One Trader’s Fast-Paced Day in the Great Bull Stock Market of the 1980s
At 6:45 a.m., stockbroker John Oppenheim walks into the nearly desolate Dean Witter Reynolds office in Woodland Hills. The New York Stock Exchange has been open for 15 minutes, and there is already a message waiting on his desk.
On this day, Oppenheim, 41, a broker for 15 years who doubles as Dean Witter’s Woodland Hills office manager, will play his small role in the great bull market of the 1980s. Unlike the high stakes arbitrageurs who have been nabbed in the insider-trading scandals, Oppenheim and his investor clients are small-timers who inhabit a much quieter end of the stock market. “We’re in retail,” he jokes.
For most stockbrokers, it’s been a great run since August, 1982, when the Dow Jones Industrial Average was at 800. As it has climbed to 2,300, both investors and stockbrokers have cashed in.
Last year, the 404,000 stocks, bonds and securities brokers in the United States had an average income of $80,000. Veteran brokers keep about 40% of the commissions their companies charge on stock trades. Oppenheim makes, he says, “in the six figures.”
Lots of Competition
But there’s plenty of competition, notably from discount brokers. An investor who buys 100 shares of a stock at $80 a share pays Dean Witter a $97 commission. At discounter Quick & Reilly, the commission for the same trade runs about $48.
Oppenheim tries to make it worth the added cost for his 900 clients, who live from Hawaii to Amsterdam, by serving various roles--by turns confidant, soothsayer, sounding board, financial planner and order-taker. Only 20% of his clients make more than one stock trade a year, he says, but they have $30 million invested in stocks, bonds, mutual and money market funds.
Oppenheim glances at headlines in The Wall Street Journal--the dollar’s fall catches his eye--and straps on his phone headset. On his desk a Quotron computer terminal flashes the latest prices of about two dozen stocks. These stocks are Oppenheim’s favorites, ones his clients have invested in, and he monitors them as a market barometer.
7:15 a.m. A client calls who wants to sell some General Public Utilities stock. GPU, which owns the Three Mile Island nuclear plant, turned out to be Oppenheim’s best stock pick, he says. After the nuclear accident, when the stock was between $4 and $8, “I put my customers in it up to their eyeballs,” he says. This morning, GPU’s stock is at $26.
Oppenheim likes to find his own stock gems--”It’s like buying straw hats in winter, buy what’s out of favor”--not necessarily just those recommended by Dean Witter’s phalanx of analysts.
The client on the phone owns about $60,000 worth of GPU, and wants to sell 300 shares. Oppenheim reaches for a red (as in stop) sell form. The buy form is green (as in go); an option form is white (as in surrender?). Oppenheim fills in the sell form and walks past the “bullpen,” an open room where brokers work the phones at partitioned desks, over to the cashier’s office, where a clerk types the information into a computer. Inside two minutes, the trade is done on the New York Stock Exchange.
7:25 a.m. Another client calls. He is worried about two mutual funds that Oppenheim steered him into a month before. One of the funds is down a tick.
This client, Oppenheim says, after six years dropped him for another broker, hoping to do better. “When I lose an account, I take it like I’m being fired,” Oppenheim says. A month ago Oppenheim called the old client, he says, and discovered that the new broker wasn’t performing magic tricks. He persuaded the client to come back.
Oppenheim, in a patient tone, reminds the client that he had a lot of cash sitting in a bank paying only 4.25% interest, and that he doesn’t like making a lot of investment decisions. Oppenheim thinks that the client will earn more from these funds than from ordinary CDs. “I want you comfortable,” Oppenheim says into the phone.
After a few minutes, the client is calm again. “Have a good day,” Oppenheim says.
7:35 a.m. The stock market is down 17 points. “Jeez,” he says.
7:52 a.m. Oppenheim calls and wakes a client. “Your gold stocks are doing very well,” he says.
Despite the stock market’s five-year surge, Oppenheim keeps trolling for undervalued issues. Recently he has recommended mining stocks, anticipating that the dollar’s uncertainty might drive investors to gold, and some defense contractors because their prices haven’t soared as much as the overall market.
Oppenheim tells his client about another gold-mining firm, and ticks off what the company will earn should gold hold at $400 an ounce. Bingo. Another sale.
Not a Longtime Dream
Becoming a stockbroker, though, wasn’t Oppenheim’s dream. After earning a master’s degree in international business at UCLA in 1972, he envisioned working for Ford in Argentina. He had been looking for work six months before he walked into a Dean Witter office.
Oppenheim trained six months and started out with a $650-a-month draw against commissions, a reverse telephone directory (listings by addresses) and a California manufacturers’ guide. Finding clients was up to him.
Oppenheim is soft-spoken and short--the plant in his office is taller by a leaf. But his tenacity made him a good salesman. To lure clients he has given free evening investment seminars, and later taught adult education classes. One course was called, “How to Retire a Millionaire.”
He started out as a stockbroker by putting in 12-hour workdays, he says. Each day he would try to call five inches of names in the Santa Monica phone directory. For every 100 cold calls, he says, he’d get one account.
One spiel that sometimes worked with executives was: “Good morning. I’m John Oppenheim with Dean Witter, and I’m interested in applying for a job with you. I’m applying for a very unique position: to help manage your investments.”
“It would get the conversation going,” he says.
10:10 a.m. A client wants to sell 100 shares of Reebok, the hot sneaker company. Last year the client bought the stock on his own at $31 a share; it’s now $48.
Many of his clients buy and sell stocks on their own, with Oppenheim serving, at best, as a sounding board. “Never get between the client and the trade,” he says. But investors, he says, tend to get jittery when a stock shoots up. “Many people are uncomfortable with profits. There’s a saying, ‘You hold onto losers and cut into your winners.’ ”
10:17 a.m. A call comes in from an executive of a small defense contractor that Oppenheim is thinking of recommending. “Are you saying you don’t perceive things will get any worse than right now?” Oppenheim asks.
10:25 a.m. After staring at his computer screen, Oppenheim decides to deal with a “problem stock.” He had advised one of his clients to invest in a motion-picture company. The client bought 1,000 shares at $9.50, and later another 1,000 at $13. Now the stock has withered to $9.50 again.
Oppenheim’s sell philosophy is shaped by his adventure with an oil company called Amarex. He bought at $9, watched it shoot up to $150, sold some of his own holdings, but not all of them, then watched Amarex start sinking until it went out of business. “I married the stock,” he says. Now, when a stock drops 15% off its high, Oppenheim takes “a very close look.”
Problem Halved
“I was going to call you about the problem stock,” he says into the phone. “Let’s cut it in half.” Oppenheim sells 1,000 shares of the problem.
This is Oppenheim’s biggest client, who has been with him 10 years, he says. The client, Oppenheim says, is a working stiff who turned millionaire thanks to an investment in his former company. Now he plays the market incessantly, occasionally following Oppenheim’s advice.
“Our job is to satisfy customers’ needs. The reasons for investing are not only for making money,” Oppenheim says. “They like the excitement, the action.”
Oppenheim mentions a laser firm he likes, but the client has other business in mind. On his own, he’d bought 50,000 shares of a mining stock, Pacific Silver, at $1.37 1/2; it’s up to $2.62 1/2. “I’m flabbergasted how much money you have made,” Oppenheim says. “We’ll sell 5,000 shares at $2.75.”
The client tells Oppenheim to sell some shares of Baker International, an oil-services company. The investor isn’t finished. “You want to buy 1,000 ITEL (cargo and rail) at $18.50,” Oppenheim repeats.
Even with this lucrative client, Oppenheim isn’t wholly satisfied. The client splits his business with another broker at E. F. Hutton.
11:55 a.m. A client who has IBM options calls and asks Oppenheim for a diagnosis. “What’s my stomach telling me about this market? If you’re uncomfortable, we can sell,” Oppenheim says. This client invested $1,800 a week ago in IBM and now will get back $4,500. “Let me get this order in because I see the stock is dropping off,” Oppenheim says.
There’s nobody at the cashier’s cage. “I’ve got an order,” Oppenheim bellows.
As the 1 p.m. market closing approaches, Oppenheim has no last-minute rush of orders. He goes through his mail and notices that Avon’s executives have been buying heavily into their cosmetics stock, usually a good sign.
1 p.m. The market closes, down 5.69 points.
After lunch, another active client calls. Oppenheim mentions the laser firm. “You’re going to buy it because you’re going to make money on it.” He explains that corporate raider Saul Steinberg already owns 13% of the company, and a big Swiss firm bought the stock at $29 a share. “Either the company gets its act together or we get bought out,” Oppenheim says.
Favorite Way
This is the kind of investment Oppenheim favors. He figures there’s little chance the stock will take a big tumble. If his clients own four such stocks and two of the stocks jump, his clients are going to meet Oppenheim’s yearly goal of a 15% return on their stocks.
His client says, yes, buy at tomorrow’s opening market price.
It’s another good day for Oppenheim, though he says this day wasn’t typical because he received more calls than he made. But, in a bull market, that’s how it can be, with investors rushing in and out.
