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Dancing With The Analysts
Dancing With The Analysts
Dancing With The Analysts
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Dancing With The Analysts

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In this first offering of financial thrillers, author David Mallach introduces Johnny Long, the man with the financial knowledge, the man who develops investment strategies and makes them available to the Everyman, the man who sees the true risks and rewards behind everything. From the outset, Johnny must make choices – hard choices – in a world of high-stakes investing and intrigue in which choosing wisely means a life of purpose and choosing poorly means unaccomplished dreams.

In this novel, Johnny shows that “money is nothing in itself.” Rather, it is what we do with wealth that brings meaning to a life well lived. Here begins the relationship as Johnny meets Austin Montgomery, a college student cut adrift and ill prepared for a world in which he has no family, no money, and no mentor. Together, Johnny and Austin accept a challenge in which they stand to win millions... or lose everything in the process. Failure is not an option; unfortunately, it is a distinct possibility. Together they must follow a path between temptation and virtue without knowing where they may eventually wind up. Dancing with the Analysts is sure to entertain as well as educate. Beginning investors receive a crash course in portfolio management intricately wrapped in a sophisticated story.

LanguageEnglish
Release dateMay 27, 2016
ISBN9781311275684
Dancing With The Analysts
Author

David A. Mallach

David A. Mallach resides in the Philadelphia area, where he has devoted his entire professional career since 1973 to helping investors develop strategies for income growth and capital appreciation. David has lectured to investors and professional investment advisors in the U.S.A., Europe, the Middle East and Latin America.

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    Dancing With The Analysts - David A. Mallach

    Dancing With The Analysts

    A Wall Street Novel About The Ultimate Financial Challenge

    Copyright 2003 David A. Mallach

    Published by David A. Mallach at Smashwords

    Smashwords Edition License Notes

    This ebook is licensed for your personal enjoyment only. This ebook may not be re-sold or given away to other people. If you would like to share this book with another person, please purchase an additional copy for each recipient. If you’re reading this book and did not purchase it, or it was not purchased for your enjoyment only, then please return to Smashwords.com or your favorite retailer and purchase your own copy. Thank you for respecting the hard work of this author.

    From the Author

    This book is a work of fiction. Therefore, it should not be assumed by any reader that any specific investment or investment strategy made reference to in this book will be either profitable or equal to historical or anticipated performance levels. It should also not be assumed that the performance of any specific investment style or sector will be either profitable or equal to its corresponding historical index benchmark. Finally, different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or investment strategy made reference to in this book will be suitable or otherwise appropriate for an individual’s investment portfolio. To the extent that readers have any questions regarding the suitability of any specific investment or investment strategy made reference to in this book for their individual investment(s) or financial situation, they are encouraged to consult with the investment professional of their choosing.

    About the Author

    David Mallach is a Managing Director of Investments for one of the world’s largest investment firms where he has spent his entire professional career since 1973. He resides in the greater Philadelphia area. He is the author of Dancing With The Analysts, Walking With The Analysts, Running With The Analysts, and Myth.

    David is a selected member of Registered Representative Magazine’s Outstanding Advisor of the Year and Research Magazine’s Hall of Fame. In 2010, 2011 and 2012, he was selected as one of the top 1,000 advisors in America by Barron’s Magazine. David serves on the Board of Trustees for Gwynedd Mercy University. David is the proud father of five children, an accomplished saxophone player, and a registered private pilot.

    Dedication

    Writing this book would have been impossible had I never met my mentor, Johnny Long, so many years ago. Recently featured as a CBS Person of the Week, Johnny Long is an inspiration to thousands of men and women who share a mutual love of music. Johnny has dedicated his life to the spirit of music (music is the spirit of karma). Perhaps more importantly, Johnny has dedicated his life to teaching the art of music.

    In 1965, I was a member of a great high school band in Montgomery, Alabama. The band was called the Pride of Dixie, and Johnny M. Long was the director. I was in the 10th grade. My father was a military officer stationed at Maxwell Air Force Base in Montgomery, Alabama. I had moved 18 times before finding Johnny Long. The next year, my family moved to Cincinnati and then on to Philadelphia.

    Despite moving around so much, selecting a college was easy. I went back to Alabama and attended Troy University on a music scholarship awarded to me by Johnny Long, the college’s new band director. For me, though, Johnny Long was more than a band director. He was an inspiration. He was a preacher, but not in a religious or political way. He did not embody a toxic cult of personality like some of the characters you will meet in this book. Johnny Long was what I call a people preacher. He taught me how to be successful. I still remember those four years I spent learning about people from this maestro of life. The life lessons I learned from Johnny are too many to mention.

    Move the clock ahead forty years, and I am a financial advisor for one of the largest financial service companies in the world. My clients include Middle Eastern royalty, and some of the wealthiest people in America and Europe. How did I become so successful? It all started with Johnny Long. He was a teacher in the purest sense of the word. He made attending band class like a graduate degree program in human relations.

    Each new band season started on a hot August day in Troy, Alabama. I can still smell and feel the hot parking lot pavement where we assembled. New members were welcomed and old friends were hugged. It was the biggest family I could imagine being a part of. Rehearsals usually lasted all day. We would play music on and off for two hours and then listen to Johnny Long talk about the state, the country, and the world at large.

    This period was a time of unrest. The Vietnam War was at its peak. Patriotism was non-existent. Johnny Long always told us that the most important song we would ever play was the United States National Anthem. This said a great deal about the man. In Johnny Long’s class we learned respect – respect for our country, respect for ourselves, and respect for others. We learned to appreciate what we had and what our parents sacrificed so that we might have it.

    A true teacher, Johnny urged us to look within ourselves to find our core beliefs. I still remember how he used to say, I know what you are against. Tell me what you are for. Somehow he managed to challenge us without forsaking his kind demeanor. He was a motivator extraordinaire. Everybody wanted to be around him because of his positive outlook. I remember one time we were on the road performing in Mobile, Alabama. When we arrived, we discovered that the student in charge of bringing the music forgot it. Instead of getting angry, Johnny Long focused on what could be done rather than what couldn’t or hadn’t. He called the right people and the music was delivered to us by helicopter five minutes before the curtain went up

    .

    Johnny never berated the student who forgot the music. He didn’t accuse him of being irresponsible or letting us all down. The student was upset enough on his own. To the contrary, Johnny Long did the most beautiful thing. He came to me with the biggest smile. I asked him why he was so happy when things came so close to going terribly wrong. His reply was wonderful. He said that he was certain the student would always make sure the music was with the band in the future.

    He was right. For the next three years that same embarrassed student never forgot to bring the music for the 200 member band. I was the student who forgot the music.

    Being a band conductor managing an orchestra was like managing a large company with many different departments. Naturally, each section wanted to be featured; within each section, each musician wanted to play the loudest. Of course, some people were more gifted than others. We had soloists and they were treated as special talents. More importantly, though, Johnny Long brought everyone together to create a single, coherent, unified sound. Johnny Long taught us to perform as one, together as a single entity, each section contributing toward the good of the whole. In retrospect, I see much of this same balancing act in corporate America.

    Similarly, Johnny Long was amazing at recognizing what our audiences wanted to hear. I realize now why he was so good at this. He tried to understand and satisfy people. If we were playing at a football game, people stayed after the game to hear Johnny Long’s band play a concert. I was amazed. Other college and high-school bands, local musicians, and general music lovers would come to listen to the 200 of us play. I remember playing in the Super Dome in New Orleans. When we ended our half-time show and marched off the field, the stadium went wild. I can still hear the roar of the crowd. My hair still stands up when I think about it.

    Johnny Long had the energy of ten men. I believe some of his energy came to him through his music. Playing music written by some of the greatest creative minds in history had to be invigorating. There was so much there to channel. Johnny taught us that music is a universal language. We all shared in the beauty of a song well played. This had special meaning for me as the elected band captain. I learned everything I needed to know to go out into the world and be successful.

    The memories abound even today. I can still see Johnny Long waving his arms in the stands for us to stop playing music because he was eating peanuts. He said we needed to play louder so he could not hear the peanut shells cracking. I credit Johnny Long with all of my success in my family and business life. To immortalize Johnny Long I wrote my first three financial novels. The main character in each novel is Johnny Long. These best-selling Wall Street novels are my way of saying thank you to Johnny Long.

    Table of Contents

    Acknowledgements

    About The Author

    Chapter One

    Chapter Two

    Chapter Three

    Chapter Four

    Chapter Five

    Chapter Six

    Chapter Seven

    Chapter Eight

    Chapter Nine

    Chapter Ten

    Chapter Eleven

    Chapter Twelve

    Chapter Thirteen

    Chapter Fourteen

    Chapter Fifteen

    Chapter Sixteen

    About David A. Mallach

    Other books by David A. Mallach

    Connect with David A. Mallach

    Acknowledgements

    Rarely is any work done alone, and this book is no exception. First, I want to thank my family, who have always given me the support and sense of purpose one needs when undertaking a large project such as this book. I would especially like to thank Jeanette Freudiger, my loyal and understanding assistant, for her constant support. Special thanks must be given to Todd Napolitano for his editing skills. Before Todd, this book had only a soul. With Todd, the book gained a heartbeat. Todd has always sought to bring a creative touch to his corporate life, and this book marks a milestone in his search for creative and economic balance. Perhaps his son Quinn will find in these words a legacy for personal growth and fulfillment. I would also like to thank my clients for their trust and respect. In return, I give them an investment discipline I believe to be the best.

    Above all, though, this book is dedicated to Winthrop Smith, the former Chairman of Merrill Lynch International. Never have I met a man so dedicated to both corporate and personal growth. Winthrop Smith is a model of excellence to which we should all aspire, for wealth is nothing if we cannot acquire it in order to become better human beings. This, Winthrop Smith taught me.

    From The Author

    This book is a work of fiction. Therefore, it should not be assumed by any reader that any specific investment or investment strategy made reference to in this book will be either profitable or equal historical or anticipated performance levels. It should also likewise not be assumed that the performance of any specific investment style or sector will be either profitable or equal its corresponding historical index benchmark. Finally, different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or investment strategy made reference to in this book will be suitable or otherwise appropriate for an individual’s investment portfolio. To the extent that a reader has any questions regarding the suitability of any specific investment or investment strategy made reference to in this book for his or her individual investment(s) or financial situation, he or she is encouraged to consult with the investment professional of his or her choosing.

    David A. Mallach

    Chapter One

    The whole affair could have marked the beginning of the end. Nobody saw it coming. At times of cataclysmic change, we rarely do. The signs were everywhere, written large in a multitude of ways. But that didn’t mean anybody was watching for them, putting the pieces together until, of course, it was too late. Nobody interpreted the events as a foreshadowing of something catastrophic – the complete upheaval of the world’s economic system. The repercussions would have reduced the once-powerful United States to a quivering patient on the verge of a systemic shutdown, wheezing in a raspy death rattle. Nobody really worried about the country’s massive debt service as something that was about to fester into something fatal.

    Code Blue.

    Crushing, debilitating debt was only one of the symptoms. The root cause was the American people themselves. They wanted more and more….of anything and everything. When the bills finally came due, they supported any politician in favor of putting it all on credit, passing the buck as it were to their children. Let them eat cake. Until the day, of course, when the credit finally dried up and liquidity evaporated overnight. But the cake only lasts so long when the cupboard is bare.

    Would this be the end for the world or a wake-up call and a new beginning? Was a new beginning even possible for a world that had grown so fat and careless gorging itself on the next generation’s dime without contributing themselves? Like the rest of the Euro-Socialist world, the United States had undermined itself by issuing so much debt it became fatally vulnerable. By 2014, the United States debt ballooned to 115% of GDP, putting the country into negative cash flow. By 2015, there was $15,000 in government debt for every United States household. Simply put, the United States was drowning in debt not unlike other countries that had recently gone insolvent before it. The other countries were Argentina, Russia, Greece, Ireland, Pakistan, Spain and Iceland. The United States government literally borrowed itself into a position of weakness the likes of which had never been seen.

    The Chinese liked it this way. In fact, they loved it this way. It suited their ego and also their penchant for feeling superior. The Chinese knew they could do whatever the hell they wanted now to America and, by extension via the global economy, to the world as a whole. If, one day, the Chinese suddenly decided they had grown tired of the United States and wanted a new plaything, all they had to do was unload the two trillion dollars they owned in United States government bonds at once, and the United States financial system would collapse, bringing the rest of the world down with it. The entire world teetered on the precipice.

    Most people saw the Chinese as a growing military threat, an indefatigable manufacturing machine capable of producing soldiers like widgets, a new Mao-rality, so to speak. The cavalcade of analysts in United States intelligence worried about the obvious threats to global stability like a massive Chinese invasion of Korea or Taiwan. The sheer number of Chinese soldiers alone would be more than any conventional force could handle. They could be armed with chopsticks for all it would matter. Others worried that the Chinese economy was becoming too powerful and would displace United States financial dominance, especially in a double-dip recession like the one during the Obama years. Only a small, barely-audible minority worried about issuing too much debt to a foreign country like China, but they were dismissed as conservative whackos.

    For the most part, nobody was looking for the other obvious risks, risks that had become so overblown it was only a matter of time before they burst. Thus, no one seriously considered that the Chinese could simply dump so much in United States treasuries onto the market that it could precipitate a complete collapse in the global economy. That would lead to the immediate illiquidity of the banking syndicate and the United States federal banking system as a whole. It just didn’t seem like a weapon of war. Neither did a Boeing 767 before 9/11.

    It didn’t start with the Chinese. They weren’t even on the scene yet. They still had the world believing theirs was a conventional military might. No, the first tremors came from an unlikely source, the Arabs. In a way, then, someone should have seen it coming.

    Chapter Two

    To most of his friends on the West Coast, no one went to Philadelphia willingly. It was one of those cities with a reputation it didn’t really deserve. Behind the well-known visible negatives everyone knew about—the run-down buildings, the urban blight, and congestion—there was a pearl to be found by those who really knew Philly. It was a rich, historic city which simply bore the scars of time.

    Miss, said Austin, craning over the two passengers sitting next to him. Excuse me, Miss. The flight attendant ignored him, pausing only long enough to say, Please return your seat to its full upright position. We’ll be landing in just a few minutes.

    Well, that’s what Austin wanted to ask her anyway. He couldn’t wait to get off that plane. He hated feeling so cramped. The guy next to him took Austin’s armrest. Austin crossed his arms tighter and looked out the window. The fact is, this wasn’t a voluntary trip back to his hometown. News of his mother’s death had been a shock to him, even though he knew she had cancer. He always hated good-byes. He was never good at them, and now he was arriving back home in Philly to say a final good-bye to his mother.

    If you’re from Philadelphia, you know how the Schuylkill River wends its way through the middle of the city, dividing East from West. He remembered Boathouse Row and the rowing crews that sliced ahead rhythmically at all hours of the day. He hadn’t rowed since starting college in California three years earlier. Life was simple back then. What he remembered most about rowing was the pain. He discovered that his own threshold for pain was best first thing in the morning. Fortunately, that’s when his crew practiced. Rhythm and pain—that’s what he remembered most— everyone focusing on the rhythm, and fighting the pain.

    Back then he was focused. He woke up at four-thirty, went to school eight hours a day, and went out with one steady girl. Each girlfriend lasted for about a year and then one thing or another broke them up. His mother was his family. His father had died in a car crash when Austin was five and he didn’t remember anything about him. His mom rarely spoke of his dad, and he didn’t probe. Life wasn’t easy, but Austin always managed to scrape up enough money for saxophone lessons. Music—now that was the real love of his life—that and rowing. That was then. Life was simple. Now, thanks to his musical talent, Stanford University paid for his education while he played in the Stanford Cardinal’s Marching Band. He didn’t have much money, but he had survival instincts— and they kept telling him, don’t stop playing and everything will turn out all right.

    As the plane descended, he put his head back and closed his eyes. His mother’s death had caused him to think about his own life. For one thing, he knew he liked to be alone. Life was just easier that way—less complicated. That worried him, because he knew he shouldn’t become too isolated from people. His desire to be alone was also pretty confusing. Sure, he often wanted to be alone, but when he was alone, he found he was lonely. Figure that out. His studies at college went very well, but every time a relationship with a girlfriend really developed, he’d find some reason to break it off. That bothered him, too. Why couldn’t he build a lasting relationship with just one girl? They were always sexy, and some were wonderful girls any guy would be lucky to have. But it never seemed to last. Was he afraid of getting too close to anyone? Well, at least he knew his weaknesses and would work on them. That’s more than a lot of people could say.

    But there was one thing in his favor that he liked about himself—he had been a good son and had returned to spend each Christmas with his mom, even though he sometimes had trouble scraping up the airfare. Now he was glad he had.

    But enough of that introspection, he said to himself as the plane landed with a small jolt. He had to face whatever was awaiting him. Things were different now—very different. For one thing, his mother wouldn’t be waiting to meet him as she always had done. As he removed his bag from the overhead compartment, he had a feeling and sense that he wasn’t just stepping off the airplane but was also stepping into the unknown.

    Austin knew he was back in Philadelphia the moment he stepped foot in the airport. To a musician like Austin, every city had its own sound, its own tempo, its own flow. Philly’s sound was the march of time. It was straight time. You knew where it was going. Austin liked that about his hometown. It suited his sense of order. And yet, the city held surprises here and there, like a Bach fugue. Philadelphia always had a surprise when you least expected it. He looked forward to that.

    The transition from sunny California to a rainy Philly and the mourning and death of his mother had been a little too fast for Austin. His father had remained a mystery—a big unknown. He was too young when the accident happened. As he grew up, his mother had been his family and his anchor, providing the warmth of a home and stability. Now, she too was gone. Austin needed a little time to deal with that before going to his aunt’s house where he was to stay.

    He jumped into a taxi and gave his aunt’s address to the driver.

    Did I miss anything lately? Austin asked the taxi driver? Sure have, replied the driver. We’ve got a new mayor. He’s building the city up pretty well. Lots of attention.

    No more union strikes? asked Austin, remembering the garbage collectors’ strike. He had left for Palo Alto three years ago, with mountains of uncollected garbage on the streets.

    Didn’t say that! said the cabby, catching Austin’s eye in the rear-view mirror. Philly’s still Philly, he laughed.

    Speaking of which, can you take me along Boat House Row? asked Austin.

    To get to the Northeast? It’s way out of the way.

    "It’s been a while. I like to watch the crew teams working. I’ll pay for

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