The Whole Kitt & Caboodle: A Painless Journey to Investment Enlightenment

By Susan Laubach

Written for readers who are novice investors, The Whole Kitt & Caboodle combines Laubach's own experience as a broker and educator in the setting of a novel. Readers follow the adventures of investment rookie Missy Kitt as she seeks employment from a down-and-out brokerage house and its floundering CEO, Mr. Caboodle. Desperate for help, Caboodle hires Kitt and soon learns what a gem he has discovered. As she digs through company records and learns the secrets of the business, so too does the reader, without even realizing it. Kitt's efforts lead to a company turn-around.

• Language: English
• Publisher: Bancroft Press
• Release date: Mar 1, 1996
• ISBN: 9781890862718

Book preview

MD

CHAPTER 1: OPENING THE DOOR

KITT MEETS CABOODLE & COMPANY

My name is Caroline Crane and I work—have for almost twenty years—as a receptionist/sales support/margin clerk/and wire operator here at the investment banking firm of Kitt & Caboodle. Eight years ago, when we were still Caboodle & Company, Missy Kitt pushed open our heavy, oak-carved front door for the first time and clicked across the marble floor to my desk.

Her voice echoed eerily in the high-ceilinged former S&L where we had (and have) our office. Where do I apply for a job? said she.

What kind of work do you do? I inquired.

What kind of work needs doing? she shot back, amiably. (I liked her then and I like her now.)

What’s your name? I asked, thinking that such a smart talker would make a good stockbroker and that Mr. C should see her right away.

Kitt.

Kitt what?

She paused. It’s not Kitt-what but what-Kitt.

Okay. What Kitt? I asked.

Missy, she said, but everyone just calls me Kitt.

Just then Mr. C came out of his office. Mr. C, this lady wants a job, I told him. Missy Kitt, this is Mr. Caboodle, president of Caboodle & Company. I quickly continued before he could slide back into his office. She asked what needs doing around here and I was about to tell her brokering. What do you think?

Mr. C regarded Missy Kitt thoughtfully for a moment. I knew he was noting her long, narrow frame even though he seemed to be staring her full in the face.

She was pretty, with short, reddish blonde hair and blue-gray eyes. And she was thin. Mr. C hated fat. He was skinny and he wanted everyone around him to be skinny.

Unfortunately for us, Caboodle & Company was pretty skinny, too. At least, our part of it. We had lost all eight of our brokers to the new office of a national firm that had opened up in our town the previous month. We were down to me and Mr. C—not what you would call a formidable team.

I watched Mr. C make a couple of quick decisions in his head. You can do that with him: thoughts flit across his face like shadows. It’s like flipping through a magazine to watch him think. And I knew just which article he would land on. We desperately needed someone else to sell stocks and bonds at Caboodle & Company. Someone who would work on commission. Actually, someone who would work. Mr. C wasn’t too good at that.

After a few seconds of this intense concentration, he thrust out his hand, gave her his big toothy smile and said, Well, howdyado? What, if anything, do you know about brokering, Missy Kitt?

Just Kitt, please. No one calls me Missy. She took his hand and pumped it enthusiastically. "And I know next to nothing—no, make that nothing about brokering. But it seems to me that the opportunity for a Kitt to work with a Caboodle is just too good to pass up."

She smiled for the first time and it was like the sun had come up. I had never seen such a smile, like she was lit from within. Whaddya say? she asked the now-befuddled Caboodle.

Say? he repeated. As long as you are willing to learn this business and work hard. . . I guess I say you’re hired!

Kitt cried, YES! with delight. She grabbed his hand and shook it some more. Then she turned to me—I was still transfixed by her sunshine smile—and did the same.

Sign her up, Mrs. Crane, before she changes her mind, Mr. C said, backing into his office and shutting the door.

I smiled back at her and said, I hope you keep smiling when I tell you about your paycheck, Missy Kitt.

The light dimmed on her face. I forgot to ask about that.

Well, brokers work on commission, I said. We’ll pay you a little something while you get trained. After four months, you take your Series 7 test and we’ll give you another couple of months to get up and running. Then you’re on your own.

I didn’t want to be too discouraging, so I continued, But the work is always interesting, people need to know what you can tell them, and it’s possible to make a lot of money. Still want the job?

She paused for only a moment, then said, Sounds good.

KITT STUDIES TO BECOME A BROKER

So Missy Kitt (from Backhoe, Nebraska where her daddy had a farm, she told me) came to work for Caboodle & Company. I think I can really help my folks, Caroline, she told me right after she was hired. Dad inherited some stuff from my grandfather and has all these investments in a safe deposit box at the Backhoe Bank. None of us knows what to do with them.

I told her that I had worked for Caboodle & Company for most of my adult life and didn’t know much more about stocks and bonds than I did when I came. Well, I amended, I know a lot about how this company works and how stocks and bonds get bought and sold. Because a receptionist/sales support/margin clerk/wire operator does just about all the behind-the-scenes stuff that needs to be done when brokers are buying and selling those things.

But the real mystery for me had always been how they make anyone any money.

So maybe I can help you, too! Kitt said with what I would learn was characteristic enthusiasm.

All this pent-up demand gave Kitt incentive to start her broker-education with a vengeance. For the first four months, she studied for the required Series 7 at a desk that Mr. C had found in the basement of the old S&L and moved to the big front room where I sat. I would watch her reading the pages of the prep course and could tell the time of day by how near her face came to the book. By one o’clock, her head would begin to bob, and by one-thirty, she was sound asleep, her face resting comfortably on the cool pages. I wasn’t worried by this. I knew Mr. C was sacked out in his office at the same time. And God knows, the phone wasn’t going to wake them. (It rang so seldom that I’d pick it up now and then just to make sure there was still a dial tone.) Usually around two o’clock, Kitt would wake up, embarrassed.

Did I snore? she would sometimes ask.

Yup. Drooled, too. And I think I heard you grind your teeth, I would invariably reply.

This is the most boring thing I have ever done, she told me once during her training months.

It’ll be over soon and then the fun begins, I assured her. That was usually enough to get her back to the book again, making a gallant effort to absorb the Federal Reserve System, the Blue Sky Securities Laws, the various Investment Acts of 1933, 1934, and 1940, financial statements, and options strategies.

Eventually it was time for her to take the Series 7, the six-hour exam that the NASD (National Association of Securities Dealers) gives to all wannabe brokers in order for them to be registered with the Securities and Exchange Commission (SEC), the NASD, and the various stock exchanges.

I remember well the day I took my Series 7, Mr. C said the morning Kitt was scheduled to report to the local testing site.

When was that? Kitt asked him.

November 8, 1965. Of course, I forgot it all by November 9, 1965. We took one of those crash courses in New York and then had to go down to one of the NYU classrooms to take the test. We wrote it all out—paper and pencil, he said, in wonder, like he had hewn the exam out of stone or written it in cuneiform or something. Kitt would take her Series 7 on a computer, touching the screen to give her answers. When finished, she’d find out on the spot if she’d passed.

And, of course, she did. Kitt had practically memorized the study material. You’ll do well on commission, I told her later, when she reported her test results with great relief. Your anxiety level is high enough.

Is that what it takes, high anxiety? she asked.

Certainly helps. Think of the commission report as your report card and I’ll bet you’ll make sure you get all A’s. I knew girls like Kitt in school. C’s made them crazy.

KITT BEGINS HER NEW CAREER

Kitt began her assault on potential customers the day after she took her exam. I’m going through the Yellow Pages and calling all the accountants, she announced. Sure enough, that’s what she did. First, she called them. Then, she went to see them. Pretty soon, she was asking me how to fill out new accounts forms so that she could buy stocks for the first of her new clients.

After accountants, it was acupuncturists, then associations, automobile dealers, bail bondsmen, barbers, and beauty salon owners. She was up to building contractors by Spring. Anyone who would sit still long enough for her to introduce herself was treated to that smile and her rapid-fire pitch on Caboodle & Company, its research, and her interest in helping them make money.

Luckily, even though we had lost our retail stockbrokers in the sweep by National (they cleaned out a lot of other local firms, too), we still had some good research analysts left. These guys did good work checking out the companies with whom our other departments—Corporate Finance, Mergers and Acquisitions, Institutional Sales, and Trading—did business.

I hardly ever saw Kitt in those early days. She’d come in very early and read all the research that had come in overnight from the services we got by subscription. Then she’d read the Wall Street Journal and the Investors’ Business Daily and The New York Times, all the time making notes, cutting out stuff and putting it in her notebook.

Every day she’d leave me a long list of things to do: letters to write, tickets (those are the things brokers fill out in order to buy or sell stock) to complete and file, phone calls to make. By the time Mr. C and I had jointly pushed open the old S&L doors to start work in the morning, Kitt would be gone. But, during the day, she’d call in every hour or so to catch up on what was happening.

The woman was a dervish. Neither Mr. C nor I had ever seen such activity in a broker, old or new. Oh, she wasn’t doing any really big ticket business. In fact, her commission sheet was full of treasury trades, government agency bonds, stuff like that. No money in those things for the broker, and hardly any for Caboodle & Company either. But she was meeting people. And learning how to talk to them about stocks and bonds.

Once or twice a week, Kitt would make it back to the office before I left for the day. Then she’d sit right down at her desk and start calling whatever group she was working her way through for more appointments.

I wish I could say that this hyperactivity paid off for Kitt. She was doing everything a person could do to make it big in the brokerage business. Prospecting for customers, reading the research, getting out and talking about investments—what more could a person do? But the business didn’t come in. No one was buying what Kitt was selling: her skills as a stockbroker. People just didn’t seem to believe that Kitt could make them money. As it turned out, neither did she.

MR. CABOODLE

Now and then Mr. C would glance over the pages detailing Kitt’s commissions (her so-called commission run) and mutter to himself. There wasn’t much he could do for her since he didn’t know anything about getting business either. Mr. C hadn’t met a customer in years, maybe decades.

Mr. C is what used to be called a scion and is now referred to as a member of the Lucky Genes Club. His great grandfather had started Caboodle & Company, having made his pile in the stock market of the previous century. He and his successors managed to avoid the market’s various crashes with adroit moves at just the right times. Over the years, the Caboodle fortune had grown to where it was regularly listed in the Forbes 400. Mr. C was an extremely rich man.

Luckily for the fortune and the company, he was also a shy man with simple tastes. His interests ran along the lines of ironing his own shirts (claims it relaxes him), cooking his gourmet meals, tending his garden (okay, so it’s an orchid farm), and driving his chauffeur to and from doctor appointments and the elder care facility. His chauffeur was 86-years-old and was part of Mr. C’s inheritance. At his age, Charles needed more tending than either the orchids or the fortune.

Mr. C had never married, although many women with large teeth who looked like they could run in the Preakness had come through our doors, or called him on the phone, speaking in that strange, nasal, wired-jaw accent that must be taught in some School for the Very Rich somewhere. Tll Mr. Cbdle tht Muffy clld.

Anyway, it was clear to all three of us that Missy Kitt was getting nowhere and that Mr. C was completely unable to do anything about it.

CHAPTER 2: LEARNING FROM THE PAST

KITT REGROUPS

One day, Kitt came back to the office early. She sat down on the fake leather sofa and looked at me with large, sad eyes. I just figured something out, Caroline, she said. "I don’t know anything."

Huh? I replied.

"I read all this research and meet all these people and babble on about stocks and bonds and money market funds and I DON’T HAVE A CLUE WHAT I’M TALKING ABOUT. I’m not fit for this business at all!"

Of course you are! I said. You’re as good a broker as anyone!

She smiled weakly. "No, but I am broker than I was. Ha. Ha. I can’t even pay my rent this month. And I sure don’t want to write home for money when they’re waiting for me to do magic with Grandpa’s Portfolio."

Kitt, I began firmly, you passed your Series 7 with nearly a perfect grade. You know a lot more than you think you do.

No, I don’t. That test doesn’t teach you anything about how to make money with investments. It just teaches you about Blue Sky Laws and the Federal Reserve and other stuff that’s totally useless.

I had to agree with her there. Naturally, brokers had to learn about Securities Law so they didn’t break it (or so they’d know when they were going to break it). But stockbrokers never learn in any formal way how to advise people on investing their money, which is what most people think the job is supposed to be. The lucky ones are guided by older, experienced, conscientious brokers who keep the rookies from making too many mistakes. And it really IS luck—who you sit next to, who you become friends with. And the rookie doesn’t even KNOW whether the older, experienced guy (there aren’t many gals) is conscientious or a commission-generating con man.

Of course, none of that would help Kitt. She sat next to no one, all our former brokers having skipped to National Investments down the road. And while Mr. C was a broker, it was in name only. He rarely put in a ticket other than for his own account.

But then a thought struck me. It was weird, but it might work. And it might help both of us make some money out of Caboodle & Company.

Kitt, do you own any stocks or bonds?

You mean, other than what Dad inherited in Grandpa’s Portfolio? Of course not. You’ve seen my commission run. You buy stocks and bonds with money, and I’m not making any.

Well, I think you need to see how this stuff really works. So I’ve got an idea. She looked at me expectantly. I drew a deep breath and went on. Okay. Here it is. I’ve got a little money in CDs. (This certificate of deposit money was residue after the fast-talking former Caboodle & Company broker got through with my savings. Neither he nor I knew what he was doing. Even with Kitt’s inexperience, I thought she could do better with my money than he had.)

You match my contribution with a little of your money. Do you think your Dad would let you raise some money by selling something in Grandpa’s Portfolio?

Kitt nodded slowly. Maybe. I guess.

I continued. We’ll set up a joint account for you to invest.

You’d do that? She was incredulous.

Yes, I answered firmly. I need a good, honest broker. We’re both probably going to retire in thirty to forty years. We need to start investing now. I know that much. And I also know I’m not making anything in the CDs. This was certainly true. But, I went on, there’s a catch to this plan. Have you ever been in the storeroom here?

No. Why?

Because Mr. C has kept ALL of his family’s investment records there. Someday, he wants to write a book about the Early Caboodles. He has boxes and boxes of old statements and ledger sheets and personal diaries upstairs in the storeroom.

Okay. So what?

Look. The Caboodles were nothing if not rich. And they got that way from investing. If you go through that stuff and figure out how they did it, you can do the same thing with our money. I’d do it myself but I couldn’t really make head or tail out of it. You’ll know much better than I would what they were doing and talking about.

Kitt looked at me, dumbstruck. Then