Bricks in the Wall, Chapter 45: Money Matters
Title: Money Matters
Characters: Sylar, Peter Petrelli
Rating: G
Warnings: None
Word count: 2,800
Setting: The Wall
Summary: Sylar stumbles onto an unexpected area of knowledge for Peter.
Notes: I woke up thinking about how Sylar and Peter were like salt (salt of the earth, very practical) and pepper (spicy and preservative), their initials being S&P. Then I got to thinking of the S&P 500 and a fic happened. Sorry it's a little light on plot, but maybe you wanted to know something about money management?
“What is a stock?”
Peter blinked at him from across the small table in the ice cream parlor. A waffle cone of green, pistachio-almond ice cream was in one hand. “Where'd that come from?”
“You said in that dream you recounted yesterday that you told Charles you knew how to pick a stock. So … what is a stock?” Sylar had a bowl before him with a small scoop of orange sherbet and a matching scoop of vanilla. He had been methodically taking a spoonful of one and then the other, intermittently watching how Peter used his tongue on his cone. Talking would draw out the process.
Peter's brows drew together in puzzlement. “Nathan didn't know?”
Sylar paused in the middle of acquiring another spoonful of vanilla. “I get to talk about what Nathan knew?”
“Uh ...”
Sylar shrugged and jumped in with an answer before Peter retracted the implied permission. “He joined the Navy, went to law school, started a family, and went into politics. He never had to think about money. His parents bankrolled him, bought his house and car for him, everything. As long as he did what he was told, money would never be an object for him.” Sylar huffed slightly. “I'm not Nathan. Money matters. What's a stock?” He ate his latest spoonful, pinning Peter down with his gaze.
“Okay.” Peter took a few more licks of his cone and ordered his thoughts. “A stock is a share of company. Like … a person has a business, selling flowers or pizza or making cars, and they want more money to expand their business or maybe they're just selling it so they can retire. They'll offer it for public sale through a financial institution, offering people shares of it, like percentages of the value of the company.”
“So that's what the '51% ownership' stuff I've heard about means? That they sell 49% of the company and keep 51% for themselves?”
“Exactly. That's if they want to keep running the company. And people buy it because they think the company will be worth more in the future. So they buy a thousand dollars worth of the flower shop thinking that after the owner (who after selling shares is called the president because he's no longer the sole owner) expands the company, then their thousand dollar share will be worth two thousand dollars.”
“Shares are all equal?”
“They're all equal in the same company, but as far as the shares of one company versus the value of shares of a different company go, those are always different. Because shares can be resold later, if you want your money back or you decide to invest somewhere else, you'll offer your share for sale and it sells for whatever other people are willing to pay for it.” Peter paused to swipe off the melting skein of green ice cream from the bottom of his cone. “That might be less than you bought it for, but hopefully it's more. And whatever the current market rate is for your share indicates the average market rate for everyone else's shares of the same company.”
“So they're … tokens … in representation of money.”
“In representation of portions of ownership of companies, who are hopefully doing things that make money. Picking a stock means trying to guess which companies are going to do well and be worth more tomorrow or next year or ten years from now, and avoiding companies that are going to do badly because their management sucks, or they're in a sector of the economy that isn't going to do well.”
“You know a lot about this.” Sylar leaned forward and put down his spoon, intent and fascinated. “I've heard them on the news make stock reports about the Dow Jones and S&P 500. What are those? They aren't companies, are they?”
“No, the things they're reporting on aren't companies. They're indexes. An index is an attempt to figure out which direction the economy is going, how the average business is doing in a certain field of business. So people pick a certain number of companies, like for the S&P (that's Standard and Poor's, by the way), they pick five hundred companies they think represent the economy, then they add together the dollar value of a percentage worth of each business, and the sum of all five hundred is a number they call the S&P 500. Then they track how that value changes, up and down, and announce it as a sort of barometer of how the economy is doing.”
“And the same for the Dow Jones?”
“Yeah, but there's a bunch of different Dow Jones indexes. I think it's the industrial one that gets all the press, but I might be wrong. Companies like Sears and … uh, Ford and 3M and stuff are in it. Every now and then the people at Dow Jones decide that a particular company no longer represents the market share they picked it for and they'll delist it and pick something else. Like maybe Wal-Mart's on there now instead of Sears. I don't know.”
“But following one of these indexes doesn't tell you how your particular company is doing, does it?”
“No.” Peter made a round of nibbling out all the exposed nuts from his ice cream. Sylar took a bite of his own to pass the time, waiting for Peter's eventual continuation. “Most people don't buy shares of individual companies, because that's really risky. If the company gets a bad manager or they have a fire or get sued, then you'll lose all your money. So most of the money that gets invested gets invested in money market funds.”
Sylar's brows twitched upwards and he gestured for Peter to continue, a warm, growing smile on his face at having unexpectedly discovered some gem like this within his companion. It was better than watching him lick frozen dairy products!
“A money market fund is where they take your money and pool it with money from other investors, and then use that pool of money to buy … well, like they'd take the S&P 500 and buy one share of each company on it. Or maybe they buy a thousand dollars worth of each company. I'm not sure about the details, but you get the point?” Sylar nodded. “So that way, risk is spread out over a bunch of companies. If the economy goes up, your fund value goes up, too.”
“But you don't get any of that increase unless you sell your stocks, right?”
“Sort of.” Peter made an ambivalent shrug and head tilt, with something of a wince on his face. “You see, if you invest a thousand dollars and after a year it's worth twelve hundred, you could sell it all and have twelve hundred dollars. Then you could turn right back around and buy another thousand dollars worth of the same fund or stock, and you'd have the two hundred dollars leftover to invest somewhere else. Or go out to dinner or whatever.”
“You have to pay taxes on it, right? Because that's income? Is that why people don't sell it and just keep cash all the time?”
“No, not exactly.” Peter gave another uncertain roll of his shoulders and facial tic. “You see, the theory is that to have that thousand dollars to invest, you had to earn it somehow and you paid income taxes on it then. So like if you went out and earned a thousand dollars, you'd have to pay two or three hundred of that in taxes. If you decided to invest what was leftover, then you've already paid your dues. There's still capital gains taxes, which you have to pay if you cash out, but there's a lot of ways to get around that.”
Sylar studied Peter's face. He'd seen that expression before. Peter did not approve of something. “So what's wrong with it?” He had to wait through another round of licking and nut-nibbling, beginning to wish he'd picked a time when Peter wasn't doing something so distracting to have this conversation. On the good side, Peter was nearly done.
“Most of the money that's out there being invested isn't 'earned'. No one had to go out and work for it, so taxes were never paid on it. Not that I think people should have to pay taxes, but it supports the public good and everyone who has a lot of wealth manages to avoid doing that through this whole investment loophole.”
“If the money isn't earned, then how do they …?”
“The usual way is inheriting it. Look at Nathan. Or me. But let's go back to that issue of investing a thousand dollars - which maybe was earned normally through work, sure - and getting twelve hundred back. You re-invest that thousand and now you have two hundred dollars of untaxed profit. Or if it is taxed, it's more like a few percent than twenty or thirty. But there's ways around that and reinvestment is one of them. Pretty soon, you have a lot of money that was never earned at all. At least not the way most people think of 'earned.'”
“But you're still having to leave it invested in all these companies, so it's money you can't use, right?”
Peter chuckled and started in on eating off the edges of the waffle cone along with bites of softened ice cream. “Yeah, but, you know, you can invest it in a company whose job is to pay you a salary and buy you a house.”
“You can?”
Peter laughed now, gesturing jauntily with what was left of his cone. “I don't know, but what I do know is that there's a whole lot of dodges and loopholes. The reason why people with any wealth do this sort of stuff is because it pays off. It's unfair. It's the people who happen to have more, due to birth or accident, using their power to aggrandize and profit themselves, refusing to help others.”
“Maybe they just picked good stocks.”
“Maybe. But that's pretty much accidental. Monkeys can pick good stocks. In fact, chimps regularly outperform money market fund managers, but there's other reasons for that.”
“You said you could pick a good stock!”
Peter chuckled again. “Right. As good as any monkey.” He popped the last bit of cone in his mouth and munched happily on it.
Sylar frowned. He still had a lot of ice cream left. Even though Peter had been doing most of the talking, he'd been listening and thinking rather than eating. Well, and watching Peter eat, which was the whole point of coming to the ice cream parlor. “Okay, so what are the other reasons why chimps outperform money market fund managers?”
“Well, for one thing, fund managers aren't paid a commission of your profits. Instead, they're usually paid a percentage of each transaction. For another, there's no inside track of secret information that lets you know how the economy is going to go in the next year or whatever. These people can't time travel and they don't have precognition, so they have no idea. But back to that first point - you see, you invest your money with them and they get paid, but then they won't get paid again until you sell and reinvest. But it's not really to your advantage to sell and reinvest, so the fund managers will set it up where they force you to do it by occasionally declaring a particular fund to be unprofitable or a poor investment, and they'll close it down and direct everyone to reinvest in a new fund that they say will be a lot better. Or, as often happens, they'll do this automatically because you gave them permission to handle your money as they saw fit.”
“Isn't that illegal? They can't just make up reasons to charge you!” He remembered Virginia urging him to apply for a job as a 'nice banker', but the way Peter talked about them, some of them were corrupt. But what did Virginia know?
“Yeah, it is. It's called 'churning'. But the thing is, it's really hard to prove because the fund managers will pick funds that aren't performing well and they'll have as good a reason as any other. No one really knows what going to happen in the future, so you can't criticize based on saying they have poor judgment. Of course, if they churn too much, their clients will leave them.”
“Why does anyone use them at all?”
“Because most people don't want to spend their time actively managing a fund and making that many stock transactions. The people with lots and lots of money hire someone to do it for them.” Peter's voice trailed off into introspection. He wadded up his napkin and scrubbed at a spot on the table that was no dirtier or cleaner than any other spot.
“How do you know all of this?”
“There was a rally at college, talking about how unfair the wealth distribution was in the US. Of course, they were kind of preaching to the choir, but the kids of a bunch of really rich people are the ones most able to do something about it. We had some meetings about it, some of the social rights groups, talked about it a lot. And then at the end of every college year, in the spring, they'd have these seminars given by the financial groups, talking to people about how to manage money and invest it. I went to a series by … um, Morgan Stanley Dean Witter? I think that was it. Anyway, it was like six or seven sessions for free. I think they were hoping people would use them as a money manager afterward, but I just wanted to know how it all worked.”
“Curiosity? You?”
“Heh. Money's like a power, Sylar, an ability. And it was one I had. I wanted to know how to use it to make a difference.” Peter wandered off behind the counter to help himself to a glass of water, using the semi-clear plastic courtesy cup out of an adherence to social mores that was weird considering they were the only two people in the world. Just as politely, he brought a similar cup back for Sylar, unasked. “So of course, like an idiot, I came home and started asking way too many questions. Dad wasn't there at first, so I went through his study and called his financial manager, Mr. Wilson. Even though he didn't tell me much of anything, Dad still fired him and made sure I knew it was my fault. That just asking too many questions had ruined this other guy's life. Or rather, led to my dad trying to punish me by ruining someone else's life. That's all it was to him - someone else's life was just a tool to try to intimidate me.”
“That's when-” Sylar paused, evaluating the wisdom of blurting out something he knew only from Nathan's memories, but Peter seemed okay with it at the moment. It wasn't like Sylar was claiming them as his own, which was when Peter reacted the worst. “That was when you had the big fight with him, about Linderman.”
“Yeah. He was laundering mob money. That's what it all came down to. It started in Vegas, went through waves of investment and reinvestment, and came out as untraceable, cleaned cash.”
“Which bought my house.”
Peter glared at him, nose wrinkling slightly as his fingers curled into fists. Sylar leaned back, mouth opening in slack-jawed confusion at the sudden change in mood. Peter drew in a deep, carefully controlled breath, pushed himself off from the table stiffly, and stalked away.
Sylar exhaled as the glass door shut behind Peter with an incongruously cheery tinkle from the bell over it. He was glad the slip hadn't resulted in anything worse, but sorry the conversation was over. He frowned at his half-eaten ice cream, then tossed it into the trash unfinished. So. How a person gains their money means a lot to him. That's useful to know. I don't think he'd approve of me making gold, but I bet he'd be fine with me restoring timepieces.
Characters: Sylar, Peter Petrelli
Rating: G
Warnings: None
Word count: 2,800
Setting: The Wall
Summary: Sylar stumbles onto an unexpected area of knowledge for Peter.
Notes: I woke up thinking about how Sylar and Peter were like salt (salt of the earth, very practical) and pepper (spicy and preservative), their initials being S&P. Then I got to thinking of the S&P 500 and a fic happened. Sorry it's a little light on plot, but maybe you wanted to know something about money management?
“What is a stock?”
Peter blinked at him from across the small table in the ice cream parlor. A waffle cone of green, pistachio-almond ice cream was in one hand. “Where'd that come from?”
“You said in that dream you recounted yesterday that you told Charles you knew how to pick a stock. So … what is a stock?” Sylar had a bowl before him with a small scoop of orange sherbet and a matching scoop of vanilla. He had been methodically taking a spoonful of one and then the other, intermittently watching how Peter used his tongue on his cone. Talking would draw out the process.
Peter's brows drew together in puzzlement. “Nathan didn't know?”
Sylar paused in the middle of acquiring another spoonful of vanilla. “I get to talk about what Nathan knew?”
“Uh ...”
Sylar shrugged and jumped in with an answer before Peter retracted the implied permission. “He joined the Navy, went to law school, started a family, and went into politics. He never had to think about money. His parents bankrolled him, bought his house and car for him, everything. As long as he did what he was told, money would never be an object for him.” Sylar huffed slightly. “I'm not Nathan. Money matters. What's a stock?” He ate his latest spoonful, pinning Peter down with his gaze.
“Okay.” Peter took a few more licks of his cone and ordered his thoughts. “A stock is a share of company. Like … a person has a business, selling flowers or pizza or making cars, and they want more money to expand their business or maybe they're just selling it so they can retire. They'll offer it for public sale through a financial institution, offering people shares of it, like percentages of the value of the company.”
“So that's what the '51% ownership' stuff I've heard about means? That they sell 49% of the company and keep 51% for themselves?”
“Exactly. That's if they want to keep running the company. And people buy it because they think the company will be worth more in the future. So they buy a thousand dollars worth of the flower shop thinking that after the owner (who after selling shares is called the president because he's no longer the sole owner) expands the company, then their thousand dollar share will be worth two thousand dollars.”
“Shares are all equal?”
“They're all equal in the same company, but as far as the shares of one company versus the value of shares of a different company go, those are always different. Because shares can be resold later, if you want your money back or you decide to invest somewhere else, you'll offer your share for sale and it sells for whatever other people are willing to pay for it.” Peter paused to swipe off the melting skein of green ice cream from the bottom of his cone. “That might be less than you bought it for, but hopefully it's more. And whatever the current market rate is for your share indicates the average market rate for everyone else's shares of the same company.”
“So they're … tokens … in representation of money.”
“In representation of portions of ownership of companies, who are hopefully doing things that make money. Picking a stock means trying to guess which companies are going to do well and be worth more tomorrow or next year or ten years from now, and avoiding companies that are going to do badly because their management sucks, or they're in a sector of the economy that isn't going to do well.”
“You know a lot about this.” Sylar leaned forward and put down his spoon, intent and fascinated. “I've heard them on the news make stock reports about the Dow Jones and S&P 500. What are those? They aren't companies, are they?”
“No, the things they're reporting on aren't companies. They're indexes. An index is an attempt to figure out which direction the economy is going, how the average business is doing in a certain field of business. So people pick a certain number of companies, like for the S&P (that's Standard and Poor's, by the way), they pick five hundred companies they think represent the economy, then they add together the dollar value of a percentage worth of each business, and the sum of all five hundred is a number they call the S&P 500. Then they track how that value changes, up and down, and announce it as a sort of barometer of how the economy is doing.”
“And the same for the Dow Jones?”
“Yeah, but there's a bunch of different Dow Jones indexes. I think it's the industrial one that gets all the press, but I might be wrong. Companies like Sears and … uh, Ford and 3M and stuff are in it. Every now and then the people at Dow Jones decide that a particular company no longer represents the market share they picked it for and they'll delist it and pick something else. Like maybe Wal-Mart's on there now instead of Sears. I don't know.”
“But following one of these indexes doesn't tell you how your particular company is doing, does it?”
“No.” Peter made a round of nibbling out all the exposed nuts from his ice cream. Sylar took a bite of his own to pass the time, waiting for Peter's eventual continuation. “Most people don't buy shares of individual companies, because that's really risky. If the company gets a bad manager or they have a fire or get sued, then you'll lose all your money. So most of the money that gets invested gets invested in money market funds.”
Sylar's brows twitched upwards and he gestured for Peter to continue, a warm, growing smile on his face at having unexpectedly discovered some gem like this within his companion. It was better than watching him lick frozen dairy products!
“A money market fund is where they take your money and pool it with money from other investors, and then use that pool of money to buy … well, like they'd take the S&P 500 and buy one share of each company on it. Or maybe they buy a thousand dollars worth of each company. I'm not sure about the details, but you get the point?” Sylar nodded. “So that way, risk is spread out over a bunch of companies. If the economy goes up, your fund value goes up, too.”
“But you don't get any of that increase unless you sell your stocks, right?”
“Sort of.” Peter made an ambivalent shrug and head tilt, with something of a wince on his face. “You see, if you invest a thousand dollars and after a year it's worth twelve hundred, you could sell it all and have twelve hundred dollars. Then you could turn right back around and buy another thousand dollars worth of the same fund or stock, and you'd have the two hundred dollars leftover to invest somewhere else. Or go out to dinner or whatever.”
“You have to pay taxes on it, right? Because that's income? Is that why people don't sell it and just keep cash all the time?”
“No, not exactly.” Peter gave another uncertain roll of his shoulders and facial tic. “You see, the theory is that to have that thousand dollars to invest, you had to earn it somehow and you paid income taxes on it then. So like if you went out and earned a thousand dollars, you'd have to pay two or three hundred of that in taxes. If you decided to invest what was leftover, then you've already paid your dues. There's still capital gains taxes, which you have to pay if you cash out, but there's a lot of ways to get around that.”
Sylar studied Peter's face. He'd seen that expression before. Peter did not approve of something. “So what's wrong with it?” He had to wait through another round of licking and nut-nibbling, beginning to wish he'd picked a time when Peter wasn't doing something so distracting to have this conversation. On the good side, Peter was nearly done.
“Most of the money that's out there being invested isn't 'earned'. No one had to go out and work for it, so taxes were never paid on it. Not that I think people should have to pay taxes, but it supports the public good and everyone who has a lot of wealth manages to avoid doing that through this whole investment loophole.”
“If the money isn't earned, then how do they …?”
“The usual way is inheriting it. Look at Nathan. Or me. But let's go back to that issue of investing a thousand dollars - which maybe was earned normally through work, sure - and getting twelve hundred back. You re-invest that thousand and now you have two hundred dollars of untaxed profit. Or if it is taxed, it's more like a few percent than twenty or thirty. But there's ways around that and reinvestment is one of them. Pretty soon, you have a lot of money that was never earned at all. At least not the way most people think of 'earned.'”
“But you're still having to leave it invested in all these companies, so it's money you can't use, right?”
Peter chuckled and started in on eating off the edges of the waffle cone along with bites of softened ice cream. “Yeah, but, you know, you can invest it in a company whose job is to pay you a salary and buy you a house.”
“You can?”
Peter laughed now, gesturing jauntily with what was left of his cone. “I don't know, but what I do know is that there's a whole lot of dodges and loopholes. The reason why people with any wealth do this sort of stuff is because it pays off. It's unfair. It's the people who happen to have more, due to birth or accident, using their power to aggrandize and profit themselves, refusing to help others.”
“Maybe they just picked good stocks.”
“Maybe. But that's pretty much accidental. Monkeys can pick good stocks. In fact, chimps regularly outperform money market fund managers, but there's other reasons for that.”
“You said you could pick a good stock!”
Peter chuckled again. “Right. As good as any monkey.” He popped the last bit of cone in his mouth and munched happily on it.
Sylar frowned. He still had a lot of ice cream left. Even though Peter had been doing most of the talking, he'd been listening and thinking rather than eating. Well, and watching Peter eat, which was the whole point of coming to the ice cream parlor. “Okay, so what are the other reasons why chimps outperform money market fund managers?”
“Well, for one thing, fund managers aren't paid a commission of your profits. Instead, they're usually paid a percentage of each transaction. For another, there's no inside track of secret information that lets you know how the economy is going to go in the next year or whatever. These people can't time travel and they don't have precognition, so they have no idea. But back to that first point - you see, you invest your money with them and they get paid, but then they won't get paid again until you sell and reinvest. But it's not really to your advantage to sell and reinvest, so the fund managers will set it up where they force you to do it by occasionally declaring a particular fund to be unprofitable or a poor investment, and they'll close it down and direct everyone to reinvest in a new fund that they say will be a lot better. Or, as often happens, they'll do this automatically because you gave them permission to handle your money as they saw fit.”
“Isn't that illegal? They can't just make up reasons to charge you!” He remembered Virginia urging him to apply for a job as a 'nice banker', but the way Peter talked about them, some of them were corrupt. But what did Virginia know?
“Yeah, it is. It's called 'churning'. But the thing is, it's really hard to prove because the fund managers will pick funds that aren't performing well and they'll have as good a reason as any other. No one really knows what going to happen in the future, so you can't criticize based on saying they have poor judgment. Of course, if they churn too much, their clients will leave them.”
“Why does anyone use them at all?”
“Because most people don't want to spend their time actively managing a fund and making that many stock transactions. The people with lots and lots of money hire someone to do it for them.” Peter's voice trailed off into introspection. He wadded up his napkin and scrubbed at a spot on the table that was no dirtier or cleaner than any other spot.
“How do you know all of this?”
“There was a rally at college, talking about how unfair the wealth distribution was in the US. Of course, they were kind of preaching to the choir, but the kids of a bunch of really rich people are the ones most able to do something about it. We had some meetings about it, some of the social rights groups, talked about it a lot. And then at the end of every college year, in the spring, they'd have these seminars given by the financial groups, talking to people about how to manage money and invest it. I went to a series by … um, Morgan Stanley Dean Witter? I think that was it. Anyway, it was like six or seven sessions for free. I think they were hoping people would use them as a money manager afterward, but I just wanted to know how it all worked.”
“Curiosity? You?”
“Heh. Money's like a power, Sylar, an ability. And it was one I had. I wanted to know how to use it to make a difference.” Peter wandered off behind the counter to help himself to a glass of water, using the semi-clear plastic courtesy cup out of an adherence to social mores that was weird considering they were the only two people in the world. Just as politely, he brought a similar cup back for Sylar, unasked. “So of course, like an idiot, I came home and started asking way too many questions. Dad wasn't there at first, so I went through his study and called his financial manager, Mr. Wilson. Even though he didn't tell me much of anything, Dad still fired him and made sure I knew it was my fault. That just asking too many questions had ruined this other guy's life. Or rather, led to my dad trying to punish me by ruining someone else's life. That's all it was to him - someone else's life was just a tool to try to intimidate me.”
“That's when-” Sylar paused, evaluating the wisdom of blurting out something he knew only from Nathan's memories, but Peter seemed okay with it at the moment. It wasn't like Sylar was claiming them as his own, which was when Peter reacted the worst. “That was when you had the big fight with him, about Linderman.”
“Yeah. He was laundering mob money. That's what it all came down to. It started in Vegas, went through waves of investment and reinvestment, and came out as untraceable, cleaned cash.”
“Which bought my house.”
Peter glared at him, nose wrinkling slightly as his fingers curled into fists. Sylar leaned back, mouth opening in slack-jawed confusion at the sudden change in mood. Peter drew in a deep, carefully controlled breath, pushed himself off from the table stiffly, and stalked away.
Sylar exhaled as the glass door shut behind Peter with an incongruously cheery tinkle from the bell over it. He was glad the slip hadn't resulted in anything worse, but sorry the conversation was over. He frowned at his half-eaten ice cream, then tossed it into the trash unfinished. So. How a person gains their money means a lot to him. That's useful to know. I don't think he'd approve of me making gold, but I bet he'd be fine with me restoring timepieces.