Popped by a Bubble- 'American Sucker'- Little, Brown: 338 pp., $24.95
Sunday, January 10, 2004, by David Denby
reviewed by John Allen Paulos

In "American Sucker," David Denby, a film critic for the New Yorker and the author of "Great Books" (1996), a defense of the Western civilization curriculum at Columbia University, tells the story of his calamitous entanglement in the stock frenzy of 2000-02 and its (in retrospect) all too obvious consequences. Married for 18 years to novelist Cathleen Schine, Denby was dumbfounded in 1999 when she announced that she wanted a divorce. Her sudden decision to leave depressed him, and he floundered. Eventually he resolved to buy her out, in order to remain in their comfortable apartment on New York's Upper West Side. There was only one hurdle to clear: He would need to make a million dollars in 2000 to do so.

The greed and giddiness of the times made this seem an achievable goal. In thrall to various market gurus, the zeitgeist and his own frazzled psychological state, he gradually moved more and more of his assets into high-tech stocks. Along the way he met Merrill Lynch stock analyst Henry Blodget, who since has become best known, to put it kindly, for his increasingly hyperbolic recommendations of decreasingly promising high-tech companies. He also got to know Sam Waksal, medical researcher, bon vivant, entrepreneur, friend of Martha Stewart and, now, convicted felon. The portraits of these two, as well as of former SEC Chairman Arthur Levitt Jr., economist Robert Shiller, Corvis Chief Executive David Huber, high-tech pundit George Gilder and others on Wall Street, are sharp and revealing.

The antihero and focus of the book, however, is the author, whose candid self-laceration is sometimes painful to read, especially for those (such as myself and several million others) who have trod similar investment paths. His description of investors' adrenaline-charged, digitally staccato sense of time is harrowing. Those who are or ever have been mesmerized by ubiquitous market tickers, CNBC's business reporters, online brokerages and stock chat rooms will recognize the pervasiveness of Denby's obsession.

Arguably his involvement with the market was an improvement over the lonely, pornography-filled evenings that followed separation from his wife. ("Shifting from one mania to another, from porn to CNBC, and accepting greater risk in the market brought me out of despair…. I buy, therefore I am.") At least the market was out there, somewhat impersonal, and booming. Still, he was troubled. His anxiety about the Nasdaq — which by March 2000 had reached 5,000 — and its surreal stock valuations would only allow him to "pull the lids down by taking a Xanax, a beta-blocker, and a swig of the cold-and-flu remedy Nyquil."

The turmoil in his personal life and his increasingly desperate need to remain in his apartment made him all the more vulnerable to the blandishments of Gilder and other high-tech gurus seemingly in touch with the spirit of tomorrow. The "telecosm" and all its glories would take its investors to a new day and a richer life. The promise of broadband and its associated fiber-optic cables, switches, transformers and "last mile" wiring preoccupied him, as did anticipated breakthroughs in genetics, cancer treatment and cell biology generally. A combination of writerly curiosity and financial interest led him to learn a good deal about these fields and to interview some of the players.

With the aforementioned Blodget and Waksal he became friends, and the book details his ambivalent relationships with them. He admired them both — especially Waksal, the urbane head of ImClone, who embodied "a mixture of idealism, ambition, and guile the likes of which I had never encountered before in a single man." Blodget's youth and earnest responsiveness to his questions also attracted him. Gradually, of course, as the market crashed, so did his assessments of these two.

"American Sucker" is chronologically structured, and many of the chapters begin with the balance in the author's quarterly financial statements from January 2000 to October 2002. Attempting to preserve his story's immediacy, he tells it at a steady pace, never fast-forwarding and rarely flashing back. Occasionally he makes allusions to movies he's reviewed whose scenes seem apt; more often he cites authors, ranging from Aristotle to Thorstein Veblen, to buttress this or that point. Throughout, he eschews economic abstraction and investment theory, maintaining the persona of a literary intellectual recalling how he was buffeted (alas, not Buffetted) by emotional and financial squalls.

The vignettes Denby sketches are often arresting and underline the schizophrenia-inducing effects of these market squalls. As examples of the ubiquitous excited stock talk in early 2000, he describes the Nasdaq chatter between vendor and customers at a newsstand at 74th and Broadway and a total stranger a little farther down the street jubilantly exclaiming "Ericsson!" (the name of a Scandinavian telecommunications company) to no one in particular. A little later, a New Yorker colleague, business writer John Cassidy, somberly warns him, "You're going to lose your money." The scenes with Waksal span a similarly wide range, from glittering soirees at Waksal's loft in SoHo to the federal court where he pleaded guilty in October 2002.

The volatility of Denby's moods and relationships mirrors the gyrations of the Nasdaq, and he indulges as frequently in social commentary as he does in market reporting. "I was sure," he writes, "for all the neighborhood's virtues, that envy ruled the Upper West Side of Manhattan." The not-so-subtle one-upmanship — who had taken the nicer vacation, who had gone to the better restaurant, whose were the more accomplished children — was all the harder to bear as his own circumstances deteriorated. Despite this, he retains throughout his ordeal a certain tough-minded respect for greed — or at least for its motivating power.

Happily, Denby's movie reviewing, a few good friends and his two sons kept him from spinning to the bottom of the vortex set in motion by the punctured stock bubble. He never did make the million dollars he needed to buy his ex-wife's share of the apartment — in fact he lost almost that amount instead — and he had to move to smaller quarters. Nevertheless, he ends up, as this book so viscerally demonstrates, in one storm-shaken piece.

"American Sucker" is a depressingly evocative account of the collapse of the high-tech bubble by a brave writer willing to tell it the way it was for him, without resort to posturing, cant or complaint.

John Allen Paulos, a mathematics professor at Temple University, is the author of "Innumeracy" and "A Mathematician Plays the Stock Market."