goddamned outfit in Arizona. His name is Earl. I don’t even know his last name. Over the past two years I bet I’ve done a couple dozen transactions with him, fifty, sixty million bonds, and I don’t even know his last name, and I’ve never met him, and I probably never will. He’s an electric doughnut.”
Sherman didn’t find this amusing. In some way it was a repudiation of his triumph over the shiftless young Argentinian. It was a cynical denial of his very righteousness itself. Rawlie was a very amusing man, but he hadn’t been himself since his divorce. Maybe he was no longer such a great squadron warrior, either.
“Yeah,” said Sherman, managing a half smile for his old friend. “Well, I gotta go call some a my doughnuts.”
Back at his desk Sherman settled down to the work at hand. He stared at the little green symbols trucking across the computer screen in front of him. He picked up the telephone. The French gold-backed bond…A weird, very promising situation, and he had discovered it when one of the fellows, quite casually, mentioned the bond, in passing, one evening at Harry’s.
Back in the innocent year 1973, on the eve of the heaving crapshoot, the French government had issued a bond known as the Giscard, after the French President, Giscard d’Estaing, with a face value of $6.5 billion. The Giscard had an interesting feature: it was backed by gold. So as the price of gold went up and down, so did the price of the Giscard. Since then the price of both gold and the French franc had shot up and down so crazily, American investors had long since lost interest in the Giscard. But lately, with gold holding firm in the $400 range, Sherman had discovered that an American buying Giscards stood to make two to three times the interest he could make on any U.S. government bond, plus a 30 percent profit when the Giscard matured. It was a sleeping beauty. The big danger would be a drop in the value of the franc. Sherman had neutralized that with a scheme for selling francs short as a hedge.
The only real problem was the complexity of the whole thing. It took big, sophisticated investors to understand it. Big, sophisticated, trusting investors; no newcomer could talk anybody into putting millions into the Giscard. You had to have a track record. You had to have talent—genius!—mastery of the universe!—like Sherman McCoy, biggest producer at Pierce & Pierce. He had convinced Gene Lopwitz to put up $600 million of Pierce & Pierce’s money to buy the Giscard. Gingerly, stealthily, he had bought the bonds from their various European owners without revealing the mighty hand of Pierce & Pierce, by using various “blind” brokers. Now came the big test for a Master of the Universe. There were only about a dozen players who were likely buyers of anything as esoteric as the Giscard. Of these Sherman had managed to start negotiations with five: two trust banks, Traders’ Trust Co. (known as Trader T) and Metroland; two money managers; and one of his best private clients, Oscar Suder of Cleveland, who had indicated he would buy $10 million. But by far the most important was Trader T, which was considering taking half the entire lot, $300 million.
The deal would bring Pierce & Pierce a 1 percent commission up front—$6 million—for conceiving of the idea and risking its capital. Sherman’s share, including commissions, bonuses, profit-sharing, and resale fees, would come to about $1.75 million. With that he intended to pay off the horrendous $1.8 million personal loan he had taken out to buy the apartment.
So the first order of business today was a call to Bernard Levy, a Frenchman who was handling the deal at Trader T: a relaxed, friendly call, the call of a biggest-producing salesman (Master of the Universe), to remind Levy that although both gold and the franc had fallen in value yesterday and this morning (on the European exchanges), it meant nothing; all was well, very well indeed. It was true that he
Sherman didn’t find this amusing. In some way it was a repudiation of his triumph over the shiftless young Argentinian. It was a cynical denial of his very righteousness itself. Rawlie was a very amusing man, but he hadn’t been himself since his divorce. Maybe he was no longer such a great squadron warrior, either.
“Yeah,” said Sherman, managing a half smile for his old friend. “Well, I gotta go call some a my doughnuts.”
Back at his desk Sherman settled down to the work at hand. He stared at the little green symbols trucking across the computer screen in front of him. He picked up the telephone. The French gold-backed bond…A weird, very promising situation, and he had discovered it when one of the fellows, quite casually, mentioned the bond, in passing, one evening at Harry’s.
Back in the innocent year 1973, on the eve of the heaving crapshoot, the French government had issued a bond known as the Giscard, after the French President, Giscard d’Estaing, with a face value of $6.5 billion. The Giscard had an interesting feature: it was backed by gold. So as the price of gold went up and down, so did the price of the Giscard. Since then the price of both gold and the French franc had shot up and down so crazily, American investors had long since lost interest in the Giscard. But lately, with gold holding firm in the $400 range, Sherman had discovered that an American buying Giscards stood to make two to three times the interest he could make on any U.S. government bond, plus a 30 percent profit when the Giscard matured. It was a sleeping beauty. The big danger would be a drop in the value of the franc. Sherman had neutralized that with a scheme for selling francs short as a hedge.
The only real problem was the complexity of the whole thing. It took big, sophisticated investors to understand it. Big, sophisticated, trusting investors; no newcomer could talk anybody into putting millions into the Giscard. You had to have a track record. You had to have talent—genius!—mastery of the universe!—like Sherman McCoy, biggest producer at Pierce & Pierce. He had convinced Gene Lopwitz to put up $600 million of Pierce & Pierce’s money to buy the Giscard. Gingerly, stealthily, he had bought the bonds from their various European owners without revealing the mighty hand of Pierce & Pierce, by using various “blind” brokers. Now came the big test for a Master of the Universe. There were only about a dozen players who were likely buyers of anything as esoteric as the Giscard. Of these Sherman had managed to start negotiations with five: two trust banks, Traders’ Trust Co. (known as Trader T) and Metroland; two money managers; and one of his best private clients, Oscar Suder of Cleveland, who had indicated he would buy $10 million. But by far the most important was Trader T, which was considering taking half the entire lot, $300 million.
The deal would bring Pierce & Pierce a 1 percent commission up front—$6 million—for conceiving of the idea and risking its capital. Sherman’s share, including commissions, bonuses, profit-sharing, and resale fees, would come to about $1.75 million. With that he intended to pay off the horrendous $1.8 million personal loan he had taken out to buy the apartment.
So the first order of business today was a call to Bernard Levy, a Frenchman who was handling the deal at Trader T: a relaxed, friendly call, the call of a biggest-producing salesman (Master of the Universe), to remind Levy that although both gold and the franc had fallen in value yesterday and this morning (on the European exchanges), it meant nothing; all was well, very well indeed. It was true that he
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