Here’s the short story I promised yesterday. I wrote this while I was on my Mark Twain kick awhile back but nobody ever picked it up. I was going for something in his style, so maybe it came off a little inauthentic. Whatever the issue with it was, I had a good time writing it, and even enjoyed rereading it while I brushed it up just now. I hope you enjoy it too.

The Galactic Stock Exchange

A good portfolio is the key to long term financial health, or so I have been told. Naturally I was curious to know the precise nature of my health, how it was being maintained, and of course, by whom. While my employer may have set up the account, I had no idea about any specifics, and just about everything the HR rep told me about it sounded like a bunch of gobbledygook. So like any good provider would, I suited up bright and early on the first day off I had to visit the galactic stock exchange and discuss the details of my retirement. 

I met a squat fellow on the ground floor of the grand exchange, a noisy, crowded place that already had me questioning how anybody’s health could possibly be improved there. He was a swarthy gentleman, but very bright in the face, and so I steeled myself against the crowd and the noise and the general sense of great urgency and teetering destructive capacity that I was not accustomed to as a tradesman myself. A short elevator ride later, we slipped into his office high above the crowded trading floor. It was a pleasantly quiet room, though not without its own high-strung intensity.

“So, I hear you’d like to know the details of our fund?” he asked me rather magnanimously. 

Looking around, I figured he must imagine that his small stature could be compensated for by the things he stacked up in his office. It was ringed by towering bookcases full of shiny, untouched volumes that reflected my face in their many gilded spines, countless expensive knick-knacks, and an especially prominent hardwood desk, much too big for his body. He gestured to the chair I was to be seated in, tiny by comparison. 

“Yes,” I told him, squeezing into the little seat. “I’m trying to understand how the firm guarantees my financial health, as your booklet here states many times over.” 

I waved the little booklet at him that my employer gave me, a thing full of plenty of jargon, but little substance as far as I could tell.

“Ah, so you’ve already read all about us here at Strategic Trading Denominations. Well then I fail to see the purpose of our meeting. Surely it explained the method behind the madness in prudent detail? Is there some part in particular that you’ve failed to grasp?”

This grating question stroked my ego the wrong way, but given he must be an expert based on the many gilded things he surrounded himself with, I did my best to quell my quick temper. 

“Well, no part in particular, no.”

He frowned at me, a brutal expression coming from his wide lips and thick jowls, but I’m proud to say I did not falter.

“I’m just a bit confused about how the fund actually works. I mean, I see that it must be very good for my financial health-“

“Based on our thousand-year upward trend, yes?” 

He indicated with one thick finger a page from the booklet, the price chart that consisted of little more than a single line. 

“Yes, that was about the only thing I did understand.”

“Then there should be no issue for a lay person such as yourself. We put it on the first page for a reason you know.”

“I understand the logistics of an upward trend, of course,” I said, my voice straining only slightly, “but what I fail to see is why the line trends upward.”

“Oh, I see. Well the details are really quite complex,” he said with the wave of a hand, “but I assure you the trend has held steady for a millennia.”

“I can see that of course, but therein lies another issue, since I don’t understand why here,” I indicated the brief but sharp downward spike at the turn of the previous millennia, “the line went down so far. In fact, I think if you could just explain this here, then I could probably surmise the reason for the long upward trend myself.”

He sighed deeply, gutteraly, pushing the wind through his thick neck with great force. I presumed this performance on his part was to make his discontent clear. Either that or a heart attack was probably imminent.

“That was due to some unfortunate market circumstances beyond our control. Nothing to do with our practices here at STD. And besides, it happened a very long time ago. Look, are you sure you want to get mired in the details? I’m telling you, it’s terribly complicated and you may come out the other side feeling even less confident in our product.”

My eyes narrowed to slits.

“Pardon?”

“O-oh,” he stammered, realizing his blunder, “I assure you that would be a result of your inexperience, not a fault in our products.” 

A bashful smile crossed his face, one I desperately wanted to wipe off, but I urged him to give me the details once again. Specifically I wanted to know how in the galaxy he kept the price from ever falling for so long.

“If you really must know, first I have to ask,” and he said this with great distaste, as one would if they were heading into chest-deep mud in their best clothes, “are you familiar with the Bloody-Scholes model for pricing equity derivatives contracts?”

“’Bloody-Scholes?’ I thought it was the Black-Scholes equation.”

“No, no,” he said, obviously quite happy to have the upper hand on me again. “The Black-Scholes model is for pricing European derivatives. We however must use the Bloody-Scholes equation instead because we use Glimflargian option contracts to hedge our portfolios.”

“Glimflargian option contracts?”

“Well yes, naturally.”

I cocked an eyebrow, but was unwilling to show any more of my ignorance.

“Naturally. So how do these option contracts differ from the regular contracts?”

“Again, it’s really quite complicated, but to put it simply, Glimflargian option contracts are generated by accurately predicting the complex adaptive system our galactic markets are predicated upon, allowing us to avoid the peskier volatile nature of the old European or American contracts. It doesn’t really matter though, because the real reason we use Glimflargian options contracts is because the Bloody-Scholes is wrong.”

“Pardon me? Wrong?”

“Yes, wrong.”

“Well how is it wrong? And why use them to hedge the fund if they can’t be priced correctly?”

“They can be priced correctly, it’s just that nobody else knows how. The people who developed the Bloody-Scholes made a slight error that we corrected.”

“The Glimflargians, you mean?”

“No, they invented the contracts, not the pricing method. The Bloody-Scholes was developed in Kentucky.”

“Hold on, you mean to say the people who made up these contracts have no idea how to price them?”

“Well they do now, since those Kentuckians came up with the Bloody-Scholes.”

“But you say they got it wrong?”

“Oh yes, quite imperfect actually. Our pricing method is much more accurate. We’re able to make much more aggressive trades without losing money insuring them. Here, let me show you.”

He pulled a whiteboard from the corner of his office, just as overlarge as everything else, and wrote a series of complicated expressions on it in blue marker. Then he took a red marker and made several changes by crossing out various variables, constants, and figures, and then added many strange symbols I had never seen before, turning the whiteboard into a mess of red and blue squiggles that made my eyes fog over. He even went so far as to circle the whole thing at the end as if it had somehow come to some sensible conclusion while I wasn’t paying attention.

“Now, does that answer your question about the portfolio?” he asked, and took his seat again.

My mind, swarming with Glimflargian (or perhaps Kentuckian) mathematics, could not settle on the answer to his question. Did I understand? It was hard to say. The big circle was oddly compelling, I had to admit. Well, I thought, if the answer wasn’t a resounding ‘yes,’ then, it must be:

“No. Why not give everybody the correct pricing method to make sure everybody’s contracts are correct?”

“Ha!” he said, and practically cracked the shiny surface of the desk with one great slap. “If you want us to lose money, just say so!”

“I see. So, you insure the fund with these contracts, but how does it actually make any money?”

“Ah, yes, more questions. So. That is really quite complicated, but here goes. Before I begin though, do you have a good grasp of naturalistic equity manufacturing techniques?”

I shook my head, and proceeded to weather a long winded explanation of naturalistic equity manufacturing, which so far as I can grasp seems to be little more than a series of circular, pseudo-intellectual mutterings about the state of galactic equity markets and the self-multiplying nature of their underlying fundamentals. I listened while he expounded upon all statements previously made, repeating his circular logic in greater detail for reasons I cannot fathom. Just when I was hoping he was about to finish up, he stood again and erased all that was written on the board, replacing it with various shades of red, blue, green, yellow, and black. None of it seemed to add up to anything reasonable, but he did put a big circle around it at the end again.

“So,” he said, red in the face from having to stand and write on his white board for several minutes. “Does that finally answer your question?”

“Er … no.”

“Dammit man! What could you possibly still be confused about? We insure our fund better than anybody else can, and the naturalistic processes behind the market grow exponentially over time!”

“Well yes, I get that. But, and hear me out, how does that actually generate anything for anyone?”

He threw his hands up in frustration, and for a moment I thought he might demand I leave his office immediately. Then he stood abruptly, throwing his huge desk chair to the ground with a clatter that made me jump several inches and nearly topple my own chair. He ripped one of the gilded volumes from its shelf, slapped it down on the desk, flipped it to a brilliantly white page, and pointed at a diagram.

“Does this answer your question?!”

“Uh …” I peered at the triangular diagram for several tense moments, trying and failing to parse its meaning. “No.”

His face boiled over in complexion, the red spilling into his eyes until they became bloodshot, and the skin on his forehead went taut with blood pressure. Wind rattled the pages of the book as his chest heaved and his great gut displaced what must be a ton of atmosphere. 

“You must be a complete simpleton! Your pigheaded questions are going to give me a heart attack! Won’t you even try to understand the information I’m giving you before asking for more? I told you, it’s damn complicated. Why can’t you be sated with this thousand-year trend like everybody else, you lecherous weirdo? This line is very clear! Simple, see?” 

He jabbed a thick finger at the little booklet, the upward trending line on the chart. “And this diagram!” The thick finger traveled over to the volume. “It couldn’t be easier to grasp! Companies at the bottom of the fund send their money upwards,” and he dragged his finger from the small companies at the bottom of the triangle up to the top, “and the company at the top collects these naturalistically multiplied funds and insures them.” Finally, his finger finished its journey by stabbing into his own meaty chest. “That’s US! We collect the money from all the lower level firms and by doing so generate profit that is reflected in the price of the fund’s shares!”

“And what do those companies get in return?”

“The privilege of demanding money from the firms at the lower levels! Do I have to spell it out for you? It’s like a pyramid. Otherwise, how would the money get multiplied naturalistically? Don’t you get it already, you moron?”

This left me completely speechless while he returned his desk chair to its proper place. I remained inanimate as he struggled up into it, his face slowly draining of color and chest heaving down to regular proportions. I watched silently, deep in contemplation, as he pulled a handkerchief from his jacket to wipe his sweaty forehead clean. Finished composing himself, he looked back to me.

“Now,” he said through deep breaths, “either buy some shares, or get out!”

I nodded sagely, all becoming clear. 

“Well why didn’t you just lead with that? I’ll take two hundred fifty thousand shares, thank you.”