American Sucker

David Denby

You instinctively know that The New Yorker movie critic David Denby ought to be able to tell a good story, and that the author of The Great Books ought to be able to weave revelation into the most daunting of experiences. Add all this together and we ought to get a rocking good ride through the rise and fall of NASDAQ 5000 as seen from main street's point of view. And we do.
Needing money to buy his soon-to-be-ex-wife out of their Upper West Side apartment, Denby loaded up on NASDAQ mutual funds in Oct 99 and NASDAQ stocks in Jan 00. The rest is history, as they say. But the process (losing $800,000 from March 2000 to October 2002) is what makes this heart warming tale of decline and fall, and redemption, well worth the read.
Taken from an investor's viewpoint, the book should have been entitled "How to lose money doing everything an investor ought not to do." (1) Don't go into the stock market with a goal of making 1 million dollars in one year - if you want to gamble, go to Vegas. At least you get free drinks. (2) Don't ignore history - every possible danger sign was flashing by the end of 1999, a fact Denby acknowledged. (3) Don't attend high-tech investment dog-and-pony shows and blindly step in the manure spread around by the hosts. (4) Don't be afraid to take responsibility for your own investments. Putting the onus off on somebody else to escape the ultimate decisions is a fool's game. (5) Don't give way to emotionalism, especially when your heart doesn't understand what your head is saying.
All of this is instructive, but the true gems come to light when Denby goes searching for the reasons why. Why did he do what he did, and why did the investment process treat him so shabbily? Up front, Denby admits to being politically liberal with a strong distrust of the business community. After all, he's a movie critic by trade. He goes into deep ruminations on the anti-capitalist, anti-materialistic, anti-consumerism philosophies of luminaries from as far back as Thorstein Veblen and as current as Juliet Schor. Still, he wanted to be part of the Wall Street crowd, the wealthy, as he calls them, and he gladly entered into the dance.
His most revealing, and important, commentary is through his love/hate relationship with ImClone founder and now felon, Sam Waksal. Happy to become one of "Sam's pals" and bask in the light of his dinner parties, Denby's exploration of what made Sam tick is worth the whole book. As he pounds the pavement of Manhattan's sidewalks, searching for meaning, Denby conjures up the 7 deadly sins, and settles on envy leading to greed as the two best fitted for himself and his new cronies on his chosen way to wealth. Near the end of the book, he even tries to offer just how much a "wealthy" person needs to have before becoming "greedy." Yet, as if to argue with himself, he makes the following observation, certainly the most cogent of the work: "The one thing shadowing their (the high-tech entrepreneurs) triumph was aging and its scything climax, death. It was the final victory that capitalism, which had swept all before it, could not achieve - immortality, or at least a long, disease-free ascent into a happy and productive old age. And yet they were arrogant enough to want to lick death. And I believe it was that realization, as much as the drive for efficiency and wealth, that pushed the all-optical network (and tech/biotech revolution) forward." And of Waksal in particular: "He looked to be in superb health, but the threat of a sickened old age was haunting him. This specter ('Every man, if he lives long enough, will get prostate cancer.'), he thought, had to be vanquished, - age postponed, vitality prolonged."
But why does this motivation surprise Denby? Is this not why we have an economy - and capitalism - and progress? To supply the necessities of life for as long as life can be sustained? Continuing, on pages 196 and 197, he sums up the driving force of the George Gilders, Waksals, etc.: "These men were not just fighting off thoughts of death, they literally were not going to accept death, and that made them more ambitious than men of all other generations." That's as heroic a vision as mankind has ever had.
Denby also asks the most important questions for our society today as we sort out what happened. "Does speculation like this...do any permanent damage to an economy? Or is it, despite the ruin it sows among the unwise, a useful and socially benevolent event in the end? And the lesser question is: Must speculation always be accompanied by fraud? Is there something inescapably criminal in the process of quickly raising money for some new enterprise?" Later, he responds: "The answer, of course, is that there's something 'escapably' criminal, and that's why we need regulators, prosecutors, and an ethics that the ambitious and wealthy live by."
In the end, Denby comes to terms with his losses and his failings. It was the breakup of his marriage, the apparent worldwide victory of capitalism (supposedly commercializing all the arts), and the threat that creativity had been siphoned off from the arts into science and technology that had blown a hole in Denby, causing him to question his whole life's purpose. I'm not so sure that Denby didn't secretly rejoice that Wall Street failed him as a God. It freed him to return to his chosen profession, giving two thumbs up to Eminem's "8 Mile" for its "renewal out of economic decline and cultural despair." But as he comes closer to that dreaded "threat of a sickened old age" that drove the Waksals of the world, Denby just might go looking for life's renewal in the companies that the Waksal's of the world built. And then, perhaps Denby will question whether he really was a sucker after all.