|January 11, 2004
A Babe in Dow Land
By ALEX KUCZYNSKI
In David Denby's office at The New Yorker magazine, two headlines from The Wall Street Journal share a frame. A March 2000 headline, accompanied by a cartoon sketch of a bull flexing his bicep, blares, "Nasdaq Pumps Up to 5000."
The other, from December of the same year, reads: "Poof! `Smart' Investment Ideas Go Up in Smoke, as Market Tumbles."
"Medieval scholars used to keep a skull on their desks to remind them of their own mortality," Mr. Denby, one of the magazine's two film critics, said in an interview last week.
Mr. Denby, a slight 60-year-old in a tweed jacket and tortoise-shell glasses, pointed to the frame. "And that is my version."
The framed, yellowing pages are a poignant memento mori. Mr. Denby's new book, "American Sucker" (Little, Brown), is a self-flagellating, revealing memoir of how, in the throttle-grip of a divorce and a midlife crisis, Mr. Denby vowed to make a million dollars in the stock market.
Instead, it all went just as the headline - the second one - described: Poof!
He lost $900,000.
"I got caught up in the whole madness and excitement," Mr. Denby said. "And I made the classic errors."
In January 2000, Mr. Denby, a relatively inexperienced investor whose previous book was about rereading the literature of the Western canon (Goethe, Boccaccio, Homer), decided to plunge into the choppy waters of high finance. He became obsessed with CNBC and believed money would rain down from the munificent technology and Internet markets that had been doing so well.
Specifically, he thought that a million dollars would allow him to salvage his marital pride and buy his now former wife's half of their Upper West Side apartment. (She is the novelist Cathleen Schine, who occasionally writes for The New Yorker.)
And maybe, just maybe, he would be able to buy an Audi A6 (the current base price is $36,640).
"I fell in love with a car," he said, scratching his gray head. "How insane and middle-aged is that?"
Just as Mr. Denby is not a financial writer, his memoir is not entirely focused on finance. For a time, he became a compulsive viewer of Internet pornography. "Asian Frenzy? Latino Studs? Oh, why not?" Mr. Denby writes.
"It is part of what happens to a man after his wife leaves him," Mr. Denby said. "It is about demoralization. It is about obsession. Now it just seems like a mirage."
A disastrous affair with a married woman ended after her husband found Mr. Denby's suit hanging in the closet. He could sleep only after megadosing with NyQuil. He dated another woman, and when the moment for intimacy arrived, he could not, as they might say on Wall Street, close the deal.
Perhaps most corrosive was a sense of greed and envy he developed - along with other members of the well-educated but perhaps not lavishly remunerated intellectual middle-class - standing in dumb, malevolent silence before the vast fortunes of the young Internet multimillionaires at the end of the 90's.
Mr. Denby writes with almost loving appreciation of the lofts, apartments, country estates, cars, even the toned bodies of the wealthy men and women he encounters.
Talk about splaying your life open. What next, Mr. Denby, necrophilia? "I'm not concerned with looking good here," he said.
At least his timing is good. "American Sucker" arrives at a moment when the markets are humming again, the economy is in an uptick and some of the former executives Mr. Denby writes about - many of whom milked the companies they steered for personal gain - are headed to trial. One has been banished by legal decree from the securities industry for life. Another is in prison.
He counted two of those men as his personal gurus. One was Samuel D. Waksal, the imprisoned chief of the biotechnology company ImClone Systems, whose relationship with Martha Stewart has led to her own trial, which is to begin Jan. 20.
Another was Henry Blodget, the Merrill Lynch Internet-stock analyst fined and exiled from Wall Street for issuing misleadingly positive reports in order to generate investment banking business. Mr. Blodget is now reporting on the legal proceedings of Martha Stewart for Slate.
Mr. Denby also became a devotee of George Gilder, the publisher of a newsletter whose wildly optimistic predictions about the telecommunications boom left his followers with shrunken portfolios.
Which all raises the question (so stark in 20-20 hindsight): Why did he choose those losers?
"Because they seemed like enormous winners," Mr. Denby said. "At the time. And of course my journalistic instinct, as far as Henry and Sam went, was, `There's a story there with these guys.' And here they are, my two characters. Blodget is covering her trial. And Waksal's in prison."
By this time, Mr. Denby had moved to the Condé Nast cafeteria, where he was swallowed up for several minutes in a swirling sea of long-legged blond women in black boots and miniskirts.
Eventually huddled over a plain green salad and black coffee at a quiet table, he explained that his mission in writing the memoir was to expose the mistreatment of the small investor at the hands of corporate America. "What outraged me was the amount of lying, and the way rich people stick together and protect each other," he said.
"They," he said, and then used a verb that could be replaced with "undermine" or "mistreat," "the little guy."
Toward the end of the book, as he lost more and more money, he became more and more angry.
Of course, Mr. Denby had more money to invest than your average American. He had inherited $325,000 from his mother in 1991, he and his wife had saved money in 401(k) plans and, as they collected money from book royalties and writing salaries, invested in small and mid-cap value funds and overseas funds in the mid-90's. In the final analysis, Mr. Denby said, he and Ms. Schine, his former wife, "were way up on paper, then way down on paper." He added, "In the end, we lost about six years' worth of investing."
Still, not many Americans who lost money in the stock market got to write books about their experiences.
"I say right up front that I am in a privileged position, to be able to make a book out of your troubles," Mr. Denby said. "Most people can't. But writers are ruthlessly pragmatic, and they will take anything and turn it into a story or a book."
John Cassidy, a New Yorker financial writer, said that he had cautioned Mr. Denby from the beginning. "From a financial perspective, it seemed to me to be insanity. He didn't seem to be operating according to financial logic," he said.
But financial behavior is not always logical, Mr. Denby said. "A lot of it is about emotion, impulse, anger, desire, envy," he said.
And envy is a driving force in the book. He writes in longing detail about Mr. Waksal's SoHo loft, the expensive art and sumptuous decorations, where "one felt as actors feel on a stage, warmed by attention." Later, he writes that he looked at Dr. Waksal and envisioned "a dream of an alternative life."
When Mr. Denby visited wealthy friends on their 400-acre weekend estate in Connecticut, he slept in their guest room and lay awake wondering why he would never inhabit a room like it and its adjoining bathroom, with its yards of marble and its pastoral views.
"They were gracious people," he writes, "and my envy would wriggle through their good humor like a snake in the garden and, finding nothing vain to attack, would turn back and bite itself in bitterness." The couple, he adds, "lived in the place from which the rest of us had been expelled."
As he stared into the bowl of untouched salad, Mr. Denby relented a bit. The real and most pervasive envy, he said, "is that among peers." He went on: "In this case, the upper bourgeois intellectuals in New York. Mixed in with the genuine good will and friendship, there is always envy."
Envy, as described in the book, is "the curse of the middle classes - particularly, I would add, the professional and intellectual sectors of the middle class, the Upper West Siders living in every city and suburb in the country." Envy swallows up the middle class with questions like: "Who has brighter children? Who has taken the more interesting vacation? Eaten at the better restaurant?"
Not that there's anything wrong with a little consumer desire. Mr. Denby said he still wanted if not a million dollars at least the Audi A6.
"I will buy it, or maybe the A4," he said, referring to a less expensive version of the car (its price starts at $26,240). "Someday. One hopes."
Mr. Denby said he and his former wife have recovered about 40 percent of their losses, which isn't as positive as it sounds.
"That means we're down about $500,000," he said.
As for the apartment, the two of them sold it. He now lives in a four-room apartment four blocks away.
"Once you know where the red pepper bin is at Fairway, you don't want to leave the neighborhood," he said. He said he was no longer a habitué of Internet pornography and rarely watched CNBC. And he is in love. He is dating Susan Rieger, associate provost for the office of equal opportunity and affirmative action at Columbia University. "She is tall and blonde," he said. "I mean, wow."
As for Ms. Schine, Mr. Denby's former wife, she said that she did not like reading about herself.
"It's alarming to see any characterization of yourself in print, because it's like looking at a picture," she said. "You just see all the wrinkles and puffs." She added, however, that she liked the book. "One of David's great strengths is that he is courageous enough to be earnest, which in this day and age is not something that everyone will do."
Mr. Denby still invests in the markets, although he has diversified his portfolio rather than relying heavily on any one sector.
"The market is coming back," Mr. Denby said. "I am interested in the Japanese recovery, and in China, which is a very dangerous, speculative thing." He paused. "Although it is pretty safe to say that no one should take my advice on investments."
© 2004 The New York Times