Tuesday, August 31, 2010
Remainder by Tom MacCarthy
“So. Marc Daubeney tells me you've come into rather a large sum of money.”
He looked at me, waiting for me to say something in response. I didn't know what to say, so I just kind of pursed my lips. After a while Younger continued:
“Over the last century the stock market has outperformed cash in every decade apart from the thirties. Far outperformed. As a rule of thumb, you can expect your capital to double over five years. In the current market conditions, you can reduce that figure to three, perhaps even two.”
“How does it work?, I asked him. “I invest in companies and they let me share in the profits?”
“No,” he said. “Well, yes, that's a small aspect of it. They give you a dividend. But what really propels your investment upwards is speculation.”
“Speculation?” I repeated. “What's that?”
“Shares are constantly being bought and sold,” he said “The prices aren't fixed: they change depending on what people are prepared to pay for them. When people buy shares, they don't value them by what they actually represent in terms of goods and services: they value them by what they might be worth, in an imaginary future.”
“But what if that future comes and they're not worth what people thought they would be?” I asked.
“It never does,” said Mathew Younger. “By the time one future's there, there's another one being imagined. The collective imagination of all the investors keeps projecting futures, keeping the shares buoyant. Of course, sometimes a particular set of shares stop catching people's imaginations, so they fall.. It's our job to get you out of a particular one before it falls – and, conversely, to get you into another one when its just about to shoot up.”
“What if everyone stops imagining futures for all of them at the same time?' I asked him.
”Ah!” Younger's eyebrows dipped into a frown, and his voice became quieter, withdrawing from the room back to his small mouth and chest. “That throws the switch on the whole system, and the market crashes. That's what happened in '29. In theory it could happen again. He looked sombre for a moment; then his hearty look came back – and, with it, his boom voice as he resumed: “But if no one thinks it will, it won't.”
“And do you think it will?”
“Cool,” I said “Let's buy some shares.”
Mathew Younger pulled a large catalogue from his dossier and flipped it open. It was full of charts and tables, like some kind of tidal almanac.
“With the kind of capital you've got earmarked for investment,” he said, “I think we can envisage cultivating quite a large portfolio.”
“ What's a portfolio? I asked him.
“Oh, that's what we call the spread of your investments,” he explained. “It's a bit like playing a roulette table – with the important distinction that you win here, whereas in roulette you mostly lose. But with a roulette table, there are sectors, clusters of numbers you can bet on, then rows, then colors, odds/evens and so on. The wise roulette player covers the whole board strategically rather than staking all his chips on just one number. Similarly, when playing the stock market you should cover several fields. There's banking, manufacturing, telecommunications, oil, pharmaceuticals, technology...”
“Technology,” I said. “I like technology... and what was that one you mentioned before that- signals, messages, connections.”
“That's a very promising sector. Mobile telephone penetration is increasing at an almost exponential rate year after year. And then as more types of link-up between phones and internet and hi-fi systems and who knows what else become possible, more imaginary futures open up. You see the principle?”
“Yes”. I said. “Lets go for those two: telecommunications and technology.”
“ Well, we could certainly weight your portfolio in that direction...but my point in putting forward the roulette analogy was that it's best to cover several sectors of the ...”
“ Yes, I understand,” I told him. “But I want to know where I am. To occupy a particular sector, rather than to be everywhere and nowhere, all confused. I want to have a...a...” I searched for the right word for a long time, and eventually found it” “position.”
“A position?” he repeated.
“Yes, I said. “A position. Telecommunications and technology.”
“Now Younger looked flustered.”
“ While I view both these sectors as most promising ones, I feel that this degree of localization, and especially given the great sums we're proposing to invest, does represent and excessive level of exposure to contingencies,. I'd much prefer...”
“If you won't do it,” I said, “I'll go to another stockbroker.”
Younger tensed up. He seemed to shrink even more; his voice shrank into silence while he took in what I'd said. Then he stuck up that hearty look once more, took a deep breath and boomed out:
“We can do it. Absolutely. It's your money. I merely advise. I'd advise a degree of diversification – but if you don't want that, then that's perfectly...”
“Telecommunications and technology,” I said. As soon as he'd explained how it worked, I'd known exactly what I wanted, instantly. It was my money not his.
Within half an hour we'd chosen a company that made small chips for computers, two of the major mobile phone network providers and one handset manufacturer, one terrestrial telephone and cable television company, and aerospace researcher and manufacturer, an outfit that did encryption for the internet, another that made software whose function I really didn't understand, a producer of flat audio speakers and some other software people and another micro thing. There was a games company, an interactive TV pioneer, a business who make those handheld gadgets that let you know exactly where you are at any given time by bouncing signals into space and back again – more, lots more.
By the time I'd left we'd sunk more than eighty percent of my money into shares. A million we kept in cash and placed in a building society account Younger helped me fill in the forms for right there. We kept one hundred and fifty thousand in the holding tank account that my lawyer had opened for me that morning.
“I might need cash suddenly,” I said to Mathew Younger as he saw me out of Younger and Younger's premises.
“Of course,” he answered. “Absolutely. And don't forget that we can sell shares at any time too. Call me whenever you need me. Goodbye.”
It was still rush hour. I didn't feel like going back into the tube. Instead, I walked down to the river, slowly, through the back streets of Belgravia. When I got there I walked east, crossed Lambreth Bridge, stepped down onto the Albert Embankment, found a bench and sat there for a while looking back across the Thames...
Now it was dusk. The city had that closing-ranks look, when it gathers itself up into itself but shuts you out. It was glowing but it wasn't heating me. As I sat there it occurred to me that I could go and stand on almost any street, any row, any sector, and buy it – buy shops, the cafes, cinemas, whatever. I could possess them, but I'd still be exterior to them, outside, closed out. This feeling of exclusion colored the whole city as I watched it darken and glow, closing ranks. The landscape I was looking at seemed lost, dead, a dead landscape.
I didn't want to go back to Brixton...