It’s the late 1960s, and story stocks like conglomerates and computer leasing companies are going to the moon. The consensus is that this is madness and it will all come crashing down.
In the throes of writing his classic The Money Game, George Goodman canvasses his friend, the Great Winfield, for insight. Ol’ GW can’t bring himself to buy the tech stocks: they’re expensive and he remembers all too well the early-60s bear market and the collapse of story stocks. The memory, the flickering déjà vu, they leave him frozen. His performance is lagging.
“My boy, our trouble is that we are too old for this market,” the Great Winfield laments. “The best players in this kind of market have not passed their twenty-ninth birthdays. This is a Kids’ market.”
The Great Winfield introduces Goodman to his solution to the current market: Kids. “This is Billy the Kid, Johnny the Kid, and Sheldon the Kid. Aren’t they cute? It’s their market. I have taken them on for the duration.”
Billy the Kid owns Leasco Data Processing, Randolph Computer, and a couple of other stocks that have either “Data Processing” or “Computer” in the title. “The need for computers is practically infinite,” says Billy the Kid.
“Look at the skepticism on the face of this dirty old man,” says the Great Winfield, pointing at Goodman. “Look at him, framing questions, I know what he’s going to ask. He’s going to ask what makes a company worth fifty times earnings?”
“Right,” admits Goodman. The Kids smile kindly, well aware that the older generation has trouble figuring out the New Math, the New Economics, and the New Market.
“You can’t make any money with questions like that,” the Great Winfield says. “They show you’re middle-aged, they show your generation. Show me a portfolio, I’ll tell you the generation.” He turns to his Kids, “A portfolio selling at hundred times earnings makes him go into a 1961 trauma. He is torn between memory and desire. Think back to the fires of youth, my boy.”
Goodman comes to a realization: memory can ge