REBOUND ON WALL STREET : Brokers : Cautious Start Gives Way to Sighs of Relief
The message was hardly reassuring.
“The seat-belt light is flashing and on the trading desk is a bottle of Maalox and a copy of the New Testament. We’re ready,” Larry Wachtel, the voice of Prudential-Bache Securities Inc., broadcast at 6 a.m. Monday over intercoms in the brokerage’s branches.
As Wachtel’s voice crackled over speakers on the 13th floor of the downtown Los Angeles headquarters of Prudential-Bache, apprehensive brokers listened intently. “Our initial impression is that it’s going to be rocky but not nearly as bad as ‘Meltdown Monday.’ ” He referred to Oct. 19, 1987--Black Monday--when the stock market plummeted 508 points.
Thinking of that Monday two years ago, the 42 brokers waited tensely. An eerie quiet settled over the office as the market began its descent--the Dow Jones industrial index dropping 24 points in the first 10 minutes.
“Institutions are standing 100% on the sidelines; they are trying to get a feel of the stock market,” explained Bernard Kassover, a senior vice president and a 23-year veteran at Prudential-Bache, as he shuffled pink order sheets and peered intently at the flashing green numbers on his computer screen.
By the end of the first half hour of trading, the Dow index was down 36 points. But Kassover, who expected the indicator to plummet 100 points within the first 30 minutes, was relieved that the market was acting rationally.
“No hysterics--it’s nothing like two years ago. This is almost a normal day, but it could change in 30 seconds. Everybody is waiting for the next man to act.”
Indeed, 15 minutes later, the market was down 64 points. “It’s getting worse, and a lot of stocks haven’t opened yet,” said Kassover as he placed a call to Prudential’s international desk to get the London price on BAT Industries for a client. “People are confused. People are trying to get a handle on things. When it settles down, buyers will come back.”
Kassover was on the phone soothing clients and doing a lot of hand-holding to get them to ride out the market’s volatility. He had worked Sunday to prepare for Monday, putting in some sell orders for clients. Still, he arrived at the office on Monday at 4:30 a.m.--half an hour earlier than usual.
Meanwhile, down the hall, Y. Clifford Tanaka and his son, Jonathan, were also taking calls. Only one of their clients, a new one, had decided to liquidate his portfolio Friday. The others were hanging in there.
By the end of the first hour, the market had recovered to a plus-30 position. By 7:30 a.m., John W. Eisele, vice president and resident manager, was on the loudspeaker. “The selling panic has turned to buying . . . decide on the price you want to buy.”
“It’s not a selling panic,” said the elder Tanaka. “Aw, dad, he is just trying to rally the troops,” responded his son.
Slowly, the buy orders began coming in, eventually outnumbering the sell orders as the day progressed. Wire operators couldn’t field the orders fast enough. One was for a $10,000 buy of Retirement Planning Funds of America Inc., an equity fund. Another was for 100-share purchases of Johnson & Johnson, Citicorp and Philip Morris. Another was for Disney at $115 a share.
By 9 a.m., a lull settled in, but volume continued heavy. Kassover clients called in to chat. One, from Long Island, N.Y., asked, “Bernie, you OK?” Kassover was thankful for their concern.
Tanaka reports that clients are making “switches,” pulling money out of one stock but buying another.
In the conference room, scrawled in blue marker, were the highlights from the morning call. “Focus on utility, income stocks. Fire sale: buy franchise cos., WMT (Walmart), Disney, also yield securities. Chinese word for crisis also means opportunity. Don’t panic--buy value.”
As the hours wore on, trading drifted up and down but stayed mostly on the plus side. Donald J. Trump withdrew his offer for AMR Corp., but it did not bring the disruption to the market that occurred Friday when United Airlines announced that it could not obtain financing for its employee-led buyout.
As noon approached, and it appeared that no market crisis was in sight, brokers began to relax and chat. A favorite visit was to the office of Kassover’s associate, Jeffrey D. Daggett, for free gum balls from a red machine sitting atop a small refrigerator.
“I hope Donald Trump took a bath on that,” said one visitor, referring to the AMR Corp. deal. “They should sue him,” said another. “The greater game is taking a position and withdrawing and then making a lot of money, almost like insider trading,” said another.
Meanwhile, orders were coming in at a rate two-thirds greater than normal and double Friday’s rate. Eisele was estimating a Monday trade volume between $15 million to $20 million for his office.
As the market wound down, brokers were anxious for the close. Five minutes before the close, Kassover popped open a can of 7-Up and poured it in his blue mug. As the market closed, he took a gulp from his mug slugged “1 Boss Bernie” and sighed: “I’m relieved.”
