The Greater Fool Page 2

  “So who's going to get my espresso?”

  “What? I'll get the intern to do it. But did you hear what I said about the press?”

  “What press? What do they want?”

  “Financial Times, Wall Street Journal, you know, the usual. They want a comment about rumours that we’re in trouble.”

  “Who's spreading rumours?”

  “Your guess is as good as mine. But presumably they've heard something and reached their own conclusions.” He looks down at the floor, and I notice the faint tremor of his small head on weak shoulders.

  I say, “Two plus two equals five, eh?”

  Without looking up, he says, “Or equals four. Reynard, have you had any more thoughts on what I said about reducing our exposure?”

  “Why so glum, Rog? I've had plenty of thoughts but I don’t agree that we need to sell any assets or reduce leverage. Relax, okay? People just need to calm down. The market will see sense soon enough, and everyone will be smiling again.”

  After a pause he says, “Right, are you going to speak to the press, or do you want to put a statement on the website?”

  “A statement. Draft it, will you? And make sure everyone here knows that the official line is 'No comment,' and they are to refer all callers to our website. And get that girl to bring me an espresso.”

  Three minutes later, a pert little redhead hands me an espresso. It's not as good as the ones that Lucija makes, but because I particularly appreciate her ripe little peaches and coy smile, I'm prepared to forgive her. I get her to bring me another one as I read through Roger's draft statement, rewrite it, and tell him to post it on the website.

  Dear Investors

  All of us at Gyges Holdings look forward to a fruitful future — a future that we believe is ripe with glorious opportunity.

  We acknowledge, however, that there is currently some market uncertainty thanks to an unprecedented combination of global economic, political, and societal factors. This uncertainty has been exacerbated by some unhelpful stories in the press about Gyges' liquidity. We therefore seek to reassure you that Gyges Holdings remains solvent, and we reiterate the long-term potential of our world-class real estate portfolio.

  Gyges has an unrivalled track record of delivering market-beating returns to investors, and intends to continue to do so. We greatly value your continued support, and look forward to enjoying a mutually successful partnership for many years to come.

  The Gyges Holdings Team

  Roger and I do conference calls with seven key investors, along with Lucija, who wears a not-very-flattering taupe trouser suit and takes notes. The investors seem reassured by how in control I am. Later, I tell Lucija that I particularly like the green dress she wore last week.

  4

  Gyges Holdings Denies Existential Threat

  Struggling Gyges Holdings last night was forced to issue a statement in which it denied that its future is under threat. Gyges, a £5 billion open-ended real estate fund headed by controversial founder Reynard Xavier, is rumoured to be facing funding difficulties. Investment guru Sven Mortenson said, “Gyges is structured in the wrong way. You simply can't structure a fund like that and expect not to get burnt when asset prices reverse and investors take flight. Allowing investors to redeem with no notice period is asking for trouble. Gyges has sailed too close to the wind for too long and could pay the ultimate price if we see a continued flight to safer assets amid unprecedented global uncertainty. The knock-on effects on the wider UK economy could be massive.”

  Although barely known to the public, Gyges’ investor base is believed to include numerous UK local authorities and national government, and any failure is likely to have serious ramifications for local and national government finances, and by extension, the taxpayer. Gyges is understood to be privately offering many of its prime central London properties at heavy discounts to market value but is struggling to find buyers.

  Gyges staff last night declined to comment.

  That cunt Sven Mortenson can go on the list. His analysis is unhelpful, biased, and factually incorrect. For example, his assertion that “You simply can't structure a fund like that...” Yes you can; I did, and that's how Gyges became so big so quickly. Without such attractive terms for investors, we would not have grown the assets so rapidly, and the fund simply would have not been viable – or at least would not have matched the scale of my ambitions. And who wants to run a poxy little fund?

  Everyone called me a hero on the way up. Investors recognised a winner, a visionary, even, someone whose sophisticated (and proprietary) methodology was going to make them — and by extension, the wider economy — richer. But the faintest whiff of trouble and in rides Captain Hindsight, trumpeting loudly, “I told you so.” Except that he did not tell anyone anything – he just quietly reaped the rewards with the rest of them.

  But I do concede that it's far easier to make predictions about the past than about the future. And if any mistakes were made, they should be learnt from. Gyges’ strategy has proved itself over time, so surely there’s little sense in changing horses in midstream. I don’t take my responsibilities lightly, and I’m resolute that I’ll steer Gyges through these choppy waters, whatever it takes.

  5

  Gyges Holdings swells, blooms, is magnificent in all its glorious fecundity. In the time I take to plough Chiquita’s (or is it Patricia’s?) furrow twice this morning, the Golden Goose has thrown off tens of thousands in management fees, and, with a trailing wind, three times that in performance fees. But even an imbecile can make money in a rising market, and therein lies the risk; you don’t want poorly educated chancers turning up and spoiling the party. The secret of Gyges’ success is my unique investment methodology, naturally kept under wraps; you don’t want your competitors replicating your secret sauce, stealing your edge. Because it’s all about alpha generation: if you outperform the market you’re a hero.

  The money flows in, and it flows out again. I retain enough to keep the wolf from the door, although the lion’s share of asset appreciation goes to investors – primarily institutions such as public sector pension funds, local and national government, even charities and religious organisations. I’m proud to serve those fine institutions; I’m privileged to have such a pivotal role in keeping the economy running smoothly.

  If, as Einstein said, compound interest is the eighth wonder of the world, then leverage — the alchemical power of borrowing — is the ninth. Let me illustrate. An asset (property, say, or a bond, or shares, whatever) is for sale for £10m, but I only have £1m to spend. I buy it with my £1m plus £9m I’ve borrowed. The asset’s value increases 10% in a year to £11m. I still owe £9m, but my equity is now worth £2m (£11m minus £9m). My investment has doubled in a year. Easy money. In fact, it’s magic, conjuring wealth out of nothing. You’d be a fool not to be feeding at this table, surely?

  Sometimes there’s a sense that the drawbridge is about to be pulled up, and anyone left outside the castle will be left to fend for themselves, with little chance of making decent money. Fucked, in other words. If you were outside the castle, you’d be crazy not to rush inside, wouldn’t you?

  So far, so simple. But things are more complicated than that. It’s a surefire winner, provided the source of funding is not staunched and provided the asset’s value increases. Fiddle around with either of those variables, and that’s when things start looking less rosy.

  In every economy there are periods of boom and bust; cyclicality is unavoidable. The trick is timing. Ride the wave but bail out before it breaks. The longer you leave it, the greater the thrill; the bigger the risk, the bigger the rewards.

  Not for me the well-trodden path: I leave blue-chip equities to the more timid market participants. Give me an uber-desirable prime central London piece of real estate over shares in Unilever any day.

  My proudest achievement — although not the most valuable — is a 2011 addition to the portfolio. Now called Reynard House, it’s a late-Victorian five-storey b
eauty in Franco-Flemish-Renaissance style near Hanover Square. A glorious combination of yellow and red brick and encrusted terracotta. Liberated from some late casualty of the Global Financial Crisis with the help of some subtle persuasion and a couple of Victor’s girls, it’s proved one of my best investments yet. Two luxury retail outlets below with four large flats above. Through some legal chicanery, I now personally own the penthouse flat, currently rented out to some Private Equity chap. No doubt some cocky shit with Italian shoes, bling Omega watch, and the morals of an alley cat. But that flat alone yields me almost £150k a year, so who am I to question anyone’s societal worth or lack of class?

  The name of Reynard House – we dismissed other suggestions that were prompted by the history of the area, e.g., Scarborough, Maddox, Pulteney — is, I must concede, somewhat egocentric, but why not seize the chance to leave your legacy? A mark on history, however small.

  Chiquita/Patricia leaves, but her Colombian/Catalonian scent lingers. I must feed back to Victor: she’s at least an 8.5, possibly even a 9. Let’s call it 8.8. Certainly worth getting her back.

  It’s mild so I sit in my Daniel Hanson robe with an espresso out on the balcony and check email. Another overly technical epic from Roger, which I flag up to read later. Uncle Ish tells me he’s booked us a table at Coq de Platine for Thursday night. I reply with some platitudes and agree to meet him there.

  Uncle Ish: my late father’s brother, who stole what’s rightfully mine. Although there was some facial resemblance between the brothers, they were temperamentally very different. My father — introspective, introverted, scholarly — was a good man, utterly unlike the unrefined and overbearing Ish. And such is the way of the world that Ish was successful in business, while my father simply wanted to be left alone to study history and made very little money as a lecturer at a former polytechnic in the Midlands.

  In 1999 the brothers inherited equal shares of their parents’ estate, a tidy sum. My recently widowed and naïve father took the advice of his older brother and piled into dotcom stocks, just before the bubble burst. Eighty percent of his wealth – my inheritance – gone. He died just a couple of years later.

  My father played by the rules. A good man – ask anyone – a man to be relied upon, a man who told the truth. Toed the line, compliant to a tee – but now dead.

  What son has not questioned his own ancestry, looked into his father’s eyes and wondered whether they really were related? In my father’s eyes I saw little in common. Surely the point of the father/son relationship is that one is a chip off the old block: someone to continue the good work, to follow in his footsteps?

  Even physically we were from different classes. He was short, narrow-shouldered, small of head and weak of jaw, not physically imposing or attractive in any conventional sense. He had a decent brain, but his intelligence was loaded in favour of perspicacity and a well-calibrated moral compass, at the expense of nous.

  At my father’s funeral, a pigeon found its way into the church. Flapping randomly and shitting in panic, it sent the mourners diving for cover. The vicar was unamused. The pigeon was eventually ushered out by an officiant, and the service was resumed. But the spell was broken; whatever solemnity there had been was lost. Instead there was a vicar going through the motions while the congregation fidgeted and glanced nervously at the door (now closed). My father, who advocated tolerance and acceptance, but whose entire life, and his funeral, was disrupted and spoiled by extraneous events and the actions of others.

  We buried him as a light drizzle fell.

  In retrospect, my father’s death precipitated a significant change in my twenty-four-year-old self. His passivity, his toleration of my mother’s malign presence, and ultimately his capitulation to the will of others, only increased my resolve to control my own destiny.

  6

  Lucija wears a grey suit, navy tights accentuating those impeccable legs, heels, and a white blouse. Hair down. Perfect. She brings me another espresso, then I get her to arrange lunch with David Bligh today – I'm running low on pregabalin.

  Roger's off sick today – another series of petit mal seizures — and his doctor's advised him to stay at home. I must research his epilepsy more thoroughly; does it represent a risk to Gyges?

  Despite the unhelpful noise in the press, not much reaction from investors. A smallish redemption (£10m) from a pension fund, which is unhelpful, but not disastrous. Just like 95% of our investors, they’re not required to give any advance notice for redemptions. The bed-wetters' prerogative, but they pay higher fees for the privilege.

  Nearly lunchtime, and Lucija tells me apologetically that I'm to meet David Bligh at Yo Sushi! in Victoria Station and that I should go on the Underground.

  I generally avoid taking the Tube, but it does no harm to be occasionally reminded of how others live. Sat opposite a cheaply suited, small, middle-aged man. Gimlet-eyed behind thick glasses, a deep but narrow expanse of forehead, the thin lips of a sadist. His hand strays once, twice, three times onto the lap of the woman next to him. She's equally unattractive but is of a different species: equine, with a luxuriant mane and flared nostrils. Across his face is a lascivious grin; across hers, is it complicity or irritation? Soon we have our answer: “Stop it, Martin,” she snaps.

  He withdraws his hand, the naughty schoolboy scolded by the indulgent nanny. But his hand soon sneaks back.

  She glares at him; he smiles. A more demonstrative glare from her – cartoonish this time, with goggling eyes. “Stop it,” she hisses, but he smiles wider.

  I lean forward across the aisle. “Yes, stop it, Martin,” I say. They both stare at me.

  “I beg your pardon?” says Martin.

  “I said 'Stop it, Martin'.”

  “What's it got to do with you?” His glass chin lifts defiantly.

  “You're in my space, so it's got everything to do with me.”

  “Then move,” says Martin.

  “Martin!” the woman interjects.

  I turn to the horsey lady. “You look very familiar. Did we, you know, have a liaison once?”

  She colours immediately. “No, we did not.”

  I turn back to Martin, grab a bony knee, and squeeze hard. He yelps.

  “Stop it, Martin. Understand?”

  Pale-faced, Martin hurriedly says, “I understand.”

  I slowly remove my hand from his knee. I watch them closely until the next stop, when I get off. Good deed done for the day.

  Moving across the concourse of Victoria Station, it seems that the whole shitting mass of humanity is here. The salary men, the backpackers, the tourists, the stressed, the degenerate, the poor, the middle class, the stupid, and me.

  Escalator up to Yo Sushi! The restaurant is inauthentic, gimmicky, and not my choice. Already sat there at the conveyor belt is David Bligh, boarding-school friend, morbidly obese psychiatrist, and lech. The sort of man who compulsively smells his own fingers.

  “Yo!” I say.

  “Yo!”

  “Why here, Dave?”

  “Sorry – on a diet and have to head off to Brighton shortly.” Already stacked up in front of him are five empty plates with their plastic covers, and two empty orange juice bottles. He calls for more juice.

  We exchange pleasantries and I sit next to him — although I move my stool far enough away to avoid the spittle and half-masticated sashimi escaping from between his fat lips – and we get down to business. He hands me a white envelope containing signed prescriptions, enough for six months of 150mg pregabalin and 30mg cocodamol.

  “Thanks Dave, much appreciated, as ever.” I pocket the envelope and grab a salmon and avocado sushi roll from the conveyor belt. “You off to see your little Bulgarian?”

  “Not a word to Debbie, eh? She thinks I'm off to another conference in Brighton. I just need to get away – you know how it is.”

  “I'm not going to sit in judgement. Who you have suck your cock is none of my business. Whatever gets you through the night, old chap.” I take
a mouthful of sushi, but it's not what I'm looking for. I see a seaweed salad heading off past David, so I reach across and rescue it.

  He says, “You won't tell Debbie, will you?”

  “Poor Debbie? Loyal, devoted, understanding Debbie? We're friends, aren't we, David? Quid pro quo.”

  Time passes slowly as we talk about plans for the months ahead, and David sets about trying every dish on the menu. Although he's done his best, and his tottering pile of empty plates provokes bemusement in the waitress, the entire bill amounts to less than half the cost of a Emperor's sashimi plate at Origami.

  We depart – me with a smile, David with a hurried “Mum's the word” — and he beetles off towards platforms 15-19. His fat, curved back and pink bald patch disappear into the throng. He's timid, weak, easily manipulated, and remarkably naïve for someone who's trained to understand the finer workings of the mind. But a friend nonetheless, and a reliable procurer of prescription drugs, no questions asked.

  Even at school he was the same: pliant, loyal, passive. The child is the father of the man, after all. As for me, well, it's a popular refrain: I was a lonely child; I had few friends; I always knew I was different. But in my case it was true.

  I had my hobbies: football (a nippy number 10 with some vision); a voracious reader; a keen interest in small animals. Mice, voles, a bat (once, briefly), and whenever I could secrete them away, my classmates' hamsters and guinea pigs. The soft warmth of the animals' bodies as I cupped them in my hands, the increasingly urgent rapidity of their tiny hearts, the pinpricked eyes, the soft down of their fur. And most of all, the crunch of their bones, the shrillness of their little screams, like electric pulses that came from nowhere and disappeared, too quickly, to nothing. And then they were gone.

  The surprising resistance of their pelt to a fishing knife; the dazzling pinks and reds and greys of their internal organs: perfect divine realisation here on earth. God's creations now stopped.