New Brokers Appear Calm Facing First Bear Market
It was eerily quiet Monday in the Pit, the warren of cubbyholes at the center of Merrill Lynch’s gold-toned office suite in downtown Los Angeles, where the youngest stockbrokers sit shoulder to shoulder, working the phones and staring at quotes on flashing computer screens.
The Dow had collapsed. Untold billions of the world’s wealth had vanished. The young brokers--”financial consultants” they’re called, to reflect the brokerage house’s readiness to sell CDs as well as stocks--read the numbers, DJI -508 , cleared their desks, mumbled reassurances and swept out the door as quickly as they could after the closing bell had sounded, witnesses to enough history for a single day.
Kirk Michie, 25, a USC finance graduate less than a month away from getting married--had stress to burn. He jumped in his Porsche, drove from Bunker Hill to Beverly Hills and worked out at a friend’s gym. “Really hard,” Michie said.
Quick to Blame Yuppies
Welcome to the Crash of ‘87, as seen through the eyes of the Classes of ’80 through ’85. Yuppies all--aspiring ones, at least--the best and brightest of America’s business schools and English departments alike have flocked in the 1980s to the securities industry, cowboys and cowgirls hankering to ride a bull market to all the good things love of money can buy.
When the bubble burst last week, the line formed behind Texas billionaire H. Ross Perot as gurus and sages sought to attribute the disaster, in part, to the youngsters’ zealotry. “There’s too much money chasing too few stocks managed by 28-year-old boys paid $500,000 a year who don’t know what they’re doing,” snapped Perot, 57.
Tragic stories circulated of dollars loved and lost--of young specialist traders who’d taken half-million-dollar hits in a day, of baby brokers whose clients’ margin accounts were cleaned out overnight. One joke was ubiquitous: What do you call a yuppie stockbroker? . . . Hey, waiter!
Yet in many Los Angeles brokerages, Michie’s breezy calm, rather than the apocryphal panic, was the rule. Many young market professionals greeted the Dow’s unprecedented slide--and the chaotic swings that followed through the week--with an almost perverse equanimity.
Schooled to balance portfolios and hedge bets, these brokers exuded a relentless confidence that the worst would pass, that fundamentals were strong, that bargains could be found and opportunities created in the market’s rubble. Not that it wasn’t bad, but that it wasn’t that bad.
On the Dow’s roller-coaster ride last week, the button-down children of the can-do ‘80s were the ones who bit their lips and wouldn’t be caught dead screaming.
It was noontime Tuesday. The market was bouncing back. Debra Roberg, 26, had been on the phone since 6:30 a.m. in her glassed-in cubicle (“It’s the fourth-biggest in the office”) at Thomson McKinnon Securities in downtown Los Angeles.
“Hey, Shep! How you doing? We’re having a party, Shep!” She is effusive, seemingly inexhaustible, belly-laughing at her own ripostes, wagging a pen in her hand when she’s not waving her arm in broad gestures. “AT&T; is at 27. You’ve got to buy it,” she tells the client. “But not yet. Put an open order in at 25. And instead of laughing at what I’m saying, you’re laughing all the way to the bank.”
Leaves Afternoons Free
Roberg has been a broker for two years. Four years ago, she answered an ad for a commodities aide. “Before I went for the interview, I looked up what a commodity was,” she said.
She needed a job where she’d be free by early afternoon. Business had been Roberg’s minor at Cal Poly-Pomona. But her major, her real love, was drama. Especially musical comedy. She had played Ruby in “Dames at Sea” and sung comic leads in “Brigadoon” and “Oklahoma.”
Stock trading proved more remunerative. Early this year, Roberg bought a town house in Pasadena and a new Chrysler New Yorker. She’s a top producer in her office, managing $5 million of other people’s money. She slips her brother, a UCLA undergraduate, $20 bills when she sees him because it makes her feel good.
Yet when the bull market she’d known throughout her brief securities career stopped dead in its tracks, it was to her dramatic training--not her business classes--that Roberg turned for a reserve of strength.
“It was the same kind of pressure you felt in doing theater, working up to opening night,” she said. “You weren’t quite ready, but you sure looked great when you went out on that stage.”
Roberg is more than satisfied with the way she coped. Tuesday morning, and all week long, she was in the office an hour early, at 5:30 a.m., to clear away paper work so she could begin phoning through her roster of 700 clients at 6:30. She stayed till as late as 7 p.m. to return every call. She oozed calm--and thinks her customers bought it.
“My clients came through wonderfully, and I have to think that’s a reflection on me,” she said Tuesday. “I feel like a mamma. I’m so proud of them.”
‘Don’t Panic’
Kirk Lazaruk, a 28-year-old project manager for a Calabasas planning firm, has a five-figure account with Roberg. He was on the phone to her early Monday morning and kept calling from his office or car phone, as many as four or five times a day, through the week.
“What she kept saying to me was, ‘Don’t panic on me! Kirk, don’t panic on me!’ ” Lazaruk recalled. “To me that was reassuring.”
Lazaruk likes the fact that his broker--whose first contact with him was on a cold call two years ago--is younger than he.
“I happen to be in a situation where I work with and supervise plenty of people who are older than me. I think it’s because of what I know and because of my experience,” he explained. “I have to prove myself to these people. And Debra was able to prove herself to me. So the age factor didn’t enter into it.”
One of Roberg’s closest friends, a commodities trader, had not anticipated the young broker’s ability to steel herself to the market’s free fall.
“I expected panic: calling clients five at a time, selling, getting out of the market, shorting it, saying ‘This is it, this is the end of it,’ ” he confided. “But rather, she stayed there and held their hands and helped them go through this tough period.”
There was an edge in Roberg’s voice Wednesday morning, though. The Dow was up 190 points at 8:15 a.m. All day Tuesday, Roberg had advised her clients to hold tight, to wait for the market to fall one more time before going bargain hunting. And here the average was, steaming upward again.
“I think I did the right thing,” she said from the sidelines, at once testy and uncertain. “You should see the brokers in here, running up and down, buying and selling.”
By Thursday morning, with stocks down 80 points, Roberg had her confidence back. “I was right!” she beamed. “I feel much more comfortable with another down day.”
And she was still preaching calm. “What I’m telling my clients is that nothing happened. Reagan didn’t get shot. We’re not all communists. California is still attached,” she said. “ ‘Hang in there, baby’ is probably what I’m saying the most.”
For cool, though, Nathan Crair is the man to meet.
At 28, Crair is vice president and manager of Prudential-Bache Securities’ office in Warner Center. He bought his first stock when he was 16 and was a broker at 22. Crair likes his work for two reasons: He gets to exercise his people skills, he says, “plus, there’s my desire to make money.”
If anyone asked about stability last week, Crair--not a razor-cut hair out of place--talked about the Rock. The one Prudential lets you own a piece of. “Prudential is the second-biggest landholder in the United States--and that’s second only to the federal government,” he said. “That gives us a sense of security. We work for a company that’s going to be around.”
Evangelist of Calm
Crair, listening to a squawk box bark market recommendations and data from Prudential-Bache’s offices on Wall Street, does not consider himself a stockbroker. He is a certified financial planner. He sells insurance as well as securities. The Pru preaches diversification, and Crair believes. His own money is in real estate and the bank, not just stocks.
Last week, Crair played evangelist, preaching confidence in the financial markets. His operations manager told him he was a calming influence. So did his boss, Jack Graner, Prudential-Bache’s regional director in Los Angeles.
“I really don’t see any young or newer-type brokers panicking,” Graner said early in the week. “I see them in awe of the tremendous powers and forces that are in the market.”
Crair, relaxed in his conservative dark suit and button-down shirt, spoke less in awe than in admiration as he assessed the exchanges’ antics Wednesday afternoon.
“To me it’s the ultimate free market, as evidenced by this week,” he said. “I like the action.”
They were keeping the faith at Merrill Lynch, too.
“It wasn’t what I would call 500 real points,” Michie said soothingly of Monday’s calamitous drop-off. “We knew it was overdone. We knew it was so exaggerated.”
His buddy Michael DeLaHousaye--Pepperdine Class of ‘84, also 25 years old, an active broker since January--broke in. “It’s not like the economy stopped,” he said. “IBM still had great earnings. Apple isn’t laying off. It’s hiring.”
The words were brave. But both young men knew something extraordinary had taken place. DeLaHousaye hung the front page of Tuesday’s Wall Street Journal on the wall of his bedroom in Brentwood. And Michie, reflecting back a week to the days before the market slumped, was thoughtful.
“Even if we were 25 or 28 on Thursday,” he said, “we’re a lot older now.”
