Wall Street and Witchcraft: An Investigation Into Extreme and Unusual Investment Techniques by Max Gunther

Author:Max Gunther [Gunther, Max]
Language: eng
Format: epub
ISBN: 9780857190017
Barnesnoble:
Publisher: Harriman House
Published: 0101-01-01T00:00:00+00:00

VIII. By the Cards

The Net-Worth Wager

ONE AFTERNOON late in 1966 a very strange man walked into the Beverly Hills office of Godnick & Son, leading broker-dealer in puts-and-calls. The man was dressed in hippie style. He wore sandals, patched dungarees, beard, long, wild hair. Against his chest, suspended from his neck by a thin chain, hung a silver medallion bearing a strange device, unrecognizable to anyone in the brokerage office. A symbol of the Rosicrucians, perhaps, or of some Satan-worshiping cult. Such cults abounded then (and are still more numerous today) in California’s dense sociological undergrowth. Nobody in the office would have looked twice at such a man in the street. But it was strange to find him in a broker’s office – an outpost of Wall Street, the very heart of the scorned and hated Establishment.

The stock-market adventure that ensued was one of the oddest among many odd cases in Godnick & Son’s files. It is an unusually direct and vivid confrontation between the hard-headed old Street and the weird and wonderful world of the irrational.

Genial Bert Godnick, the “& Son” of the firm, told me the outline of this peculiar tale one night over dinner at The Coachman. The Coachman’s bar was densely crowded that night. It had been a high-volume day and the Dow was up several points. In the Coachman, as down the street at Delmonico’s, the atmosphere was charged with exuberance and high hope. Maybe, they were all telling each other, maybe the long bear market has died at last. Maybe … maybe …

“Nobody ever really knows what’s going to happen on the market,” Bert Godnick was saying. “Once in a while you meet a guy who says he does know, he’s sure, he doesn’t have any of the doubts that bother everybody else. This guy is obviously a nut. But then, when he turns out to be right, you find yourself doubting your own doubts. Which reminds me of a story…”

After Bert Godnick told me about the Beverly Hills hippie I phoned Bert’s California manager, Marty Tressler, to verify the story and get the details. It was indeed a weird tale. Like many others in this book, it would be hard to believe if it were not documented.

To understand it you must first know what puts-and-calls are. A call is a piece of paper that guarantees you the right to buy a stock at a fixed price over some future time span. You buy a call when you believe a stock is about to rise in price. If you are correct – if the stock does indeed rise – you can make much more money by having a call on it than by owning the stock itself.

Risk is involved, of course. If you buy the stock itself and the price drops, you don’t lose your whole investment. You lose only the value off the top – and the loss may be temporary at that. But if you buy a call and the stock’s price

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