Working: People Talk About What They Do All Day and How They Feel About What They Do (67 page)

 

I loved building houses. It’s really a marvelous thing. You work with people that work with their hands. When the carpenters come in to work, goddamn it, they’re good. When the bricklayers came in, they gotta know their job. I had a roofer, a Norwegian or whatever the hell he was—when he went up on that fuckin’ roof and he bucked that stuff there, man, you knew you were gonna have the best roof you ever had on a house. I didn’t cheat on the house. I sold my own houses, wouldn’t turn them over to an agent. I enjoyed doing that more than anything I ever enjoyed in my life. I don’t know why I didn’t continue it.

I was kind of driven. I had to go on doing something else. I couldn’t see myself building a development of fifty, a hundred houses, little boxes. I couldn’t get the kind of plots where I could put five, six houses on one or two acres, to build a house with enough nuances. The challenge went out of it after a while.

I invested in a hotel. It had 101 keys. I got fascinated with hotels, the operation of it, how it was put together, who came, who went. I came out with a quarter of a million and I built my own hotel—alongside the World’s Fair grounds. We did the biggest job of any motel at the fair. In two years the fair was a shambles. The area was a desert, death. I walked away with a whole skin, but gave the hotel back to the bank.

While I was fiddlin’ around with the hotel I began to play the market. I got lucky at some point and made about a hundred thousand dollars. That convinced me I could make this my way of life. I thought it would be a nice way to live. I began to study to be a stockbroker. I passed the exam. You learn the ethical side of the business, what you can and can’t do. It’s all mumbo jumbo.

The New York Stock Exchange has 1,066 members. I always think of it as the Norman Invasion. These are William the Conquerors. The 1066 is one of the greatest clubs in the world. A seat on the exchange costs anywhere from a hundred thousand dollars in bad times to a half a million in good times. These guys didn’t pay that price of admission without deciding that they’re gonna take care of each other, protect their own. They’re the guardians of all the stock. They’re the specialists. They dole out these stocks to each other and they have the edge. They become the bookies on all the stocks. This is the only wheel in town.

I really thought of the market as a sort of river. Money running to the sea. I figured all I had to do is just stand on that bank and lower a bucket every once in a while and take a little bit of that out. I didn’t care how much these gentle gentiles, with those little briefcases under their arms, took back to Larchmont or how much went up to Westport. I figured they’re gonna let me lower my bucket. But they don’t let anybody lower a bucket.

I’m afraid the work of a stockbroker is superfluous. He did have a function at one time, when little people were allowed in the market and given a chance to share in part of the goodies. The market really is a game played by very skilled people, who accumulate stocks at low levels so they can be distributed at high. The market is rigged. Knowledgeable people buy certain stocks, whether they have intrinsic value or not, and at some later hour the public is told these stocks represent good values and should be purchased. By the time Joe Blow goes in, the people who’ve created this atmosphere go out. For every dollar made in the market, a dollar has been lost. The pros make it, the 1066 boys.

The brokerage firms need some people to make this whole machine work. Somewhere in this pattern of things is the stockbroker. Here’s where I come in. We’re all hooked in. I’m watching every transaction. Everything that happens in the market I see instantaneously. I have a machine in front of me that records and memorizes every transaction that takes place in the entire day. It’s called a Bunker-Ramo. It’s really a television screen that reproduces the information from a master computer that sits in New Jersey. Within a fraction of a second, when I press for the symbol I want, it goes to the central computer and it automatically comes back. When I take my hand from the machine, the screen in front of me is already reproducing the information.

I watch eighteen million, twenty million shares pass the tape. I look at every symbol, every transaction. I would go out of my mind, but my eye has been conditioned to screen maybe two hundred stocks and ignore the others. I pick up with my eyes Goodrich, but I don’t see ITT. I don’t follow International Tel, I’m not interested in that. I don’t see ITT, but I do see IBM. There are over thirty-two hundred symbols. I drop the other three thousand. Otherwise I’d go mad. I really put in an enormously exhausting day.

It’s up at six thirty, I read the
New York Times
and the
Walt Street Journal
before eight. I read the Dow Jones ticker tape between eight and ten. At three thirty, when the market closes, I work until four thirty or five. I put in a great deal of technical work. I listen to news reports avidly. I try to determine what’s happening. I’m totally immersed in what I’m doing. For the amount of work and intelligence I bring to this job, I’m not being properly compensated. I make a routine living now. The only compensation is like me against the machine. I’m trying to use my intelligence against the wheel. I’m a fuckin’ John Henry fightin’ this goddamned steel drill, and I’ll probably die with my hammer in my hand. (Laughs.) Because I don’t want to buy the package. Maybe I’m wrong, but I want to get there my own way. It’s very difficult, that’s God’s truth.

The market moves to destroy you. It says, Play it your way, sucker, buy the package. Believe in the American Dream, buy the hundred time multiple, believe in IBM, and if you doubt it, God help you. Don’t ever question what you’re doing.

 

 

People who go into the market are committed to losing money. They don’t blame the broker. They don’t blame the machine, which is rigged against them. The moment you buy a stock, you’re hooked. You’re gonna pay a commission on the way in or on the way out. Normally that’s a sizable percentage. The stock has to move up at least a point and a quarter for you to get even. If you bought a stock at $50, it has to move to $51.35 before you’d get even. You’re being humped before you even get around the corner. The moment you buy that stock, you’re a loser.

What I try to do to justify my existence is to understand how it works. I took courses. I took in every lecture. I subscribed to services. I do charting. I’m almost like that gambler who clocks the horse at six in the morning on the workout when they blow that horse out. But I’m really on the outside lookin’ in. Somebody else has rigged the race and knows who’s gonna win it. And somebody else knows what stock’s gonna go. I’m sure every stock has a group that decides when they’re gonna go and when they’re gonna get off. All you can hope to do when you see that train moving—there’s the theory of the moving train . . .

When the train begins to move, all you can do is see it move and hope to get on. You don’t know when the train slows down until after the big boys have jumped off. You’re gonna get on ten points after they did and get off ten points after they did. If you can discern the direction of the train . . .

Maybe if I was twenty, twenty-five years and I just came out of Harvard Business School and I believed this bullshit, which is packaged and wrapped . . . Wall Street, Madison Avenue. The people even look the same. They really believe in their invulnerability. They believe their own success story. I don’t believe it. (A rueful chuckle.) That’s a hell of an argument to be a broker. In a crazy way I do a service. I try to give such customers as I have a rational explanation for an investment. I try . . . (Sighs wearily.)

 

 

(A long pause.) I try to perform a function that has some meaning. I try to take somebody’s money and not make shit out of it. If a banker’s taking your money and giving you five percent and he’s earning twelve percent on it, there should be a better way for the little man to participate. He should do a hell of a sight better than giving it to an insurance company or a bank. It shouldnt’ be that rigged. He should have a chance to get a fair return on that money. He’s worked for it. Somebody else shouldn’t be able to use that money and get a twelve percent return while paying the little guy five in front.

The real money made in the market is being made by people with real wealth. I’ll say, “If you give me five thousand dollars, I can make you a ten percent return. If we’re pretty good, maybe I can get you twenty percent. If it’s a smash, maybe we’ll double it.” But the only way you’re gonna make a million dollars is to start with a million dollars.

 

 

I’m trying to use my intelligence, which I’ve exercised in other businesses. But it’s like wrestling with an octopus. Too many things that I can’t control are happening. I can tell you what happened after the fact, but it’s very difficult to tell you before the fact. The market never really repeats itself exactly in the same way day after day. There is similarity over the years. Jesse Livermore, a legend, went broke three times. But he was so valuable to the Street, he created so much excitement that the fraternity, the 1066 club, gave him the money to put him back in business. His manipulation in the market, his activity, created additional sales every day. Other people became excited and involved. Yet this man, with all his experience, continually got wiped out. He was bucking something bigger than he was. Ultimately he was destroyed and killed himself. He lost touch with even the reality he knew.
⁴⁹

It’s really an illusion. It’s only real because enough people believe it’s real. The whole market is based on a premise—potential growth. You can put any kind of multiple on a stock. If a stock earns a dollar a year, it sells for a hundred. It’s selling at a hundred times its earning capacity. If you believe the stock is a reflection of some future experience, that you can invest in a hundred times its earning capacity and that you will subsequently benefit, you qualify as a true believer. But the moment you question that premise, the whole thing collapses like a house of cards. You have to buy this whole crazy fiction or there would be no market.

 

 

Some people know me over a period of years and have allowed me to handle their business. I’ve created new business on solicitation, depending on how good my track record is. The function of a broker is to try to get his account to trade. The real money is never made by selling stock. A broker’s lifeblood, the only money he makes, is by generating commissions. Most money is made by getting people to turn their portfolios, their stocks, over three, four, five times a year. If you’re really unethical——cynical, the milder word—you may get ’em to turn their stocks over ten times a year or fifteen times. There’s a name for it.