Broker Taking Stock in Wake of October Crash

Spring 1987 was the high-water mark of John Oppenheim’s career. Oppenheim, a stockbroker and branch manager of Dean Witter Reynolds’ Woodland Hills office, could hardly seem to do anything but make money for his clients in what turned out to be the last great surge of the five-year bull market. But unlike many stockbrokers who knew only life in a bull market, Oppenheim had gotten his start in the business during the tough recession of the mid-1970s, and he knew that the good times would inevitably slow. When the Dow Jones industrial average was at 2,300 points last year, Oppenheim guessed the market would drop 15% sometime during 1987. “What are we going to do when this market does go down?” he fretted. Last October’s 508-point stock market crash was of a magnitude beyond his, and nearly everyone else’s, grasp.

The sound of money has vanished from John Oppenheim’s office. A year ago, his phone rang so often it might as well have been a cash register. About 30 calls a day would come in from clients. Often a client would be on hold while Oppenheim finished with another happy investor. They wanted to sell stocks that had shot up like weeds, or they wanted to buy more. They wanted to keep minting money.

Today, what John Oppenheim mostly hears in his office is the faint whoosh of the air conditioner. “The phone has stopped ringing,” he said.

12,000 Lost Jobs

Oppenheim, 42, like the other 400,000 stockbrokers in the country, has to cope with life after Black Monday, when the stock market crashed and lost 23% of its value in a mere seven hours last October 19. Already 12,000 employees in the financial community have lost their jobs and experts say maybe 25,000 pink slips will be issued before all the ledgers and mergers are closed.

After the initial panic, many of Oppenheim’s 900 clients moved sizable chunks of their money out of stocks into safer havens, into money market funds and certificates of deposits.

Investors are spooked, but so are stockbrokers, he said. “There are a lot of people still looking back over their shoulder and waiting for a 150-point down day. We have a big case of paranoia,” Oppenehim explained. “The things that motivate people tend to be the two extremes, greed and fear. And fear of loss seems to be dominating today.”

The evidence is in the amount of stock traded each day. For the first five months of this year on the New York Stock Exchange, the amount of stock traded was about 9% less than in the same period a year ago. Even that number is inflated because some big Japanese investors have bought stocks just for a day to qualify for high dividends.

But down at the grass-roots level where most stockbrokers work, the money isn’t moving.

When Oppenheim pitches a stock to a client today, the likely answer is, “Let me think about it,” or “Don’t buy me 500 shares, buy me 300 shares,” he said.

One of Oppenheim’s biggest clients is no longer speculating in the stock market; he’s speculating in terra firma. He has built three homes in Los Angeles and so far has sold one of them.

Quick Results Sought

“People are impatient. They want instant gratification. When the market goes from 1,000 to 2,700 you expect $1 to go to $1.20. And when it doesn’t you get upset. But it’s not easy to make money,” Oppenheim said.

He was accustomed to making a six-figure income. But stockbrokers make their money by moving money, moving it into stocks, or even out of stocks, no matter. They get a commission on each transaction. Now the commissions are smaller and Oppenheim figures his Woodland Hills office is doing about 23% less business this year, and he’s proud of that, because across the industry he guesses the decline in business might be as much as 35%.

“You can go crazy trying to do better than you did the preceding years,” he said. His new goal is to have his office outperform his rivals and to keep the amount of money under its management as high as possible and wait for the cycle to turn up again.

In the meantime, Oppenehim is out hustling up new business. For years he coasted on the 900 customers he’d built up. Since the crash, Oppenheim says he’s picked up about 25 new customers, many of them referrals from clients. He’s been picking up about four or five new clients a month. His goal is 10.

Big financial houses like Dean Witter employ a fleet of financial analysts to pick stocks worth buying. But Oppenheim cemented the client-broker bond by prospecting for undervalued stocks. He’s still prospecting. He likes oil and oil equipment stocks because the industry, he reasons, has essentially been in a slump since 1981 and with the sizable U.S. dependence on foreign oil, there will have to be more drilling for oil here.

The timbre of Oppenheim’s voice is more somber than it was a year ago. The stock market crash had a profound effect on him. “There are very few people who on their death bed say ‘I’m concerned I didn’t spend more time at work.’ October 19th kind of helped me reorient my priorities. It was a much bigger event than a business event,” he said.

So Oppenheim is trying to spend more time with his wife and children, while trying to work harder, but without any more hours. He’s trying to give his clients sage advice and make sure his office performs well. But all the pieces don’t quite fit. “Trying to do all that is somewhat stressful,” he said.

Had Oppenheim known the stock crash was coming, he probably wouldn’t have sprung for the new BMW 735. But he consoles himself with the fact that 1988 will probably be his second-best year in the stock business--never mind that it will be the first year his income ever dropped.

Meanwhile, Oppenheim looks ahead, convinced that the Dow Jones industrial average can climb to 3,500 by the early 1990s, in part because inflation remains under control.

But he concedes there will be no big spurt until the budget and trade deficits are repaired. “Until then, it’s going to be tough to see the market 300 or 400 points higher.”

Given the tumult of the past nine months, did Oppenheim ever waver, did he ever think of bailing out of the business?

“No. I’m unemployable. What else would I do?” He was laughing, though, when he said it.