Hedge fund pioneer Jerrold Fine discusses his career and his novel, Make Me Even and I'll Never Gamble Again.

71cd8pNIskLIn his unfinished novel The Last Tycoon, F. Scott Fitzgerald wrote that there are no second acts in American lives. While this statement is widely quoted – or misquoted, according to purists – clearly it does not apply to Jerrold Fine, whose life has had at least three acts. Having begun his career in New York City after graduating in 1964 from Wharton, Fine at age 24 was one of the pioneers of hedge funds on Wall Street. The fund that he and his partners launched in 1967 grew by the 1970s to become the largest in the industry. Fine left the partnership in 1976 to set up his own firm – Charter Oak Partners Management – in Connecticut. That second act continued through 2014, when he converted Charter Oak into a family office to embark on Act Three. At age 72, Fine chose to become a novelist.

His debut novel – titled, Make Me Even and I’ll Never Gamble Again – was published in August, and it packs the power of a Babe Ruth home run. Its multi-layered narrative is at one level a coming-of-age tale of a middle-class kid from Cincinnati named Rogers Stout. His father is a dedicated doctor who cares deeply for patients. After considerable soul-searching, Rogers chooses not to follow his father into medicine but decides to go to business school and pursue a career in finance. The novel paints an affectionate portrait of the Wharton School in the 1970s. At the same time, Make Me Even is the story of life on Wall Street in the turbulent 1970s and early 1980s. At its heart, it is the saga of a brilliant young man’s efforts to cope with an unhealed – and possibly unhealable — wound.

Readers get an early glimpse of that trauma in the opening pages when Stout, the narrator, says: “My mother died when I was a young boy, a tragedy my dad and I shared but rarely talked about. It was an open wound that refused to heal.” Given the intense demands of his father’s practice at the local hospital, Stout is compelled to learn what it means to be alone; he spends a lot of time in the kitchen, yearning for his mother’s presence. Even so, father and son share an enduring closeness, nurtured in part by their shared enthusiasm for poker. For years, on Friday evenings, both bond over so-called gambleathons in which no real money changes hands but still are fiercely competitive. As Stout says, “Gloating was permitted. Poor sportsmanship was discouraged.”

Poker and Profits

Stout’s interest in finance is ignited in his junior year in high school. He lands a summer internship at Prescott & Prescott, a local stock brokerage and investment banking firm whose offices have a “sweeping view of the Ohio river and the neighboring state of Kentucky.” Stout prepares for the job by going to the local library and reading everything he can learn about the firm. In the interview, his supervisor, a finance executive named Andrew Stevens, asks Stout if he really wants to become very rich. “I don’t know what it’s like to be rich,” he replies, “but I do know what it’s like to win.”

Stout soon proves he knows how to win. Two seasoned traders – Ronnie Davis and Jimbo Burns – take the lad under their capacious wings, and one evening, they invite him to dinner to celebrate the year’s largest trade. Before long the revels move across the Newport Bridge into Kentucky and a lively poker game ensues, during which Stout demonstrates his mastery and wins a windfall of cash. The traders are impressed. They realize – as does Stout – that the same skills that make him an exceptional poker player could serve him as well in a financial career.

Make Me Even is the story of life on Wall Street in the turbulent 1970s and early 1980s.”

Stevens, Stout’s boss, suggests that he prepare to enter the world of investment by studying business and finance at his own alma mater, the Wharton School of the University of Pennsylvania. The scene in which Rogers tells his father that he wants to study business rather than medicine is among the novel’s most moving. Disappointed at his son’s decision but still unfailingly empathetic, Dr. Stout tells Rogers: “I’m so proud to be your father. I only wish your mother were here to witness your growth and development. If you want to head off to Philadelphia, do it. I’m sure you will impress them and excel at whatever you choose to do.” Rogers, who hates to cry, cannot hold back his tears.

For all his brilliance, Stout is still an emotionally vulnerable teenager; he begins a hesitant romance with Charlotte Marks, the daughter of one of his father’s colleagues. Before he leaves for college, the couple go with their friend Ronnie Davis to a poker game, where they meet Everett, a factory worker. Stout is in top form and keeps winning even as Everett keeps drinking and betting while his losses multiply. Realizing the extent of his devastation, Everett rolls his eyes to the “Heavenly Big Guy” and begs: “Make me even and I’ll never gamble again.” Stout is in a quandary: Fairness dictates he should claim his winnings; kindness prompts him to let Everett off the hook. Charlotte helps him deal with the dilemma when she says, in tears, “You can’t take his money.” Stout listens to her, seeks out Everett and presses the money into his hands. An act of compassion solves the problem.

At B-school in Philadelphia

Stout arrives at Wharton to find himself in a savagely competitive environment. “Every Whartonite knew that job recruiters emphasized class rank, so it wasn’t surprising that the student body was exceptionally and often ruthlessly competitive,” he realizes. “Most of the better students could read the assigned materials and regurgitate the answers with little effort. The fun came when one of the school’s finest went on the offensive. These were the types who were attracted to the smell of blood in the water.” Rivalry doesn’t intimidate Stout; it stimulates him. He falls in love with Philadelphia and the Penn campus, with its “dormitories first built all the way back in Ben Franklin’s era, stately College Hall, the absolutely magnificent Furness Library, and even the dignified Penn Art Museum.”

In class, following Stevens’s advice, Stout slogs hard to learn the concepts and rules of accounting. One of his favorite faculty members is a sociology professor named Dr. Whittles, “who was sort of an outlaw who created a syllabus meant to encourage debate and debunk preconceptions” – and whose first words in each class usually were, “Okay, my friends, let’s tussle.” Whittle’s approach to teaching is to avoid prepared lectures. Instead, believing that heat generates light, the professor provokes students to debate opinions. “He rarely offered his own view, even when the controversy rose to a fever pitch. His goal was to make his flock think for themselves.”

Another impressive professor is Dr. Townsend, who teaches Money and Banking. Initially, Stout finds this course – which focuses on the Federal Reserve and discount rates – pure torture. Eventually, he accepts that even though the professor is not particularly likeable, he prepares students for the kind of “hand-to-hand combat” they will face after they graduate. “College professors don’t have to be warm and fuzzy or outwardly entertaining,” he recognizes. “If they can stimulate students to attack new ground vital to future understanding of a subject matter, if they can drag them through the labyrinth of a complex topic and come out of that maze on sure footing, then their charges will have earned their knowledge the hard way.”

“…The one crucial ingredient of the investment brew that you can’t buy in any store, find in any book, or uncover under any rock, is judgment.”

The professor who has the greatest impact on Stout, though, is Wharton’s Finance department star, Bates McNeer, who has arrived in academia via an unusual path. Having grown up on a farm in Delaware, McNeer got his baptism of fire in finance as a penniless clerk on Wall Street, where he saw the carnage unleashed by the stock market crash of 1929 and the Great Depression that followed. A shrewd observer of other people’s mistakes, McNeer made his fortune when the markets recovered – and then declared it was “time for a change.” A graduate degree from Wharton in hand, he joined the faculty for a dollar a year. By the time Stout arrives, McNeer has become a tenured faculty member who wins rave reviews as the school’s best teacher, whose classes are “standing-room-only affairs.”

Stout finds McNeer’s class riveting. The reason is that the professor treats his charges not as students but as budding securities analysts. The class is his “research department; he is the senior portfolio manager.” After a brief series of lectures, McNeer asks his students to analyze companies and share their findings with the class. Each student is asked to “prepare a significant report on a selected company detailing thorough analysis of its income and cash-flow statements, balance sheet, footnotes, specific company dynamics, a snapshot projection of its future, and an attempt to determine the company’s equity valuation.”

As the students stare blankly, McNeer explains why these skills are critical. He drives home his most crucial point: “…you can study balance sheets and read income statements until you’re dizzy, you can seek advice from the best financial minds of the day, but the one element, the one crucial ingredient of the investment brew that you can’t buy in any store, find in any book, or uncover under any rock, is judgment.”

McNeer’s class is oversubscribed. So Rogers, ever mindful of the connection between gambling and financial markets, plays a poker game with the professor who, despite having a winning hand, graciously accepts him in his class. One of McNeer’s most challenging assignments is having the students analyze a proposed and well-publicized merger between West Pecos Pipeline and Gulf Oil. It is clear why the pipeline’s shareholders, who stand to bag a handsome premium, want the buyout. What is less obvious is what the takeover would mean for Gulf Oil.

Most students believe this to be a win-win transaction. Stout, however, doubts whether the professor would pose such an easy challenge. The deal feels just too pat. He keeps digging deeper to discover the hidden catch – and finally finds it in a “Legal Issues” footnote. West Pecos Pipeline faces an environmental liability lawsuit – whose exposure could impact its future and greatly magnify the risk for its potential buyer. Stout is meticulous in doing his homework – and eventually is the only student to speak out in class against the merger. The scenes in which Stout defends his analysis against some of his smartest, richest and most entitled peers are among the most dramatic in the novel.

Impressed by Stout’s performance, McNeer recommends Stout as an entry-level security analyst to Burr, Addington & Merrit (BAM), an investment bank in New York. A few weeks before graduation, Stout gets a signed job contract from the investment bank. Also attracted by Stout’s brilliance is Elsbeth Aylesworth, a highly intelligent and seductive class beauty. Should Stout stay loyal to his first love, Charlotte Marks — who has moved to Cambodia to work with Doctors Without Borders — or transfer his affection to Elsbeth Aylesworth, whose presence makes his pulse race? That is the dilemma that the 21-year-old faces as he graduates from business school and prepares to take his first job in New York.

Freedom Road

Initially as a trainee and then as a junior securities analyst at BAM, Stout is now able to put his ideas into action. The novel follows Stout as he steadily builds his personal investment account by exploring opportunities that had germinated during the Wharton years. Among them, he closely follows Resorts International, a casino operator that is making a big bet on Atlantic City, hoping to create an East Coast rival to Las Vegas casinos. Instead of relying just on what he reads, Stout makes several trips to the construction site to speak with the workers and learn for himself what is going on. As the stock gradually rises, well-meaning advisors suggest that he sell to safeguard his profits. But Stout’s appetite for measured risk, coupled with his gambler’s instincts, encourage him to hold on to his investment even after it has tripled in value.

BAM offers Stout opportunities to learn from seasoned players who have seen many ups and downs in financial markets. Among them is his boss, a professorial senior stock analyst named Ezra Carter, who, when he wants to attract Stout’s attention, shoots paper clips with a rubber band at the partition between their offices. Stout also gets to know others at the firm, including Paal Van Horn, a foul-tempered Dutchman with legendary impatience. He is BAM’s “resident soothsayer with a formidable batting average,” and arrives at his investment recommendations through arcane technical analysis. Stout’s job is to provide seniors at the firm with broad summaries on company fundamentals, but his passion is to spend time on companies on which BAM has not reported. He keeps trolling new ideas in the hope of uncovering one or more “hidden jewels.”

“Will Stout’s ability to take measured risks help him navigate these threats and achieve his dream of financial independence?”

Meanwhile, with his first love Charlotte still in Asia, Stout regularly spends his weekends with Elsbeth Aylesworth, who has grown up surrounded by wealth. Though he is attracted both to her brains and her beauty, he wonders if she will understand his journey, or “how much joy I experienced when succeeding in the stock market or even pulling off a small coup at a poker table in Kentucky. Of course, the bigger the pot, the better but that wasn’t always the point. I loved winning at any game in which thinking was involved.”

Stout’s investment in Resorts International pays off handsomely – and his personal investment account, on which BAM’s compliance staff and his boss Carter keep an eye, becomes massive for a man still in his 20s. Such victories encourage Stout to take on bigger risks. He researches the potential impact on oil prices if the Shah were to be overthrown in Iran and dips his toe into the dangerous world of commodities trading. He considers short selling bonds – based on the view that inflation could trigger an increase in interest rates and make the bond market collapse. As Stout wades into these potentially treacherous waters, his business associates issue a warning. Carter tells Stout that he imagines he is “an oil market maven and a Fed policy seer wrapped in a packet labeled HUBRIS in capital letters.” Everything seems a little too rosy.

Greek mythology long ago recognized that hubris usually gives way to nemesis. As the British humorist P.G. Wodehouse once wrote in his inimitable style, it is just when “a fellow is feeling particularly braced with things in general that Fate sneaks up behind him with a bit of lead piping.” Will Stout’s ability to take measured risks help him navigate these threats and achieve his dream of financial independence? Or will his gambler’s instinct prevail and impel him to extend himself too far? If the latter were to happen, Stout might have no choice but to turn his eyes to heaven and plead – as the factory worker Everett had done years earlier – “Make me even and I’ll never gamble again.”

This review contains no spoilers; readers will have to discover for themselves how it turns out for Stout in his financial as well as romantic life. Still, one conclusion emerges clearly from the narrative. In the end, Stout will never be even. His drive to win is rooted, above all, in the void left by his mother’s death. That is a wound that neither money nor love can heal. F. Scott Fitzgerald would probably agree.