Coffee Read Online Free PDF Page A

quite the
Investment expert, and we need some advice,” Etty began.
    “Sure.”
    “We’re
interested in purchasing some options on one of the commodity
exchanges - Coffee. And...”
    “Now
there’s something you don’t get into unless you know
what you’re doing,” Warren interjected.
    Etty
was well aware of the risks in all the publicly traded investment
instruments, especially options. She took every course possible in
option theory, and knew the mathematical models inside and out. She
didn’t come to receive advice on risk - she wanted to know
whether Warren had any buying power.
    Ignoring
his interruption, she continued. “First of all, tell me
Warren, do you have complete say in the investments in the school’s
portfolio?”
    “Not
even close. We have strict guidelines, right down to the types of
investments. I can make proposals to the Trustees, and sometimes
they accept, but not after an incredibly convincing story. They
never go for the odd stuff, especially derivatives like options.”
    “Oh,
I see,” she said lightly, showing disappointment.
    Warren
wasn’t accustomed to students waltzing into his office with
investment ideas, or if they did, the suggestions were often too
academic to have merit in the real world. There was something
intriguing about Etty though. “Well, I do have a speculation
fund.”
    “Oh?”
    “It’s
not uncommon in the investment houses. I helped Dartmouth design
it. But I thought you were the one with the story to tell.”
    “How’s
it work? How much money can you play with?”
    Warren
huffed, “A chunk of the portfolio is left aside for the
manager to have full say - to take some calculated risks. If you
beat some target rate of return, the manager gets to keep some of
it. In the big firms, if you play your cards right, you can make
millions, some even billions.”
    Knut
jumped in. “But Dartmouth had better cafeteria food, right?”
    “Right.
Chile con carne from a can, same reason you don’t walk out
and get a six figure salary someplace, Knut. You know damn well it
would take you about ten minutes to find one.”
    “Actually,
for me it’s the baked beans and ketchup.”
    Etty
recovered the topic. “Boys, this is my show. Continue,
Warren.”
    “So
I have a speculation fund, some dollars I can do what I want with,
with only a few exceptions. Then, as my incentive I get a quarter of
any earnings over 10%. It’s not great, but it can add up.”
    “What
if you go under?”
    “If
the return is 10% or under, I get nothing. Of course, if the return
goes negative, I get fired and probably never work again.”
    “How
much money is in the fund?”
    Warren
rolled his eyes at Knut, even though he couldn’t have seen.
“Harriet, where are you going with this? The speculation fund
is fifty million.”
    Knut
jerked and had to scramble to catch the papers in his lap from
falling. “Fifty million dollars? This is your little ‘spec
fund’?” Etty reached over and took the papers from
Knut. She scanned them quickly, pulled one report to the top, and
turned back to the discussion.
    “Yea.
It’s not that much, really. Remember the total portfolio is
800 million,” Warren said with sincere surprise at Knut’s
reaction. “I had many times that in New York.”
    “What’s
the money in now?” Etty continued.
    “Listen,
I have a lot to do. If you have a proposal, I’ll hear it.
Otherwise ... ”
    “All
right, all right. Sorry if I’ve been rude, but we’re in
a tight time frame. I’m looking for someone who wants to make
a sizable investment, and if you didn’t have the capability, I
didn’t want to waste your time.” She straightened in
the chair. “Let me explain.”
    Etty
described in detail the price abnormalities in the coffee market.
Knut helped by reciting his analysis. Warren watched with growing
interest. In his fifteen year career, he had never seen such
dramatic proof of market manipulation before it was discovered by
the authorities. He had