The Big Short_ Inside the Doomsday Machine - Michael Lewis [54]
Every new business is inherently implausible, but Jamie Mai and Charlie Ledley's idea, in early 2003, for a money management firm bordered on the absurd: a pair of thirty-year-old men with a Schwab account containing $110,000 occupy a shed in the back of a friend's house in Berkeley, California, and dub themselves Cornwall Capital Management. Neither of them had any reason to believe he had any talent for investing. Both had worked briefly for the New York private equity firm Golub Associates as grunts chained to their desks, but neither had made actual investment decisions. Jamie Mai was tall and strikingly handsome and so, almost by definition, had the air of a man in charge--until he opened his mouth and betrayed his lack of confidence in everything from tomorrow's sunrise to the future of the human race. Jamie had a habit of stopping himself midsentence and stammering--"uh, uh, uh"--as if he was somehow unsettled by his own thought. Charlie Ledley was even worse: He had the pallor of a mortician and the manner of a man bent on putting off, for as long as possible, definite action. Asked a simple question, he'd stare mutely into space, nodding and blinking like an actor who has forgotten his lines, so that when he finally opened his mouth the sound that emerged caused you to jolt in your chair. It speaks!
Both were viewed by contemporaries as sweet-natured, disorganized, inquisitive, bright but lacking obvious direction--the kind of guys who might turn up at their fifteenth high school reunions with surprising facial hair and a complicated life story. Charlie left Amherst College after his freshman year to volunteer for Bill Clinton's first presidential campaign, and, though he eventually returned, he remained far more interested in his own idealism than in making money. Jamie's first job out of Duke University had been delivering sailboats to rich people up and down the East Coast. ("That's when it became clear to me that--uh, uh, uh--I was going to have to adopt some profession.") At the age of twenty-eight, he'd taken an eighteen-month "sabbatical," traveling around the world with his girlfriend. He'd come to Berkeley not looking for fertile soil in which to grow money but because the girlfriend wanted to move there. Charlie didn't even really want to be in Berkeley; he'd grown up in Manhattan and turned into a pumpkin when he got to the other side of a bridge or tunnel. He'd moved to Berkeley because the idea of running money together, and the $110,000, had been Jamie's. The garage in which Charlie now slept was Jamie's, too.
Instead of money or plausibility, what they had was an idea about financial markets. Or, rather, a pair of related ideas. Their stint in the private equity business--in which firms buy and sell entire companies over the counter--led them to believe that private stock markets might be more efficient than public ones. "In private transactions," said Charlie, "you usually have an advisor on both sides that's sophisticated. You don't have people who just fundamentally don't know what something's worth. In public markets you have people focused on quarterly earnings rather than the business franchise. You have people doing things for all sorts of insane reasons." They believed, further, that public financial markets lacked investors with an interest in the big picture. U.S. stock market guys made decisions within the U.S. stock market; Japanese bond market