall Street firms, but Brendan had cold-called Marshall, and Marshall liked him. Brendan was quiet and humble, more blue-collar than white-collar.

That first day Marshall told us we'd be working together, McMahon pulled me into an office. “We have six sectors to split up,” he said. “I'm going to let you trade the two smallest ones.”

I guess he doesn't realize he could just tell me
to get him coffee
.

“I know I don't have to give you any sectors, but I've been watching you,” he said. “You're young but talented. I think we are going to make great partners.”

I was relieved. Brendan looked regretful. “I'm sorry I couldn't give you one of the bigger sectors. This is a big shot for me,” he said. “I hope you understand.”

I did understand. I was surprised he was letting me keep any sectors. Letting go of even two small sectors meant a step down in profile for Brendan and would likely impact his end-of-year bonus.

That he let me keep two sectors surprised me. What he did two hours later shocked me. He came by my desk, tapped my shoulder, and pointed to the office we'd spoken in earlier.

When I sat down across from him, he said, “I'm sorry. I was being selfish. We're going to be partners. I'm going to help you like I wish someone had helped me. We'll split the sectors down the middle, even steven.”

I almost laughed out loud, marveling at my good fortune. Then my throat grew thick. I nodded a thank-you to Brendan, afraid that if I spoke I'd start crying in gratitude.

For the next few months, I poured everything I had into trading. I read incessantly about the chemicals and metals/mining sectors I traded, and spent evenings and weekends in the office doing extra work and studying for the
CFA
. Brendan and I had been reserved with each other at first, but now we laughed and joked all day long. Sometimes we played golf together on the weekends.

I thought about Sloane all the time and called her often. At first, she called me back right away. But as the months passed, she started taking longer and longer to return my calls. I'd leave casual, happy-sounding messages so that she'd want to call me back. What I really felt like doing, though, was begging her to come back.

I woke up early on the Saturday morning of my first
CFA
test. I'd been studying for six months. The pass rate was only 30 percent. The phone rang at 6:00 a.m. It was Marshall.

“Sammy,” Marshall said when I picked up, “I wanted to call and say I'm thinking about you today. If anyone can pass this test on the first try, it's you.”

“How did you even know it was today?” I blurted out.

“Are you kidding?” he said. “I wouldn't have missed it.” He said that even though the pass rate was so low and the six-hour test so grueling, he had total faith in me.

My dad missed
birthdays
, but here was Marshall, rising at dawn just to support me taking a test.

Then one day, Marshall asked me to drive him to the airport and then drop his car off at a mechanic. On the way, he asked me how things were going.

I had learned how to answer that question from my father. In our house it was never enough to say you needed something; you had to
prove
it. Marshall was in charge of my bonus, so I took the same tack with him.

“Things are tough right now,” I said. “I'm working late every night. I'm already studying for the next
CFA
test. Nights
and
weekends. Money is tight. I'm not getting any support from my parents, and I have serious student loans and credit card debt.”

Money
was
tight, but not because I wasn't being paid enough. I was making $55,000 a year—meager for Wall Street, but plenty for a recent college grad. But I was paying off student loans, a twice-a-week counselor, and a large credit card balance I'd built up during college.

Marshall looked over at me and then opened the center console between us. Inside were stacks of hundred-dollar bills. He pulled out a stack and held it in my direction.

“Take it,” he said.

My eyes bulged as I stared at the kind of money I had only
dreamed about. Then I looked up at the kind of man I had only dreamed about. He smiled at me.

I knew I couldn't take it. But I was so touched that I couldn't even speak. I put my hands up in a gesture of refusal. I knew I had overstated my case, and anyway, I wanted to do it myself.

He put the money back in the console and then looked over at me with a serious expression. And then he said the words I had waited my whole life to hear.

“Sam,” he said, “if you ever really need money—like, if you ever need a hundred thousand dollars—just call me. No questions asked. I trust you.”

We were just pulling into the airport, and I waited till he got out of the car before I started to cry. At first it was just tears blurring my vision as I cut across the empty Charlotte freeway. But soon it turned into deep, heaving sobs and I had to pull off to the shoulder.

CHAPTER
23

The Ephemeral Prison

¤

T
hat moment when Marshall offered me $100,000 changed everything. It wasn't about the money. I didn't need $100,000; I needed someone to tell me I was worth being taken care of.

I walked with my head held higher. I slept better. I started to feel like things would work out, like I wouldn't have to scratch and claw to survive. And slowly I started to trust my instincts when it came to trading. But change happens on the margin. I still carried with me the propensity to self-destruct.

In June, the metals and mining sector that I traded leapt into the news. Western Mining, a small ore producer in Australia, was the target of a three-way bidding war. The two largest metals companies in the world—
BHP
and Rio Tinto—along with a smaller Brazilian company called
CVRD
, were looking to acquire Western Mining.

When a company gets acquired, the debt of that company becomes the debt of the acquiring company. I traded the debt (or bonds) of Western Mining, so whoever won the bidding war would take over that debt. If
BHP
or Rio—both with sterling credit profiles—bought the company, Western Mining bonds would increase in value. But if
CVRD
—an already debt-laden company in a risky economy—won the bidding
war, Western Mining bonds would plummet. When the headlines hit, Western Mining bonds dropped precipitously.

I read everything I could about the industry—newspaper articles,
CEO
speeches, tax filings. I printed out each company's annual report and took them home at night. I spoke to the metals analyst at Bank of America.

I hadn't understood how investors knew whether bonds were going to go up or down. This time, I saw the trade. Though it was unlikely that
CVRD
would win this bidding war, their involvement frightened investors. That created an opportunity: Western Mining bonds were trading so low that if either
BHP
or Rio won the bidding war, Western Mining bonds would skyrocket. Of course, if
CVRD
somehow did win, the bonds would fall even further. But I was confident that I had thought it through, and I started to buy bonds.

At first I bought $20 million worth, a healthy size for a position. Then I typed up a message about why I was buying them and sent it to the sales force so they could try to sell some of my bonds at a profit. Instead of finding another buyer, I found another seller. A senior salesman asked me if I wanted to buy $40 million more in bonds.

“Yes,” I said, before I really thought about it. The size of my Western Mining position was no longer healthy; it was scary, especially for a rookie trader. Eventually, the risk monitors would discover how many bonds I owned, but that would take a few days. I knew the position was too big, so I leaned over and told Brendan I owned $60 million in Western Mining bonds, and why.

He nodded. “Go for it,” he said.

The next day, I got a phone call from a trader at a hedge fund who'd heard I was buying Western Mining bonds.

“This is our favorite trade, Sam,” he said. “Unfortunately, we have to sell some bonds because we're closing down one of our funds. Do you want them?”

My stomach clenched. I already had a huge position. But I didn't want him to think I was scared.
Fuck it
. “Sure,” I said. “I'll take them.”

Buying $100 million in Western Mining bonds was a
holy shit
proposition. When I hung up the phone, I just sat there, numb and mute. I knew I should tell Brendan, but he'd want to know why I'd added more. I didn't really know the answer. It dawned on me that with a position this size I'd be fired if I was wrong. Brendan, too. I was also hit with a rush of adrenaline that I hadn't felt in years, the same rush that came with getting in a fight, or scoring a big bag of cocaine.

The risk reward of the trade was not in my favor. If
BHP
or Rio Tinto bought Western Mining, I'd probably make $1 or $2 million. If
CVRD
bought them, I'd lose $5 or $10 million in minutes. When Brendan returned to the desk, I didn't look at him.

The next day was a Friday, and the morning passed without a headline about Western Mining. In the afternoon I caught a plane to Denver. I was on my way to visit Ben.

We'd been sober almost two years. We talked on the phone two or three times a day. Everyone on the trading desk knew Ben because he called so often. In his first year of sobriety, Ben had worked a series of odd jobs, barely making ends meet. When he lived in that tiny room in New York, he'd been too poor to afford a winter coat. One night at an AA meeting, a woman noticed he didn't have a coat and took him to the Gap and bought him a fur-lined leather jacket, which got him through the winter.

But things were looking up for Ben. He'd never been as focused on money as I was, but he'd decided he wanted the security of a steady paycheck. Three years out of college, he'd managed to talk his way into the analyst class of the consulting giant Bain & Company, working in their Boston headquarters. A job at Bain carried prestige. I was happy for him and a little jealous.

On the plane to Denver my mind started racing about the Western Mining position.
What if
CVRD
wins?
What if I'm wrong?
My stomach tied itself into knot after knot.
I could lose $20 million.
My hands were cold, clammy. Rivulets of sweat skied down my back.

By the time I landed I was nauseous. I must have looked green, because when Ben saw me, his smile vanished.

“What's wrong?” he asked.

Part of me didn't want to tell him my job was in jeopardy. But he was, as he'd always been, the single most comforting presence in times of stress. During the drive to the cabin I told him the whole story. I finished as we arrived. A few minutes later, standing in the kitchen of our cabin, he said, “Dude, why don't you tell Marshall?”

“No way,” I said.

Ben looked at me a second. “You're doing it again,” he said softly.

“What?” I asked, suddenly furious. “What am I doing again?”

He looked sad. “The same thing you did at Columbia. The same thing you did at
ON24
. The same thing you did with Sloane. The same thing you did when you hooked up with Emma in high school. It's self-sabotage; don't you understand? Why are you risking everything you've worked for? Why are you keeping it a secret? Why don't you ask for help?”

I sat quietly in my chair as I thought about what Ben said. I thought about those moments after I got suspended or fired, how ashamed I felt. I thought about the pain of Sloane dumping me, and my estrangement from my brother. I didn't want to go through any of that again. Still, the thought of opening up—making myself vulnerable—to Marshall was terrifying.

Ben watched me. “It sounds like you have a good relationship with Marshall,” he said. “It sounds like your trade makes sense. Why don't you just ask him for advice?”

My mind flashed on Marshall's toothy smile as he held out stacks of hundred-dollar bills to me. I also remembered what Marshall had told me about his own career.

What Marshall had recognized in me was his own checkered past. He hadn't, he told me on one of our walks, left Merrill Lynch voluntarily. As the youngest managing director in firm history, he'd felt tremendous pressure to perform. He hadn't taken a day off in five years. “I lost perspective,” he said. After one of his positions went bad, he'd tried to make up the losses. He'd started secretly betting on interest rates. He took positions in treasury futures, a type of derivative that let him keep his trades off the books. He built a massive position—billions of dollars of exposure, multiples bigger than his biggest corporate bond trades. Soon the position started going against him. He doubled down. He started hiding his trading tickets, a fireable offense in those days (these days you'd go to prison).

One morning at 3:00 a.m. he startled awake. He rubbed sleep from his eyes and used the remote to turn on the
TV
. There'd been a coup in Nigeria. Marshall was betting that treasury futures would fall. Anytime there is global unrest—like a coup in Nigeria—treasuries rally as investors seek safety. Marshall turned to the woman next to him in bed, who was now awake. “Today will be my last day at Merrill Lynch,” he said. He'd been right. His firing had made headlines. Marshall Masters knew plenty about bad positions.

I looked at Ben and then went into the bathroom and sat on the toilet. Before I lost my nerve, I dialed Marshall's number and held my breath.

“Sammy?” he said when he picked up. “It's Saturday. What's up?”

“I've got a problem,” I began.

“Let's hear it,” he said.

I told him everything: the various trades, the thought
process, the size of my position. When I finished, I held my breath, waiting for the gigantic hand to slam down on me. Waiting for the rage I knew was building. Waiting for the kettle to scream.

Marshall waited a few beats. “That's a big position,” he said. “But I like it. Let's keep it. I like your instincts. Keep trusting them.” Then he hung up.

A few weeks later, headlines blared across the tape:
BHP
to Buy Western Mining.

For the first time in my career, my portfolio made over a million dollars in a day.