Nothing But Money

The young man of means awoke in his thirty-eighth-floor Manhattan aerie high above the East River. Below he watched the sun rise up over Queens and spread across the towers of the Upper East Side. He could see the millions just beginning to awaken. The lights on the 59th Street Bridge still twinkled in the gray dawn, and one by one, the good people of Manhattan were rising to face the day. Lights went on all around him. He was up at 5:30 a.m. every weekday, out the door by 6:30, at his desk by 7. He embraced his early morning enthusiasm. He couldn’t wait to get to work. He was going to make money, lots of money, more money than a young man of twenty-seven deserved to make. This was it. He had arrived. He stepped into the shower and prepared to march forward.

He told people he lived on Sutton Place, an address synonymous with wealth and Upper East Side taste. He told people he lived down the street from the secretary general of the United Nations, who lived in a house built for the daughter of J. P. Morgan. Henry Kissinger was his neighbor.

Marilyn Monroe and Arthur Miller once lived within these city blocks of exclusivity. Sutton Place was a place unto itself, blocks from the subway but attractive to people who wouldn’t think of riding the A train. Buildings designed by architects famous twenty years ago. A “TAXI” light from the 1940s on the corner of Sutton and 57th Street that hadn’t stopped a cab in years. This was Sutton Place, a neighborhood that stubbornly clung to Old New York. An address steeped in old money. A place where guys who wanted everybody to know they’d made it might choose to live.

Actually he lived a block away, on East 54th Street and First Avenue. But he still had the views, and for somebody who didn’t know the difference, he could keep the line going. Sutton Place was where he lived, as far as he was concerned. And Sutton Place or not, he had come a long way.

When he started out, he had almost nothing. He had come to believe that, through sheer force of will and a good story line, he could do anything he wanted to do and be anyone he wished to be. Women inevitably loved him. Men wanted to be him. He was handsome in a predictable way. People often told him he looked like the actor Mickey Rourke, with square jaw and sly smile turned up at the corner. He was always tan—summer, winter, spring or fall. He knew how to turn on the boyish charm. He was a Wall Street buccaneer, the lone rider on the plains of Capitalism with no attachments, no real responsibilities other than to continue making money for people who already had plenty. He was up with every sunrise and ready to be at his desk at Oppenheimer by seven. That was the Wall Street way.

This was the 1980s. This was Reagan and supply-side and trickle-down. This was a market trading in the thousands after trading in the hundreds for decades. Money was the new frontier. Every day the heroes of Wall Street came up with new ways to make more and more money. And there was so much money floating around, you couldn’t spend it all. There weren’t enough hours in the day. Maybe the old guard still took the subway to work, but the new guard knew better. Why hide success? Screw the subway. Hire a limo. Order top-shelf, smoke Cubans, collect Italian suits. Spending theatrically sent a message, made a statement, proclaimed that you were a man of substance who spent only what he’d earned. Excess was acceptable, even expected. The young man’s apartment may have been a block from Sutton Place, but the suits and the guy waiting to drive him down to Broad Street were real enough. They were what was required if you wanted to be somebody down on Wall Street.

Getting ready for the office, the young man was quite aware that he was the luckiest guy in the world. Ten years earlier a lot of guys his age would have been struggling to work their way up the ladder, nowhere near this wealthy this soon. His timing had been impeccable. He lived top-of-the-line, in a high-rise with a twenty-four-hour doorman in an old-money section of Midtown Manhattan perched over FDR Drive and inhabited by people whose money dated back to the robber barons of the last century. Some of these people had been born into it, but some had had to scrape their way up to be allowed to live on Sutton Place (or at least near it). Many of these people would have been shocked at all that the young man had assembled in such a short period of time.

There was the art collection. He knew almost nothing about art, but understood its ability to create credibility. He’d bought matching black Mercedes convertibles for himself and his sister. He owned a $500 Rolex. He visited a tanning salon once a week, no exceptions. The stove in his apartment was top-of-the-line, but he never turned it on. He ate out every night and placed himself in nightclubs and bars frequented by models. Models were part of the deal. You let models know you were a Wall Street guy and that got their attention. The sound of money always got attention. They may have had a hard time naming the president or filling out a customs form, but they well understood the ramifications of the Wall Street hurricane of the 1980s. In fact, all of America knew about the Wall Street buccaneers and the glamour and the glory. They worked hard, they played hard. They were doing lines of coke at midnight and were back at the office by seven, ready to reap the rewards they believed they so richly deserved.

On this day, the young man hoped for a little more reaping, although he was painfully aware that this Monday might be anything but a sure bet. The previous Friday had sort of been dubbed Black Friday. It was really kind of ridiculous, but it had spooked a lot of normally intelligent people. The Dow had gone and fallen more than one hundred points (108 points precisely), a feat it had never accomplished before in its history. The percentage drop, 11.7 percent, was not as bad as the 12.8 percent drop of the Crash of ’29, and that disastrous moment in U.S. history had kept going for two days and then started a depression. This time the young man hoped it would be different. The Dow had been slowing since August, when it peaked at 2,700. It was down to 2,200 by the end on Friday, which meant a lot of the young man’s colleagues had spent the entire weekend obsessing about what was going to happen come Monday morning. The young man tried to ignore it and go about his business.

Now here it was, Monday morning. He knew rewards required risk, and make no mistake, the rewards were endless. Just look at the numbers. He was making mad money. Crazy money. And there was no reason to believe he would not make more. Nobody had seen trading like this in the history of the New York Stock Exchange. No one had seen so many people getting rich so fast—even ordinary people investing their savings and pensions. Risk was good for the soul. Wall Street of the 1980s was spreading the wealth, and the young man was part of the mission. Here he was, a mere twenty-seven years old and already he had acquired and then walked away from a high-six-figure partnership at Bear Stearns—the biggest brokerage house on the Street. He would make a point of bringing this up and reciting the perks in detail as proof of worth.

“I came over to Bear Stearns as a vice president,” he’d tell people. “It was right around my twenty-fifth birthday. I was given a private office. I was given a secretary. I was given a trading assistant. At one point in time, I had three trading assistants, and in the 1986 partnership announcements right before my twenty-sixth birthday, I was made partner at Bear Stearns.”

He wore his hair in a ponytail. He’d show up in the partners’ dining room without socks. They called him “the kid” because he was the one who could spout financial judgments like he was at a spelling bee. They’d say, “Let’s get the kid’s opinion on where the market’s going.” At least, that was what he thought. It didn’t last.

For some, leaving Bear Stearns would have been devastating. For the young man, it was just a means toward a more lucrative end. He knew things weren’t working out as he’d planned at Bear Stearns. The lack of socks in the executive dining room, the ponytail—all of that was okay when he was making judgment calls that resulted in profit. But the calls weren’t going his way of late, and “the kid” was now more of a nuisance than an asset. The partners were bored with the kid. He began to look around until he found a new spot—a tabula rasa opportunity at Oppenheimer.

Now on this unseasonably warm October Monday, he was headed into work at Oppenheimer, the black car picking him up outside his apartment for the slog from the Upper East Side through downtown traffic to Wall Street. It was good that Oppenheimer had made him a senior vice president, let him write daily financial futures reports and given him a one-year payout that came to more than anything Bear Stearns had ever offered. It was a great job—better than Bear Stearns. It was the kind of job he could talk about to friends and family, let them see just how well he was doing. He looked forward to going to work every single day, even if it was the Monday after Black Friday.

The young man arrived at the office before his secretary and checked his messages. Usually he’d check prices for commodities like wheat and soy and look at overseas markets, where this stuff was sold, to see whether any new wars or coups or assorted panics had screwed around with price. Then he’d look at gold and silver and how the U.S. dollar was holding up. Lately the dollar hadn’t been doing too well. There were a lot of people out there worried that foreign investors were getting tired of its slow spin toward the abyss and would start getting out of the American stock market. This was something to think about in his latest line of work—derivatives.

At Oppenheimer, the young man was paid to foretell the future, so he had to weigh all manner of factors. He was working as an analyst now, so he didn’t have to deal with that intense buy-sell nonsense of his early years, but he surely paid attention to it. Dealing with derivatives was tougher. You had to predict correctly all the time, and people tracked your percentages. If your batting average hit a slump, you could be out the door. If you were good at guessing, the client was able to sell his futures contract when the per-pound or per-ounce price was up, and everybody was happy and the Christmas bonus was in the bank. If anything unexpected or just plain random happened, profit could go out the window and then anything could happen.

One thing was clear: the young man certainly needed Black Friday to turn into Sunshine Monday. He had much to lose. He’d come so far and didn’t want to go back. He hadn’t grown up like the exclusive residents of Sutton Place. He hadn’t been immersed in affluence, comforted by a sense of entitlement, possessing only an abstract notion of what it was like to have nothing. The young man had experienced living with no means of support before and was not interested in revisiting that period of his life. Anything good that had come his way, he had put there himself. And he knew one thing above all—everything you have acquired over years of hard work can go away in the time it takes for some fool out there to begin yelling “Sell!” at precisely the wrong moment.

His problem had always been timing. He was born into money that quickly disappeared. For his first eight years, he lived the upper-middle-class suburban life of bicycles and private school in Oyster Bay, Long Island. His mother had married a real estate developer who already had three children, so when the young man arrived, he became part of a family that wasn’t really his. He had no idea his two older brothers and one older sister weren’t blood relatives, because nobody told him. He learned about this the day his siblings’ real mother showed up screaming and yelling about custody. A nasty battle ensued, and in the middle of it all, when he was a mere nine years old, his father collapsed on the kitchen floor of their comfortable home, victim of a fatal heart attack. When Dad died, so did the comfortable life.

Wall Street had been a pretty simple choice for a guy who’d suffered uncertainty for so long. It was not a question of what he felt like doing with his life, or whether he enjoyed one vocation or another. It was a matter of obtaining certainty. To do this you got and kept as much money as possible, as quickly as possible. He went to college, got a degree in biology, and naturally got a job with all the implications of Darwinism—a clerk at a commodity trading house. He took the Series 7 and became a registered broker, and in nine months he’d jumped to a new twenty-four-hour-a-day brokerage house with a higher salary. The money poured in, and as far as he was concerned, Wall Street was where he had always been meant to be.

“I would believe I had, I should say, I don’t want to sound egotistical at all, there were points in time when I was the largest producer or second largest producer at Oppenheimer or at Bear Stearns and I believe during that time period I had only one [customer] complaint.”

No way was somebody going to take it away. He had already come close to losing it all through no fault of his own. The way he saw it, you worked all the time and got only what you deserved—lots and lots of money. You benefited from rules that existed to ensure those with the most talent would receive the maximum profit, as long as they were ambitious enough to take it. But you could always lose it. His first job as a licensed broker was with a London-based firm, Johnson Mathie, one of four that fixed the price of gold and silver twice a day. It seemed like a sure bet, even if his abuse of the English language didn’t exactly fit in at a London investment house.

“Everything was to be done correctly and articulately and properly. Clients’ interests were at heart—to use a mis nomenclature, the best way to describe it was, it was a class act. It was a nice place to work. Right down to the euphemism, they did have tea at twelve in the afternoon. It was a really nice place to work.”

True he would always sound like a Yank, but he was making them money. That was a language anyone could understand. Then the biology major discovered a very biological fact about economics—one day you’re here, the next day you’re not. Mathie went bankrupt. He had to find a new job. It was his first time. On Wall Street, jumping around from employer to employer is not really that uncommon, but it’s rarely pleasant. When Mathie shut down, he took what he could find and wound up at a smaller brokerage called Clayton.

“I should say that Clayton was not an upward move. That was definitely a sideways or downward move. And I was with Clayton Brokerage for maybe nine months to a year and I became their biggest producer. But I want to define producer. Producer means commission dollars: how many commission dollars one is generating for the firm. I believe the last month—now this is 1985, the last month that I was at Clayton Brokerage, my commissions were approximately $150,000 to $160,000 a month, which my payout was 50 percent on. I had several months at Clayton Brokerage where I would earn that kind of money, right before my twenty-fifth birthday. I really didn’t want to stay at Clayton Brokerage. It lacked a certain amount of sophistication.”

Sophistication. Prestige. Sometimes it seemed these were more important than even the money. It was important to him that he be seen as sophisticated, a man of wit and worth. He never really spent much time acquiring the cultural education necessary to be truly sophisticated, because that would have taken away from the time he spent making money. And he had discovered that on Wall Street, you really didn’t have to know a Mondrian from a Monet; you could pay someone to know the difference for you. What was important was the effect the Monet had on people who didn’t know any better. It was Manhattan name-dropping. It was being part of something you could never really be a part of, simply by writing a check.

To be more precise, lots of checks. The need to improve the net was all-consuming. It was just as John D. Rockefeller had said when he was asked how much money is enough: “Just a little more.” The hunting and gathering never ended. The young man was motivated by a desire to acquire, but once he’d begun acquiring, he learned a distressing fact: there was only one direction—up. You could never sell off property and you had to have more. Once you attained a certain lifestyle, you were obligated to maintain it and improve upon it as soon as possible.

Whatever money he got, he spent. If he wanted more, he borrowed. He would never recommend a company that did business the way he lived. If he saw something he liked, he bought it. If he drank wine with his dinner, he’d never look at the price. That was something only ordinary people had to do. Cost was meaningless when you believed the supply of cash would never stop. And if he came up short, that was no problem. There was credit. American Express and MasterCard and Visa were delighted to help out, sending off friendly solicitations with zero-percent financing for the first six months. After that, you switch to another card. There was no reason to save. Saving was for fools. Sink some of your paycheck back into stock and get rid of the rest as fast as you can. The art hanging on his walls was worth a fraction of what he told people it was worth, but still he could use it as collateral to borrow more. Collection agencies hammered at the door, looking to seize first his Mercedes convertible and then his sister’s. When he jumped over to Oppenheimer, most of the up-front payout went immediately to cover debts, some of which had been festering for quite a while. If Wall Street collapsed, that could be a problem. The revenue stream would have to be replaced immediately. Bankruptcy was not an option.

For a while, there was hope. The drop stopped shortly after eleven and the Dow began to rise again, until noon, when it began to hold steady. Nobody went out on the street for lunch. The hot dog and knish guys on Broad Street outside the Exchange stood around scratching themselves, victims of slide. The shoeshine guys outside Trinity Church smoked cigarettes and talked Yankees and Mets. The usually bustling lunchtime crowd evaporated.

After lunch the drop started again. The execution of trades was beginning to get clogged in the machine. Trades were behind by two hours. Nobody knew what the hell was going on, so naturally everybody started to guess. Was it James Baker talking negative about the U.S. dollar? Was it the U.S. Navy choosing today of all days to blow up one of Iran’s offshore oil platforms in the Persian Gulf? Was it millions of small-time investors spooked by Black Friday and fleeing the stock market altogether like lemmings into the abyss? Was it the dreaded program trading gone wild? Who knew? The Dow hit 2,000 at 2 p.m., then 1,900 by 3 p.m.

That was when the rumor started. The Securities and Exchange Commission was ordering the Exchange to halt trading. It could happen at any time. They had never done that before, and to do so now was surely a sign that the end of days was at hand for American capitalism. The fact that the rumor wasn’t true didn’t really matter. Rumor itself could easily have the same the effect as lightning hitting a pond. The panic began in earnest at 3 p.m. Investors began unloading as fast as they could. In one hour the Dow dropped from 1,900 to 1,800 and screeched toward 1,700.

This was history. This was big. They had witnessed the Dow skid like a kid on a sled headed for the interstate. You could almost hear the collective gasp. The money that everyone had made in the bullish eighties had swirled down the drain, all gone in six hours. Fortunes had evaporated between coffee break and lunch. The Dow had dropped 508 points—a 22.6 percent hit. That was well over the 12.6 percent of 1929, especially when you considered the scope of trading. In one day’s activity, a stunning 604.3 million shares had been traded. That was nearly twice Black Friday’s 338 million, which itself was a record. Who even remembered Black Friday? This was, by all accounts, a disaster. At close there were 52 stocks up, 1,973 down. The estimate was that the American stock market had just suffered a loss worth $500 billion in equity—more than the gross national product of India.

Nobody moved from his or her desk. Everyone knew what had happened, and no one could have done a damn thing to stop it—certainly not the young man who had much to lose, formerly “the kid,” the guy who’d gotten quite used to making high six figures. The clients had panicked. Sell orders hit the desk like a tsunami. The buccaneers were overwhelmed. They watched the spectacle, absorbed the moment, put off all deep reflection. They sat in a catatonic trance. The market they all believed in, the good times that would never end, had collapsed right there in front of them in a handful of autumn hours. The weekend seemed far away. This was sea change. This was a turning point. This was the decline and fall, the end of the Temple of Boom. Clearly the young man had not seen it coming.

He was, allegedly, as prepared as anyone else making a fortune through his acquired knowledge of how money and people interact. He had taken macroeconomics, microeconomics, accounting, calculus. He knew about the Laffer curve, the multiplier effect, the nuances of supply and demand. He understood how it was supposed to work. He understood that at times it was difficult to anticipate arbitrary human emotion. He understood that voodoo superstition could sometimes play havoc with a system allegedly based on reason, but usually reason prevailed. Self-interest produced complex equations, but usually the answer was more or less equal to the sum of the parts. And it always worked out in the end. A bear was always followed by a bull. It had been that way since Alexander Hamilton established the first Federal Reserve. How had it come to this? Why hadn’t he been on top of this?

For some of the young man’s colleagues, the morning produced headaches, a deficit in the bank account, some heated arguments with demanding spouses or girlfriends or both. There might be some belt-tightening for a short bit, but they would weather the storm, wait until the seas had calmed, then wade back in and pull down the big bucks once again. Most had accumulated plenty of net and socked it away for events such as this. This would be a temporary setback, a speed bump. The money tree would sprout anew in no time at all.

If he thought about it, he knew it wasn’t really his fault. It was the fault of unfortunate timing and, of course, his employer, Oppenheimer. In his opinion the firm had long been poorly managed and vulnerable to downturns like that day’s implosion in ways it didn’t need to be. If the company had not been so heavily leveraged, they would not now be facing the probability of severe cutbacks, which he knew were coming. He called it a “double whammy”: making a “mistake” by leaving Bear Stearns (actually he would have been fired if he hadn’t left) and then working for a company that was “grossly undercapitalized.” Within days, he got the news.

It was just a job, of course, but work was his life. And when the market that would never end decided to self-immolate and bring half the economy down with it, “the kid” was quite aware that getting a new job as soon as possible was not just important—it was crucial. Oppenheimer had been comfortable, a serendipitous burst of good fortune. The Monday Massacre or whatever the Wall Street Journal was going to call it, meant good fortune was at an end.