Reading the early chapters of David Denby’s book “American Sucker” is like watching Leonardo DiCaprio and Kate Winslet romp about on the Titanic. It’s tolerable only because you know pretty soon someone is going to drown.
From his movie reviews in the New Yorker, you’d hardly know that Denby spent the early part of this decade not only suffering through a painful divorce, but also squandering his money on a naive leap into the stock market. But at least that cured him of his addiction to Internet porn.
His seduction by stocks and by the bull market prophesies of Merrill Lynch analyst Henry Blodget and ImClone founder Sam Waksal weren’t quite as easy to shake.
Denby got to hobnob with them, bought into their stories, and unfortunately for him, that just pulls him deeper into the world of “true believers” who lead his portfolio to ruin.
All the way, he is smitten by their confidence and, in the case of Waksal, the trappings of wealth and fame.
He describes one party at Waksal’s Manhattan loft: “The room seemed to be pulsing with light and noise, and with arrogant flesh, too. I stood off to one side, a little awed by the tall men with barrel chests…..They stood talking to beautiful Amazonian women with golden flesh and boots rising nearly to their hips.”
No matter whom he spoke to, however, Denby’s timing couldn’t have been worse. Intent on buying out his wife’s half of their apartment in order to retain some part of his previous life, he moves more of his assets into tech stocks at the height of the bubble, aiming for a cool $1 million.
Waksal, meanwhile, goes from Wall Street darling to Page 6 fodder.
“I found all this astounding as the background of a scientist, and, in fancy, I sent him out there, conquering the world, sleeping with superb women, imagining his moves as if they were an extension of my desires,” Denby writes.
“I had no desire to be friends with Martha Stewart or to date her daughter. But the scandalous bravado suggested by the dual relationship amused me a great deal. Was he a brazen sport who got away with everything, or just a creep? Sam pushed the envelope.”
Blodget image turns ugly as the market goes from rip-roaring gains to freefall.
The first time Denby encounters Blodget, at an investment conference, he’s quite taken by the up-and-coming analyst who got famous predicting shares of Amazon would reach $400.
Denby is sold on Blodget’s argument that “if you don’t invest in the Internet, you’re not hedged against the impact of the Internet on the rest of the economy.”
By the end of the book, at a dour lunch in a Greenwich Village restaurant, Denby notices Blodget taking his sweater on and off because “he no longer knew who he was-a young employee following orders, and therefore an aggrieved fellow, unfairly scapegoated for others’ sins; an opportunist making a quick fortune; or a trapped man preparing for a legal defense.”
On Blodget, who spent the lunch trying to explain how the stock bubble of the 1990s happened and who was responsible, he concludes that “he was trying to be straight and not quite making it.”
Along this ride, Denby takes Nyquil to sleep, suffers from diarrhea, frets over the market and has brief bouts of impotence.
He even has Arthur Levitt, then the chairman of the SEC, telling him that the market is due for a downturn, and Denby still doesn’t listen.
Like many Americans, he blames Blodget and Wall Streetwhen things go south, and his losses reach $900,000.
“I felt slightly used in some way, as if my trust had been borrowed and violated.”
Bull market bull
David Denby’s “American Sucker” describes the author’s fascination with stocks, as well as the meetings with Internet guru Henry Blodget and former ImClone boss, the now-imprisoned Sam Waksal.