Devil Take
The Hindmost

A History of
Financial Speculation

Edward Chancellor
(Farrar Straus)
Part I

Mother comes to me in my dreams and tells me what stocks to buy. Stop laughing: I don't make this up.

This stentorian voice never came to me until after she died in 1995. Now, from time to time, the moment I wake up, I have firmly planted in my brain the name of a stock and often its price.

It first happened a couple of years ago. "ADT at 25." I bought a hundred shares, it drifted down to 20, and dumb me, not believing Mother would actually leave such a bug in my ear --- sold out, only to have it soar (it got bought out by another company).

Mother was a stock nut. Starting when my Dad died, she turned from being a rather distracted Mum and party-goer to a full-time player of the market. Always the teacher, she formed her first investment club in 1955. "When your father passed on, I didn't know beans about stocks," she told us. He left her a small portfolio, which in the next forty years, she turned into a fairly sizable nut. She studied stocks, and the market, endlessly --- not only in Barrons, and The Wall Street Journal, and Businessweek, and Forbes, but poring through Standard & Poors, reading annual reports --- most especially the all-important footnotes (which, as with Gibbon, often contain the most lurid information).

She was doing what Peter Lynch says to do, only she was doing it when he was still in diapers. Buy and hold, buy and hold. Her portfolio was chock-a-block full of stocks that she culled (counting splits) at bargain prices: Coca-Cola at 7, Philip Morris at 3, Winn-Dixie --- her all time favorite --- at 3-1/2, Florida Power and Light (later FPL) at 8-1/4, Pfizer at 12, American Express --- bought right after the canola oil scandal (remember that one?) at 15, Scott Paper at 6-1/2.

There were a couple of windfalls built into the portfolio: Dad did legal work for Paul Reinhold, founder of Foremost, and got paid in stock, so we ended up with Foremost Dairies (later Foremost-McKesson) at zilch. And there was an investment in a local garbage company, $10,000 as a favor to a friend, that turned into several thousand shares of Waste Management, Inc. I suspect she would have dumped it when it got to fifty. She, like Warren Buffett, knew there were times when buy-now-sell-never is just plain wrong, knew there were times when management turns shifty and strange, like when her beloved R. J. Reynolds got involved in those leveraged buy-out shenanigans a dozen or so years ago. She was out of there in a trice.

By the end of her days, her one investment club had turned into thirty-five, each with a couple of dozen members. Although most of her meetings were held at home, she was forever traveling to hell and gone, as she would phrase it, over north Florida and South Georgia to keep the ladies of Gainesville or Savannah or Tampa or Brunswick on the straight and narrow. Buy and hold.

Her clubs were for women only, she said, "So that they won't be in the same place I was when your Father died." Women in those days weren't expected to be smart with money, much less investors, but she didn't believe that a bit. She wanted to change the system, to be damned sure that when their time came to take charge of their own money her "ladies" --- she always called them that --- wouldn't be flying blind. At least, she said, they would know the difference between a tax-bill and a dividend check, between corporate income and corporate earnings, between the p/e ratio and annual return on invested dollar.

The thesis was simple. The investment club members --- with such exotic names as "The Gold Diggers" and "The Millionaires" --- would ante up twenty-five dollars a month. And each month, they would study an industry: February it would be utilities; March, drugs; April, banks; May, entertainment. Each of the members would dig through S&P and the business dailies and weeklies for information to bring to class. Each would give a report, and afterwards, they would vote on which stock to buy. In their time, some of the clubs hit the jackpot. Which my mother always discounted. "We're in it for the long run," she would sniff.

§     §     §

She kept it up right to the end. Blind, unable to walk on her own, she might forget names of the clubs, or the members, or her own children, but she never forgot the rules of stock buying: pick sound companies with sound management: no bookkeeping tricks, please. And buy. And hold. My sister tells me that as Mother lay dying there in the guest room downstairs in the great Georgian house we had all grown up in, she --- under the influence of some drug they had given her for pain --- sat up in bed, thinking, perhaps, she was before one of her classes, and delivered an extemporaneous speech on her investment policy to the nonplused nurses, doctors and family members. "It was one of the best talks I ever heard her give," my sister said later.

§     §     §

For someone so grounded in balance sheets, p/e ratios, and sound investment, Mother did indulge in a bit of the spiritual. She was keen on the Ouiji board. She talked to my father, at times, "over on the other side." She went to Virginia Beach regularly for readings with Edgar Cacey when he was still around. (She taped and played one session back for me, with a "guide" describing my life. I was startled that what I thought was my secret world was so public --- at least to the spirits).

So when she recently started coming back from time to time to tell me what to buy on the market, I wasn't all that surprised. The advice wasn't what you or I would think: it wasn't Microsoft or Coca-Cola or Houston Industries, and it certainly wasn't Amazon or the now-so-sad Winn Dixie. It was a stock I had never heard of. I wake up, and there it is, in my head, the words carefully spelled out for me: "P-h-a-r-m-c-h-e-m. 2. Going to 50."

I figured it was some chemical company out poisoning the earth, but I was wrong. I looked it up in "Barrons" the next day. It wasn't NYSE, or ASE --- I found it in the NASDAQ listings. There it was, just as she had spelled it out. Pharmchem. At 2-1/2. They test for drugs --- both government and private industry. Looks like what she would call "a dog" to me, but their balance sheet didn't look all that bad, and it's definitely a growth industry.

Who am I to defy the gods? I dug up $2,000. Got 500 shares for me, 500 for my secretary --- she wants a new car someday. We'll be patient --- won't make the same mistake I did with ADT. We have almost doubled our money in the month since I bought it (it's doing better percentage-wise than Qualcomm), but we're hanging on, as Mum would want us to. Buy and hold, buy and hold. At least until we have our $50,000 in hand.

--- Carlos Amantea

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