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Successful commodity futures trading is indeed possible

OPTIONS & SPREADS: Today's Lessons
from the 1860s Gold Room

Early in World War II, the head of a Hollywood film studio feared the possibility of Japanese bombers attacking California. Deciding that he wanted his studio camouflaged, he called in an expert and offered-to pay any price. The expert replied, "It can't be done. You see, every camouflaged site needs a decoy site that the enemy will mistake for his target. By the way, in case you didn't know, your studio is the decoy site for the Boeing aircraft plant."

I carried that story around in my head for years before realizing what it had to do with me. It involved, to state it simply, transferring the risk to someone else. As an option spread strategist, I do it all the time. It might not sound very nice that aircraft manufacturer feared the whipping post and so exposed the back of that studio head. Nevertheless, with stocks and futures and options, that item called the risk factor has filled too many financial coffins. If you can pass the ball of risk to some other player and still collect a percentage of the gate, you do it. "Spreads" in the game-plan score points. Crucial ones.

Of course, you also need good mental furniture upstairs, and that you are too smart to buy a gold brick might not be enough. In an old comedy film, the Bowery Boys buy a "valuable mansion sight unseen at a fabulous bargain price." They arrive in their jalopy to behold a decrepit wreck that vaguely resembles a mansion. One of the gang says, "But we've only seen the outside. Don't judge a book by its cover."

"Yeah," retorts another, "but you don't have to open the box to know you bought a hunk of Limburger cheese." They should have smelled the stench earlier, when a fast talker not listed in the phone book offered a deal too good to be true. Let us see if you can "pick up the scent" with the following quick quiz on investments:

1. At an archaeological excavation, a coin is found in fair condition and bearing the date 240 B.C. Do you think it is genuine and a good "collectibles" buy?

2. For Sale: Civil War memorabilia. Confederate war medals, gray uniform remnants, and a CSA battle saber. Would you purchase?

Answers: You probably spotted the ruse behind the ancient coin in question #1. The coin-makers back then did not know at the time that they were living 240 years before Christ. #2 would even have fooled many Civil War buffs due to a fact not widely known: Confederacy did not award medals.

3. For Sale: From the 1800s, election campaign buttons & posters urging citizens to vote for the "log cabin" presidential candidate. Whose name should appear on those buttons and posters?

4. An Old West stock promoter with derby, bow-tie and satchel steps out of a time machine and offers to sell you certified shares in the Pony Express. The shares are genuine and you have admired that glorious enterprise since you were a kid watching cowboy movies. Dividends if declared will be paid with 20-dollar gold pieces that will travel through time. Would you invest?

Answers: William Henry Harrison in the year 1840. It should be of interest to business people that was the first "smart advertising" presidential election campaign. W.H. Harrison's opponents jeered at his humble birth and said, "The White House is too good for him. All he deserves are a log cabin and a jug of hard cider." His supporters and campaign managers realized that many voters slept there and drank that.

So the cabin and the jug appeared prominently on posters and buttons. The losing side had the cold comfort of knowing it provided the winning advertising angle. Since Harrison died after only a month in office, he inevitably became one of the less-remembered presidents. Yet the notion of a "log cabin president" lingered long enough in people's memories to attach itself to the better-known Abe Lincoln. But if you see a wooden structure and the words "Vote for Lincoln," the poster is fake.

Far weaker and short-lived than its legend, the real Pony Express lasted less than two years (1860-61)land was a financial failure. It was bad news for share-holders long before it became a feed bag for boots & saddle screen-writers. Everybody remembers the heroic gallop across the Rockies, the six-shooter protecting the mail, but does anybody remember the scorched investors?

5. For Sale at Hollywood Auction: Classic movie props including the "rosebud" sled from Orson Welles' Citizen Kane. The problem is, everyone saw that sled incinerated at the conclusion of the film. Did it rise phoenix-like from the ashes or is this a hoax?

6. You have in your possession what appears to be an old Action Comics comic book. In it, Superman cannot fly but can only jump large distances. It's fake, sure. Everybody knows he flew.

Answers: "The sled" that appeared in the masterpiece Citizen Kane was actually 2-½ sleds. One descended the snowy Colorado hillside, the other was burned, and the half a one was burned during the camera close-up of the word "rosebud." The first still exists and brought huge bids.

When first presented to the world by creators Segal & Shuster, Superman could not fly but was an awesome jumper. Hence the phrase "able to leap tall buildings in a single bound." Dated 1938, those issues #1 are worth an astronomical sum. So if you open an old comic book and see a caped jumping jack.

Although mostly about collectibles, the preceding quiz has three messages or morals-of-the-story for traders in options, futures and stocks. One: Be alert and aware, and you will know sooner than some which financial boxcar carries the De La Renta perfume and which the fertilizer. Two: God is in the details. Three: What "everybody knows" is often not true and is definitely insufficient for traders and investors.

Regarding what "everybody knows" and what many investors believe about all sorts of things, it is essential that the successful trader or investor be a skeptic. That is, he must explore the jungle but he must not be the dupe who reads the sunny advertising and then pets a venomous snake. A businessman checked into a hotel down south and then approached a black hotel employee. He said "I'm a practicing Baptist and tomorrow is Sunday. Do you know a church around here I can go to?"

"Well, a couple of blocks east of here is the white Baptist Church and a couple of blocks west is the African Baptist Church that I attend. The only difference is in some of the Scriptural interpretation."

"What kind of difference?" "Well, you have to understand that being black makes a fellow skeptical. You don't always accept the official explanation. At the white Baptist Church, they state that the pharaoh's daughter found the infant Moses in the bulrushes. At the African Baptist Church we state, "That's what she says!"

In a movie on TV -- a 1930a romantic comedy -- the following dialogue occurs: He: "The doorman of this hotel was a general in the czarist army." She: "Didn't the czarist army have any privates?"

She sounds like a gal who became skeptical from hearing the same fibs too many times. When a self-declared "Hollywood talent scout" opened his wallet to pay her restaurant bill, she also sounds like a gal who would have spotted his meat-cutter's union card.

Skepticism and an eye for detail. This came to mind a couple of days after the death of Frank Sinatra, as I watched a TV ad of a futures & options broker. Years ago in Atlantic City, signs and cards in store windows announced a live performance by Frank Sinatra Junior. The "Frank Sinatra" was in big block letters but you needed a magnifying glass to see the "Junior." In the broker's TV spot, "200 to 300 Percent Profit Potential!" took up most of the screen but "risk is involved," was junior-size. Advertising people describe that as playing up the good and playing down the minus. Cold comfort to those whose trades perform off-key.

This deserves emphasis because when you quest for a diamond mine, there are so many ways that the money in your checkbook can become somebody else's diamond mine. Be especially skeptical and attentive to detail when anybody tells you that things have "changed so much" or "improved so much" since the old days. Among the many old books in the New York University library is Ten Years in Wall Street by William Worthington Fowler, published in 1873. No computers or Fax machines, of course, but otherwise the place resounded with familiar rings.

Back then, a huckster could sell you fake stock certificates in a company that did not exist. Today that is far more difficult if not non-existent, but then as now there were also plenty of perfectly legal ways to fleece investors on a woolly mammoth scale. During the Civil War Era, railroads were becoming a mature industry, but mining stock and oil stocks boomed (and busted).

Textile merchants from Upper Broadway, lawyers from Albany, church pastors from the river counties, all types of people with disposable cash swarmed to Wall Street and jostled each other in line to buy newly-issued stock -- men lured by headlines that told about gold strikes out west but not about sly-fox arithmetic on the investment end. Fowler called many of these corporations "bubble companies," i.e., destined to grow big on hope and anticipation and then burst. Black Mountain Gold, Silver and Copper Company sold $1,000,000 in stock and then spent $1,000 on mining land. Grand Junction Gold Mining Company sold shares for $1,800,000 and bought $40,000 worth of property.

No ore strikes, but most of the difference went into the pockets of mining executives and stock promoters whose "mother lode" was the investors' wallet. With headlines only part of the inducement, the advertising and hard-sell proved muscular. The scenario repeated with oil-drilling shares. Fowler said:

"A volume might be written to describe how the English language was twisted and turned, to paint the prospect of fortunes and avoid the legal liabilities incident to false representations; how the bubbles shone as if colored with every brilliant dye that could be extracted out of Petroleum; what engines were set at work to bring in the public; what stool-pigeons were called from the solid and respectable circles, from the halls of legislation, from the learned professions, and from the church, to entice dupes, and feather the nests of needy adventurers; how the owners of lands that smelt of oil, the mineralogists, the geologists, and chemists were in clover, and then to tell how one by one the phantom-flowing wells dried up, the magnificent oil territory became abandoned to its original desolation, watched over only by skeleton derricks, while the thousands of victims came dropping in, file after file, to draw their dividends, as the bubbles were bursting."

That is, to ask for dividends that did not exist as expensive share certificates turned into scrap paper. Today's history books give an unbalanced picture, telling of oil and gold bonanzas but not of stocks cramming a thousand tinder boxes. Do not tell me that this is no longer the 1860s, that this no longer happens. Any second now my phone may ring and another broker-dealer will try to sell me an initial public offering. This stock is expected to climb extraordinarily. Large numbers of people want to buy in but are being turned away disappointed. However, a limited number of shares have been set aside for select customers such as yourself." In other words, his desk is piled high with paper hard to get rid of. The skeleton derricks reappear like hovering ghosts.

Nor is this the only thing that did not end with the gaslight. Not all blameless innocents, many speculators make the same mistakes today that they made when Jenny Lind warbled. Back then, Uncle Sam bought and coined so much gold that a strong federal government was believed to mean an ample supply but, of course, shortage or fear of shortage was what boosted the price per ounce. Thus good news for the federal government meant a fall in value of yellow metal and bad news a rise.

During the Civil War, telegraph lines hummed to and from many locations, including blue-coat command tents in the field and the cavernous Gold Room near Wall Street. News of a Confederate victory lifted the price of gold and a Union victory lowered it. Allegiances notwithstanding, long players cheered Chancellorsville and booed Gettysburg, and short-sellers the reverse. A European-born broker on the floor of the Gold Room offered William Worthington Fowler a standard deal: A contract for delivery of $100,000 worth of the precious metal, three percent margins short or long.

Fowler wrote a check for $3,000 and said, "Go short at the market." It must have been a good week for Beauregard's troops because the metal rose. The floor broker said, "Oh, Mishter, tish all right. You geep your poseetion. But I musht have more marchin. Gif me dree tousand dollars more and I geep you short of gold, den you mak monish." That broken English cantata was destined to be sung twice more and responded to twice more, with a total loss to sweet William of $12,000: Futures trading's old "add cash" bubble-burst.

It has been a long time since Grant and Lee locked glances through field telescopes. But has anything changed? Traders still write check after check to put up "more marchin." Has anyone not heard the phrase "throwing good money after bad?" Think of Henny Youngman in heaven as a doctor of finance. "Doc, it hurts when I do that." "Well, then, don't do that!"

A far sadder story involved a friend of Fowler's whom he identified only as "L." The price of gold fell when General Sherman took Atlanta but afterward climbed repeatedly to Lee's delaying tactics against Grant's Petersburg Campaign. L had enjoyed much success as a trader, with a hefty bank account and a brownstone home in Manhattan. He wanted one more triumph before carrying his winnings away from Wall Street. With gold at 200 he shorted $100,000 worth.

It climbed to 210 and he proceeded to do "averaging," a maneuver that served him well in the past as with railroad stocks. Averager's logic said that gold had to decline 10 pts for him now to break even but if he shorted another $100,000 worth at 210 it only had to fall 5-pts. He did so, and again at 220 and again at 230 and . . . Relentlessly he must have repeated to himself, "This averaging works but ya gotta stick with it to the Gates of Hell!" The final tally was a $600,000 loss, wiping out trading capital, savings, brownstone, and leaving a $30,000 debt on money borrowed.

L died six-weeks later in the attic of a decaying tenement, his sobbing wife by his bedside and only moonlight illuminating the room. We need not search far for a financial autopsy report and a second opinion. One of W.D. Gann's later Axioms: "Averaging a loss is the worst mistake an investor can make." A statement by Christopher Morley: "If you have to keep reminding yourself of something, maybe it isn't so." Dr. Henny Youngman's remedy: "Don't do that."

Another Ironclad Axiom of W.D. Gann and others: "Don't buck the trend." Adding more and more margin money to a trade going the wrong way and averaging a loss whether with stocks or futures or options are both bets that lilacs abound in a box that smells of Limburger. Both involve throwing good money after bad when the Maxim is: "Cut losses short." A bet against the trend relies not only on a future U-turn but on a U-turn within specific time and space frames. An alcoholic may lick it and a mugger may reform but probably not in time to speak at the seminary graduation.

When two Greeks meet, they open a restaurant. When two sailors meet, they start a crap game. When two speculators meet, they talk about the market. "How did you do?" "I broke even." If you believed all the "former generals" off the immigrant boats, the mili-military corps in the old country must have been the only army in the world with no privates. If you believe all IPO touts, no newly-issued stock will ever nosedive. If you believe all traders, nobody ever did worse than "break even." That's what they say!

Dictionaries define "fish story" as "a lie or exaggerated tale." In a glaring omission, they do not define a broker-dealer's pitch or a futures & options TV spot or a speculator's Chapter 11 "break even." Without prevarication, I wish to tell of non-fatal snake-bite in the diamond region.

With horizontal calendar spreads, my standard strategy includes call options over a stock that is rising and has a conservative price/earnings ratio or put options under a stock that is declining and has an inflated P/E ratio. The options should be out of the money with a strike price four and a fraction or more from the price of the underlying shares. In late April 1998, IBM with its conservative P/E fluctuated on the Big Board between 109 and 111. Call options with a strike price of 115 seemed worthy of perusal.

Calls of that strike price with May expiration dates were skinny dollar-wise due to the lack of time value. Junes and Julys had ample meat on the bone. My "credo" holds that the short end or near-in-time end of the option "spread" should be worth at least two points and preferably more. Also that the short end should be worth more than half the long end or far-in-time end, and preferably around two-thirds. At the time, IBM's June 115 calls traded at about 3-½ and the July equivalents at about 4-½.

An IBM earnings report was due presently but was expected to fit analysts' expectations. I phoned the broker and said, "I want to enter a spread order with IBM call options, the buy and the sell going in together, each dependent on the other. I want to buy 10 IBM call options July 115 and sell 10 IBM calls June 115, with debit of 1-point. These are both to open a position and both day orders."

The young man taking my order happened to be a broker-in-training who asked, "The Junes that you're selling--are they covered or uncovered?"

"With a horizontal debit spread," I explained, "the short end of the spread is covered by the long end. So the bought Julys cover the sold Junes."

That meant that if the 10 Junes were exercised and I had to come up with 1,000 shares of IBM to cover the obligation, I could obtain them by exercising the 10 Julys I was to own. Broker exigencies require that this "safeguard" exist on paper but the careful and capable spreader makes sure that it is never used. Those "long end" or bought options are trader's treasure not to be exercised.

The "one-point debit" meant that the 10 Junes could be sold at any price and the 10 Julys bought at any price but that the difference between an option bought and one sold could be no more than $100, or $1,000 on 10 bought and 10 sold. In other words, I expected what I bought to be worth $1,000 more than what I sold, with what I sold plus one grand out of my own pocket paying for what I bought. The report came back at the end of the day: Nothing done.

Early the next trading day, I entered an identical order except now with a 1-1/8point debit, i.e. $1,125. The news came a couple of hours later. I sold 10 Junes at 3-3/8 ($3,375) and bought 10 Julys for 4-½ points ($4,500). The money from the sold Junes paid for most of the bought Julys except for $1,125 plus brokerage commissions out of my own capital. My gold was in the gap or spread & profit-potential in the hoped-for widening.

There are no sure things. Spreads are risk-reduction strategies but not risk-elimination. IBM's earning report came in just one penny per share over analysts' expectations, which according to most theories should not have caused the stock price to jump but did anyway. It leaped 5 & a fraction then kept climbing in smaller increments. Rising above 115 it placed my short-end options in the money, first fractionally and then a full point at 116, then more.

When it hit 116, I said to myself, "It's in forbidden territory and not just fractionally. I should pull out." Deep in-the-money "short" or "obligation" options carry risk of "overnight exercise" between trading sessions, so I was determined to do something before the end of the trading day. Another danger of a stock pushing an option more than fractionally into the money is that it "squeezes" the spread, narrowing the gap when the profits are in its widening. That shrinkage prompted me hesitantly to end the sortie.

The shares crossed 117 and the gap narrowed a bit. Why did I not pull out or close the position when my better judgment told me to do so at 116? The reason that afflicts every flesh & blood trader: The hope of a turn-around, the bet on a U-turn that has not happened yet, a de facto wager against the trend. I could envision it falling below 115 in a hour like a dollar lottery player envisions millions or a failing restaurant owner anticipates crowds.

Had I said to the broker, "Buy back the Junes at the market to close the position, sell the Julys at the market to close the position," the worst would have happened. "At the market" usually means the worst--buying back at the ask price or the too high price of the bid/ask gap and selling at the bid price or too low price. So I asked the broker for each option's bid, ask and "last traded at" prices. When the Junes last traded at less than the ask price, I entered an order to buy back 10 at the last-traded-at figure. When the Julys last traded for more than their bid price, I offered to sell 10 for that higher figure to close the position.

Buy low/sell high has special meaning for the option spreader closing a position. Being choosy at the outset over how wide an opening spread is another crucial factor. On this 1-1/8 point spread I lost 1/8 of a point plus commissions. It could have been worse. A couple of years ago, I bought into a 1-½ point or $1,500 spread. Subsequent figures went against me and I closed out "at the market" with a final 7/8 of a point. After commissions this amounted to a loss of nearly half the investment.

Why markedly less damage this time? No more "at the market" has to be one big reason. Perhaps an even bigger one is my insistence on a narrower gap at the start. To reiterate guidelines from my previous article: A single-point debit is pure gold but hard to find. 1-1/8 is excellent and less rare. 1-¼ and 1-3/8 are fine and okay respectively. Half avoid 1-½ and wholly avoid 1-5/8 or more. Less width at the start means bigger and more frequent gains, fewer and smaller losses, at the conclusion. Although this recent IBM venture showed loss, I thank Providence that the beginning spread was not 1-½ or 2 points!

The above statements are made with the qualifier that I am not what you would call philosophical about adversity. Futures broker and independent trader Stanley Yabroff said while lecturing to a New York University finance class, "You learn from your mistakes, not your successes." The financial wipe-out rate among futures speculators is variously estimated at between 80 and 90 percent. Could it be that Stan was trying to sugar-coat the setbacks in a field that is 80 to 90 percent setbacks?

Everyone has heard the adage, "A fool and his money are soon parted." Did you ever hear the following saying? "The fool became wise and wealthy because of the experience." You did not because I just made it up and even I do not believe it. Yes, we can learn from our mistakes and profit from them. Yet many, many a trader keeps writing checks to the broker and does as badly on the last one as on the first. "Den you mak monish." Aim for more profits and fewer mistakes, especially repeated ones and ones you see others commit. Remember the little-known proverb: Experience is what you get when you didn't get what you wanted.

Nevertheless, experience can serve not only to instruct but to test a methodology. After closing out IBM, I pondered American Express which I had been watching. In itself, blue chip status means little to me. "Everybody knows" you cannot lose with blue chips just as "everybody knows" Abe Lincoln was the original Log Cabin President. Yet American Express had a fairly conservative price/earnings ratio of 25 or 26 and what looked like a solid "floor of support" around 100 for shares hovering between 104 and 106 after their gradual climb recently.

A horizontal calendar spread with call options having strike prices of 110 seemed a good idea, more so since near the end of April the June 110 calls were meaty at around 3-½ and the Julys around 4-½. I like the near-in-time option to be "at least 2 or 2 & a fraction and to be worth more than half the far-in-time one," as mentioned among the rules of hammered-out practicality that served me in the saddle. That alone eliminates huge numbers of options from consideration. I instructed the broker to sell 10 American Express June 110 calls and buy 10 July 110s at a one-point debit. Nothing done. The next day I added 1/8 of a point to the debit figure.

I bought 10 Julys for $4,625 (4-5/8 - ½ points) and sold 10 Junes at $3,500 (3-½ points) and paid $1,125 (1-1/8 points or the difference) plus commissions. Frankly, this bit of sailing has proven less than sunny and breezy. At the time of this writing -- a trading day and a half past the five-week mark -- the July 110s trade at 2 and the Junes at 5/8 (June 2, 1998). Not only would the gain after commissions be runty if I closed the position now but the timing has been lethargic. Experience with options spreads has accustomed me to a three to four-week window of time. I would take profit something like a day after the three-week mark or a couple of days sooner than four-weeks.

American Express has been a long trek to small nuggets, and it still might not pay completely for the prospector's donkey. Yet everything is relative, especially amid the skeletons of men and longhorns. Whoever bought those June options I sold has lost more than 80% thus far. Whoever bought Julys at the same price I did but without spreading is down nearly 60% and falling.

There could be a turn-around but options, like futures contracts, are "wasting assets," i.e. burdened with expiration dates. Will John Dillinger reform in time to speak at the commencement?

Spread methodology's armor has been dented but proven effective by experience. Thanks to spreading, I protected my financial metaphor aircraft plant by exposing a June movie studio and a July iron foundry to most of the risk & loss bombing hazard. Fallibly, I kept hoping for an upward thrust of American Express shares to push the short and long ends (near-in-time and far-in-time ends) of the spread farther apart. A strong floor of support held for the stock price, but alas, likewise a ceiling of resistance. Yet in Contrast to the Verdun-size losses routinely suffered by options traders as well as futures traders, the spread strategist perennially has blessings to count.

Merriam-Webster's definition of "Perennial:" Persistent, Enduring. Related to "Perennate": To live over from season to season. Synonym: Continual. Wouldn't it be nice if those terms described the activities of many speculators? Great Axiom: Handle trading like a business, not like a gamble. Many traders cannot because they are not around for longer than a "poker marathon" length of time. Try to imagine a Cartier or a Duncan Phyfe attempting to run business in circumstances where the statement "I'm cleaned out!" comes so quickly. If the words "perennial" and "continual" and "ongoing" were merit badges or guild medals, the spread strategist would have a nice drawer full.

Why is writing repeated checks to a broker a bad way to become "on-going"? Business-wise, it bears an uncomfortable resemblance to opening a shop of the same type and at the same location as the one that went broke. It bears an even worse resemblance to the casino gambler who says, "Maybe switching to another table will change my luck." On-going business success means getting plenty of mileage out of the original stake, not repeatedly bleeding your bank account.

In my recent years of trading options through York Securities in Manhattan, the only "second check" I wrote to them was to buy into the Alliance Money Market Fund. I have not added money to my trading account, officially called the margin account. Now, however, I am about to write another check to open an additional trading account at a different discount brokerage house -- "opening a second shop" as the Italians say -- and entirely with money from options-related profits. The struggling actor who achieves success always recalls the date on which he received The Phone Call. If I could recall the date I first read about horizontal calendar spreads, it would be framed in red on my wall.

My article references to culture, fine arts, literature, have evoked different reactions from different subscribers, mostly favorable. Yet I did not realize how much this was needed until I just read about the growing popularity of "dead pools," that is, gambling pools in which people bet on the future deaths of celebrities in the coming year or month. Many people collected on Frank Sinatra, some on Dana Andrews and Dorothy Lamour. Princess Di and John Denver surprised everyone; practically no bets. This macabre type of wagering is done by employees in many business offices and on the Internet. Are you ready for worse news?

"But it was on Wall Street -- where betting is like breathing -- where the ghoul pool found a permanent home," wrote Laura Pedersen-Pietersen in the New York Times Money & Business Section. She quoted Tony DeMartino who worked on the American Exchange for 40-years as saying, "The death pools have been around as long as the exchanges, because during market lulls traders sit around for hours looking at one another in utter boredom. They do stuff like this to stay awake." (June 7, 1988)

How is that for an astounding confession? Has culture gone that far downhill since the days when Wall Street moguls rode horse-drawn hansom cabs to the art museum and the opera house? All right, there have always been con-men and sneak-thieves on the Exchanges and the Curb and the Gold Room. Yet plenty of club men gave profound attention to King Tut's archaeological treasures when these were brought to New York. During lulls on the exchange floor, talk could turn to Rodin's statuary or a performance by Caruso.

With today's technology, anyone can bring to the trading pits an earphone containing Debussy's piano or a symphony orchestra and Shostakovich. A satchel can hold vivid, detailed color-reproductions of paintings by Titian and Boucher to which cameras 75-years ago could never remotely do justice. Yet floor traders "sit around for hours looking at one another in utter boredom" and "stay awake" by betting on stars' obituaries. Talk about an idle mind being the devil's playground.

In the pockets of the "open outcry" hand-signalers? Not Homer's adventures on the wine dark sea, not the make-the-milkmaids-blush humor of British Jacobean playwright Thomas Middleton, not archaeology memoirs by Sir Arthur Evans or Lord Carnarvon, but a pad bearing the names of Rod Steiger, Jessica Tandy, Abe Vigoda, also the crossed out names of Jimmy Stewart, Tiny Tim, and Brian Keith who helped to hurry things along. A hero to the dead pool crowd. This vultures-passing-the-time speculation "found a permanent home" on "Wall Street -- where betting is like breathing."

Please, dear financial reader, have better ways than this of handling your free time or your idle interludes. If you want evidence on the importance of culture, look at those who lack it as they watch the embalming tables as well as the dice tables. Even if your monetary ventures are not Astor or Vanderbilt size (and hardly anybody's are), cast yourself in the role of the carriage-trade tycoon enjoying art works excavated from Pompeii or Gounod's haunting marble halls music or Anton Chekhov's short-literature sojourns to Russia's wooded marshes as the mists rise and disappear into twilight. You will feel little "utter boredom" and even less yen to gamble with autopsy rooms.

A better item for your pocket than a "Mickey Rooney this year?" marker may be Richard Muther's book The History of Painting. Muther wrote of Tiziano Vecellio (aka Titian): "The beautiful sunny October days, when thick blue grapes gleam from the dark foliage; when the leaves shimmer in warm, brown tones, and succulent fruit loads the trees -- such is Titian's season. It is no accident that he is so fond of placing a basket of ripe apples in his pictures of the Madonna, or of giving his daughter a bowl of fruit. These peaches, grapes, melons, and oranges in their gleaming, golden splendor meant for Titian what the lily did for Botticelli, the master of the springtime."

The painting of the artist's 18 or 19-year-old daughter holding the autumnal bowl was described in detail by Frank Preston Stearns in his book Four Great Venetians: "Lavinia bends slightly backward to support the weight of the fruit; her hair is rolled back gracefully under a jewelled crescent, and her light mantle falls in a loop from her shoulders relieving a bust like pink snow. The painting of her neck is of itself a most interesting study. Slashed sleeves, a necklace of Roman pearls and a girdle of chased (set with gems) silver, produce a princely richness of effect."

The term "culture" has multiple shades of meaning. Several months ago I wrote about H.L. Mencken's statement that the ghosts of primitive peoples have short life-spans. Members of primitive tribes see spooks from their father's time, sometimes their grandfather's, but none from farther back in time than that. As new ghosts are added to the folklore, old ones are forgotten. Also, stone age and jungle peoples tend to lack history books and portraits which feed memory and imagination.

I compared this to certain segments of our civilized society: Right-wing reactionaries who declare themselves "traditionalists" and cherish their "golden yesteryear" but whose knowledge of the past is so meager that it cuts Irving Berlin's career down to a spotty latter half. Well, the process continues this very moment. More ghosts and yesterdays disappear. Whole decades vanish to Unremembered Land. Vaudeville memories fade; enter I Love Lucy memories.

A former FBI agent and prosecutor, Frank Keating is now the Republican governor of Oklahoma. After two boys ages 13 and 11 were charged in the shooting deaths of four students at a Jonesboro, Arkansas school, Governor Keating wrote a piece for the Wall Street Journal April 10, 1998 in which he reminisced about when he was 11 years old in the 1950s:

We know the popular culture both shapes and reflects its time and those who inhabit it. What was different about the popular culture in 1955?

"The big movies of 1955 included Mr. Roberts, Marty and Oklahoma! All three celebrated certain worthy values-courage, fidelity, love, devotion to duty. Two had villains, but they were made to pay for their misconduct in the final reel. I don't recall any sex, nudity or graphic violence in those films, which still delight cable TV audiences almost half a century later."

He went on to hatchet today's raunchy rock lyrics in contrast to 1955's Yellow Rose of Texas and concluded, "As a former prosecutor, I would feel confident in indicting the popular culture as an accessory to the Jonesboro murders."

Note the 1950s slant. Judge Robert Bork praised 1930s Tin Pan Alley songs and 1930s film censorship under Will Hays. Apparently Governor Frank Keating's cultural memory is even more stunted than Bork's. Right-wing reactionary "good old days" disintegrate in wholesale lots. '30s and '40s slip through the cracks. Like the ghosts of shamans and witch doctors they do not lasts.

If Governor Keating had known classical Greek culture, he would have known that Sophocles' drama Oedipus Rex has been performed for 2,400 years without causing men to murder their fathers or marry their mothers. If he had known Italian culture, he would have known that Verdi's opera Aida, has not caused any young lovers to be buried alive. If British culture, he would have known that Shakespeare's play King Lear has not provoked young women to gouge out their fathers' eyes. If French culture, that the voluptuous nudes in the Delacroix paintings -- conquered, chained, enslaved -- have not yet compelled children to go around hanging chains on undressed women.

There is nothing wrong with Rodgers & Hammerstein. However, there is plenty wrong with so-called "traditionalists" for whom "The corn is as high as an elephant's eye" marks the outermost boundary of the then-known world. When a governor's horse-blinder pronouncements got into the Wall Street Journal and traders do D.O.A. wagers "on Wall Street -- where betting is like breathing," can this be called encouraging?

Trading can be a business instead of a gamble. There can be traditionalists worthy of the name. When you make choices, regard these two as key choices. No longer do Yankees who are long gold root against General Grant but other absurdities persist. People thirsting for excitement still turn speculation into a crap-shoot because they cannot tolerate a good business with idle periods. Rachmaninoff or Pavarotti on an earphone can help you avoid a skeleton oil derrick, and there's plenty to avoid. Happily, there is also real "black gold."

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