Alex, the whole inside trading thing has been blown way out of
proportion. As far as I’m concerned, no one’s even come up with a good
definition.”
“Come on, Lou.”
“Do you have one?”
“Sure,” I said. “Using data unavailable to the average person in order
to make buy-and-sell decisions.”
“Okay, then, what about an investor who wines and dines a key employee
in order to find out if the company’s doing its job properly?
Someone who takes the time to really get into the nuts and bolts of
company operations? Is that corrupt or just being thorough?”
“If bribery’s involved, it’s corrupt.”
“What, the willing and dining? Why’s that different from a reporter
buttering up a source? Or a cop encouraging a witness with a doughnut
and a cup of coffee? I don’t know of any law that makes dinner between
business people illegal. Theoretically, anyone could do it, if they
were willing to put out the effort. But no one ever bothers, Alex.
That’s the thing. Even professional researchers usually rely on graphs
and charts and the numbers the company gives them. Lots of them never
even bother to visit the company they’re analyzing.”
“I guess it depends on what the investor learns from the willing and
dining.”
“Exactly. If the employee tells him someone’s going to make a serious
takeover bid on such and such a date, that’s illegal. But if that same
employee tells him the company’s in a financial position that makes it
ripe for takeover, that’s valid data. It’s a thin line-see what I
mean? Chuck Jones does his homework, that’s all. He’s a bulldog”
“What’s his background?”
“I don’t think he even went to college. We’re talking rags to
riches.
I think he shod horses or something when he was a kid.
Doesn’t that appeal to your sensibilities? The guy came out of Black
Monday a hero because he dumped his stocks months before the crash and
shifted to T-bills and metals. Even though his stocks were shooting
up. If anyone had known, they would have thought he was going
senile.
But when the market crashed, he was able to bottomfish, bought in again
and made another fortune.”
“Why didn’t anyone know?”
“He’s got a thing for privacy-his kind of strategy depends upon it. He
buys and sells constantly, avoids big block trades, stays away from
computerized trading. It wasn’t until months later that I found out,
myself.”
“How’d you find out?”
“The scuttlebutt-twenty-twenty hindsight, while the rest of us licked
our wounds.”
“How was he able to predict the crash?”
“Prescience. The best players have it. It’s a combination of a great
data base and a kind of ESP you get from being in the game a long TIME
I used to think I had it, but I got chastened no big deal.
Life was getting boring, and rebuilding’s more fun than just treading
water. But Chuck Jones does have it. I’m not saying he never loses.
Everyone does. But he wins a lot more than he loses.”
“What’s he into now?”
“I don’t know like I said, close-to-the-cuff’s his style. Invests only
for himself, so he’s got no shareholders to deal with. I doubt,
though, that he’s high on real estate.”
“Why’s that?”
“Because real estate’s a turkey. I don’t mean for someone like you who
bought in years ago and is just looking for some stable income.
But for traders out for a quick profit, the party’s over, at least for
now.
I divested myself a while ago, moved back into stocks. Jones is
smarter than me, so odds to evens he got there before I did.”
“His son owns a big block of land out in the Valley.”
“Who said wisdom is genetic?”
“His son’s a college professor. I don’t think he was able to buy fifty
parcels for himself.”
“Probably his trust fund-I don’t know. You’ll still have to convince
me Chuck’s getting into r.e. in a big way. The land the hospital’s on
is Hollywood, right?”
“Several acres,” I said. “Purchased a long time ago-the hospital’s
seventy years old-so it’s probably all paid for. Even in a slump, a
sale would be pure profit.”
“Sure it would, Alex. But to the hospital itself. What’sJones’s