Authors: Greg B. Smith
Nothing But Money (3 page)
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.
Of course, he really didn’t live on Sutton Place.
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 had a unique way of describing things. The language wasn’t exactly Wharton School. He’d say he “purposely pushed the back of the envelope.”
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.
In his office, the young man sat back, prepared. He waited for the opening bell the way the bullfighter waits for the bull.
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.
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.
This was difficult to explain on a résumé in a world where there was only one acceptable direction, but there was always a way to explain anything if you had the desire and imagination. He was particularly adept at explanation.
“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.”
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