'He knows how to really figure out how a company's doing.
Which means going way beyond quarterly reports. Once he ferrets out an undervalued stock about to pop, he buys in, waits, sells, repeats the process. His timing's impeccable.'
'Does he ferret using inside information?'
Pause. 'This hour of the morning and you're already talking dirty?'
'So he does.'
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.
