Hindsight is 13,000: Playing the Stock Market in 1999-2000



960 Park Ave., NY, NY 10028

Neighborhood: Upper East Side

I have just taken over the passenger car from Roberto. There are three tenants in the elevator and they are discussing their vacation plans. 3A and her family will be hitting the slopes in Jackson Hole, Wyoming; 5C is going to work on his tan and try his luck at the blackjack tables in Aruba; and 12B and his girlfriend will be ringing in the new year in Paris (He doesn’t mention it to the other tenants, but I have it on good authority that he’s going to propose). After the others have gotten off, 12B asks me how I’ll be spending New Year’s. “Oh, I’ll be cleaning the lint traps in the laundry room, scrubbing the toilet in the gym bathroom, and dreaming of the day I dance up 5th Avenue with your head on a pike.”


12B and I have a regular routine wherein he plays the rich, boorish philistine and I play the angry, young, class warrior, so, delivered differently, this retort might have been within the bounds of our schtick. But the mirthful tone I had intended was completely absent from my delivery and both of us were a little unsettled by the violence of my statement. “Whoa,” he said, recovering from the death threat. “Take it easy there, Trotsky. It’s Christmas.”

I’m grateful to 12B for taking it so well. Truth be told, he’s a decent guy. Before he sold his soul to Merrill Lynch, he was a fifth and sixth grade math and science teacher, living in a studio in Astoria. But after a few years of watching his Wall Street friends acquire bigger apartments in fancier neighborhoods, as well as summer homes and other luxuries that he could never afford on his teacher’s salary, he decided he had fulfilled his commitment to making the world a better place. I myself have never had a worthwhile career, much less the opportunity to forsake it, so it would be unjust of me to condemn 12B, but I wonder what effect this turbo-charged upward mobility, or, at least, the promise of turbo-charged upward mobility is having on our society.

In the building next door there was a handyman named Freddy, who, like 12B, saw how much money everyone else seemed to be making in the stock market, and decided he wasn’t going to let the gravy train pass him by. After several attempts, he finally passed the Series 7 exam in September, and he now spends his days cold-calling potential investors.

This phenomenon reminds me of something I once heard attributed to Eugene McCarthy. The former senator and presidential candidate thought that the Great Depression was one of the most productive and efficient periods in American history. In the Depression, McCarthy reasoned, legions of educated, hardworking people lost their lofty positions and were forced to take jobs that were unequal to their talents: lawyers became stock clerks, bankers became train conductors, and everything ran smoothly because these overqualified people were forced to do jobs that in better times would have gone to lazier or less intelligent workers.

Perverse as this logic may be, I can see his point. And, if McCarthy is right about this, then the converse must also be true. In a time of great prosperity, the mediocre will rise to levels of such affluence that the jobs they once did—important if not glamorous or lucrative jobs—are taken by the stupid, lazy, and surly. If the friendly and competent fifth grade science teacher can increase his salary tenfold by analyzing pharmaceutical stocks, and the capable building handyman quits to hawk Internet stocks over the phone, then we have to question the cost of all this easy money. What gaineth a man if the Dow hits 13,000 but his kid fails science and his toilet overflows? Do the “corrections” the financial experts tell us are inevitable refer not only to the price of stock shares but to the social order as well?

As I let 12B out of the elevator, I am rudely reminded of my own place in the social order. 12A is waiting with her dog. She thrusts the leash at me. “Can you take him for a quick walk, please? My show’s coming on.” I am too busy trying not to trip over the frantic dog to respond before she retreats into her apartment. Opening the door to his own apartment, 12B looks back at me trying to untangle myself from the yapping Trixie’s leash. “Viva la revolución!” he shouts, his fist raised in a show of mock-solidarity.

Oh, how I long for the day when the stock market crashes and he’s back where he belongs–living in Queens and teaching the reproductive methods of amoebas to a classroom full of giggling twelve-year-olds.


Jan. 2000

I am slipping a notice from the management company about an upcoming inspection of window guards under the doors of apartments with children. Only tenants with children are obligated to have them, but after what I’ve heard the last couple of hours, I think they should be mandatory in every apartment. If, as legend has it, people were throwing themselves out of windows after the stock market crash of 1929, then we must take precautions immediately.

When Vince arrived at 2:30, he handed out the coffee with an expression that, while not quite happy, was definitely less suicidal than usual. Roberto was the first to notice. “Damn, papí. You just get laid?”

“I never get laid, anyway,” said Vince, the embryonic smile now gone. “But maybe I make some money.” He told us about the just-announced merger of AOL and Time Warner. Vince had recently bought some Time Warner stock and he was sure that with the news of the merger the value of his stock would soar.

At 4:00, I went to the diner for lunch and observed most of the customers watching the CNBC coverage of the proposed merger. In the last year, the twenty-four hour financial news channel had eclipsed ESPN, the twenty-four hour sports channel, as the home network of bars and restaurants throughout Manhattan, their reporters and anchors fast becoming household names.

I listened to the breathless commentary of the reporters and their guest experts praising the deal. “The synergies this would create for both companies; it would be a paradigm of cooperation between old ‘brick and mortar’ companies and the young turks of the Internet; the one creating content and the other providing revolutionary new ways to distribute it.”

This all sounded like great news for Vince, and he could really use it. During this, the biggest, longest economic boom in history, he has lost money on almost every stock he’s bought. His stocks don’t stagnate or lose a point or two; they go into a freefall within days of his purchase. He buys at 26 and sells at 7. So, maybe his luck is changing; maybe a deserving loser is finally going to catch a break. I hope so, but I can’t help thinking that this is the beginning of the end. Although I don’t have the expertise to challenge the talking heads on CNBC, I know someone who does. And, if he were alive today, I’m sure he would advise his friends and family to take the money and run.

Joseph P. Kennedy Sr. (I’ve also heard this story attributed to Bernard Baruch, so who knows?) made a fortune in the crash of 1929 by shorting his holdings. That is, he bet on them to lose money. At a time when stock prices were going through the roof, Kennedy’s strategy seemed like madness to his more bullish colleagues, many of whom would soon lose everything. How did he see the end coming when others did not? Kennedy’s pessimism was not rooted in any arcane knowledge of economics nor was he privy to any specific insider information. To the contrary, it was outsider information that tipped him off to the imminent collapse of world capitalism.

Unlike many of the more established (read: WASP) Wall Street grandees, the Irish-American arriviste did not willingly engage in small talk with the shoeshine boys, paperboys, bartenders, and barbers who plied their trades in the financial district. Nonetheless, he couldn’t help overhearing them when he stopped for a shine or a shave. Where once these working slobs talked only of Babe Ruth’s home runs or Jack Dempsey’s knockouts, now they were speculating about how high GM shares would go before they split. If the stock market mania had spread so far (and so low), then it was time for serious men of business to get out.

In this era of endless blather about the democratizing, empowering potential of the stock market for the little man, Kennedy’s naked elitism is refreshing, and of course, his business acumen was undeniable. Therefore, it seems to me that Vince’s temporary good fortune is a sign that the bubble is about to burst.

It is also a sign that we need to get those window guards installed in a hurry if we are to prevent an epidemic of defenestrating investment bankers. I am not proposing these safety measures out of any concern for the lives of the tenants–if they want to kill themselves, it’s okay with me. But, as the guy who cleans the sidewalk, it is in my best interest to ensure that the suicidal stock speculators find a less messy way to meet their maker, the Great Alan Greenspan in the sky.

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