Gekko.

FOR macro players, as they call those who bet on the relative performance of global markets, last year was the year of the "convergence trade." The convergence trade means making a bet that interest rates in different countries -- or between higher- and lower-rated bond issuers here at home -- will come closer together.

The convergence trade is a byproduct of happy times for investors. It happens when, little by little, people stop charging a risk premium for their money. Things have been good, the reasoning goes, so things will always be getting better. The neat trick about the convergence trade is that, as every self-important money manager will tell you, "You get paid to wait." What the mini-Soros means is that he has bought a riskier asset such as, say, Italian bonds and has sold short the less risky asset, such as German bonds of the same maturity. Since the interest you earn on the risky asset is greater than the interest you must pay on the less risky asset, you earn income on the spread while you are waiting for your capital gain to come in. You are, indeed, paid to wait.

Let's say you, like many conservatives, think that perfection can't be achieved in this world, and that risk doesn't go away just because the perception of risk does. Then you would appreciate the rationale for a divergence trade, buying the less risky asset and selling short the more risky one. The problem is that instead of being paid while you wait, you are tortured while you wait. You must pay out the "negative carry" while waiting for your capital gain to come in. Most people don't have the fortitude, or maybe the spare cash, to do this. That is why the convergence trade, a form of irrational exuberance, goes on for so long.

I think 1997 will be the year of the divergence trade. Riskier borrowers will have to pay more to get money, and the investors in those bonds will lose relative to investors in less risky bonds.

It's not that I like painful things. I was pro the Canadian, Italian, Swedish- and Danish bond convergence trades this past year. But times change. Jim Bianco, of Arbor Trading, looks on the convergence trade in domestic securities -- that means buying junk bonds -- as a way fixed-income investors have played the stock market. "There is a very close correlation," he says, "between the stock indices and the spread between junk bonds and Treasuries. When stocks go up, the spreads go down."

One group that doesn't have to be told that pain is part of the investing game is gold and gold-stock investors. In the first week of the new year, the gold price dropped more than ten dollars an ounce, and gold stocks dropped even faster.

What's left as a way to play the precious-metals market? I think there's a pretty good bet in the platinum/gold spread. Usually, the price of platinum hovers at least $20 - $30 dollars above the gold price, but in recent weeks the the white metal touched the price of the yellow one.

Historically, when platinum has gotten down to those levels relative to gold, speculative interest tends to carry it back up fairly quickly. There are also good fundamental reasons to be (relatively) bullish on platinum, and the other platinum-group metals, in particular palladium.

Prices for the PGMs, as they're called in the trade, have been depressed in part by sales out of indeterminately large Russian stockpiles. Sales from those stockpiles have been one of the ways the Russian government has been making up for its citizens' unwillingness to pay taxes to a collection of grafters and criminals. According to an audit committee of the Russian parliament, sales of precious metals last year were five times what had been budgeted. At some point, probably in the months, the Russians will have only their current production to sell, and the world deficit between production and demand will lead to a significant increase in price. Demand from the automakers for PGMs for catalytic converters will continue to grow as Europe and the developing world follow the U.S. in cutting engine emissions.

So if you've decided to take your financial life in your hands by going into the commodities markets, sell gold and buy platinum or palladium.

It's not often that I like a stock with a price/earnings ratio in the 20s, but you might do worse than to take a look at Sotheby's International Holdings. The price moved up from $12 - $13 to $18 -$19 over the past year, as the Bass family moved in on a 10 per cent - plus stake in the publicly traded shares, presumably with the good wishes of Al Taubman, the controlling shareholder.

Taubman has made money on his stake, but despite his protests last year, it might be time for him to sell out -- at a price. At least in the mid 20s. He probably did all that he could to instill a businesslike attitude among the employees of the auction house. But that is truly an uphill battle with that crowd. Anyway, the art auctions last fall showed that that market was coming back to life, if not the preferred irrational exuberance. Now Sotheby's is well positioned to be bought by either a luxury goods company or a foreigner with social aspirations. The Basses aren't in there for their health. Oh, Henry Kravis is on the board, but don't expect a bid from KKR.