Nothing Personal: A Novel of Wall Street (11 page)

Warren had asked Alex why he kept trading, and why he’d stayed at Weldon if the pay was so low in comparison to that of some other firms.

“I honestly don’t know. I go in there every year on payday”—he pointed at Dressler’s office—”ready to quit and call a headhunter, and somehow that slimy fuck talks me into another year of this agony. I should get myself some big guarantee from some horseshit retail firm like Prudential, roll the dice a couple of years, then retire to San Diego. This place is bullshit.” Alex gestured at the expanse of the trading floor, the desks receding in tiered ranks to the walls of windows, easily 150 yards away, every seat filled by a young man or woman in a white shirt, staring at screens or talking rapidly into handsets or the occasional headset. In this hive of activity, shouting and laughing burst out sporadically. On one side, a couple of the treasury-bond traders were tossing a football, annoying the assistants and occasionally sending something smashing to the floor.

“What do you mean by roll the dice?” Warren had asked.

“I mean go work someplace where they give you a percentage of your profits.”

“Why is that rolling the dice?” Warren didn’t understand what Alex meant.

“Because you go there, they guarantee you a big bonus no matter what, and then you just take huge positions. If you win, you get a piece above your guarantee and you get seriously rich quick. If you lose, it’s their money, and you leave with just your guarantee, but a rep as a big hitter—so at least you have big cojones. Other firms will still want you.”

“So, why work in a place like Weldon?”

“Well, they tell you that you’ll be taken care of and have a long career. Also, they have the big customers—the institutions. The percentage places are usually the retail shops. Their customers are moms and pops with twenty thousand bucks. We only deal with the big boys—you know—pension funds with twenty or fifty billion or even a hundred or more. The crap firms like Pru or Smith Barney just gouge the little guys for big commissions. Their traders usually are more like clerks. Understand?”

“Sure. Since we can’t rip off the unsophisticated little guy on a regular basis, we just try to do it to the big guys. But, that generally means you’ve got to have some brains, ’cause they’re smarter.”

“Some are, some aren’t. But they’ve all got their charms.”

“Yeah, but if you’re a good trader, does it matter where you work? And don’t a lot of other shops have decent institutional sales?” Warren was perplexed by Alex’s misery and refusal to change anything. Alex clearly liked talking about himself, and Warren felt that he was getting to see a side of the business that it might take years to fully appreciate.

“Hey, the devil you know is better than the one you don’t. And, sure, Solly, First Boston, and Morgan have good sales forces, but they pay traders the same way as here. My advice is go into sales or get a percentage deal to trade while you’re young, single, and have no overhead. Me, I’ve got a wife, two kids, and a couple of mortgages. I can’t afford to take any risks with my career.”

Alex broke off the conversation at that point to argue on the phone with Bill Dougherty, a senior salesman, over the value of a $75 million block of FNMA-guaranteed mortgage bonds with a coupon of 10 percent. His customer, Metropolitan Life Insurance, wanted to buy them an eighth of a percent cheaper than Alex was offering them, a difference of about a hundred thousand dollars.

“Hey, Dougherty, tell the Met to get fucked, okay? I’m sick of those guys bidding me back an eighth on everything. Just for once, let them lift me. These bonds are at least a half point cheap to where they should be, and these assholes can’t get this size anywhere else.” Alex disconnected the phone and turned to Warren. “You see? These fucking guys, they know I’ve got cheap bonds, that I made a good call when I bought them last week. If they want my bonds, they gotta come to me. I’ll drop the price one thirty-second of a point, but that’s it. Fucking Dougherty is just the errand boy. Bet they buy ’em.” Alex had gotten a little flushed.

“Sounds smart,” Warren said, then resumed their conversation. “But is it really Weldon’s franchise that makes the position profitable, or is it you?” Warren had been inundated over and over with the notion of Weldon’s franchise in the training classes, until the concept had taken on a life if its own. Everything they saw or heard clearly implied that it was Weldon Brothers that made the business happen, that salesmen and traders were just a part of a continuum of bodies filling the precious seats and taking phone calls like clerks.

“Ah, who knows? Look, I made this place thirty-seven million bucks last year. Let’s say I’d gone to Drexel or Pru-Bache and gotten fifteen or twenty percent. I’d only have had to make ten million there to get paid maybe twice as much.” Alex stopped and studied the broker screens in front of him. Every line was a bond being offered to sell or buy. “Ah, I see the Met went to someone to try to buy the bonds cheaper.” He pointed at some numbers that Warren deciphered as a bid. Alex picked up the phone to the broker.

“Bid seven for twenty tens,” he said, and hung up. “When the Met hears they’re seven bid in the Street, I bet they’ll buy my bonds … ah, I don’t have to bet. That’s gotta be Dougherty calling me now.” He punched another line, for the New York sales desk. The traders and salesmen in New York did business on the phone, even though they sat only fifty or sixty feet apart. “Yeah?… Billy? How’d I know?… They wanna pay six? Yeah, me too. I wanna pay six for more bonds, too. Six bid for a hundred million, okay? I’m at seven.… Yup. Seventy-five million to go at seven.… I’ll wait.” He smiled at Warren. “Okay?… Yeah, seventy-five done at seven. Take two dollars, priority one, and call me in the morning. Thanks.”

“They bought ’em?”

“Yup. At seven. Now, get this. I paid Dougherty two dollars per thousand commission. He sold seventy-five million bonds. That’s three hundred grand in gross commission. Priority one means he gets the top percentage payout on commission—fifteen percent. That’s about forty-five grand net pay for four minutes’ work. And, he’s got no positions to worry about, no losses to eat. If I’m lucky and don’t blow the four hundred grand profit I just made by doing something stupid, I might see five or ten grand off this trade at the end of the year. Once he prints a ticket, nothing can make him give that money back. Sweet, huh?” Alex shook his head, evidently finding it a little hard to believe himself.

“Well, that’s why we’re here, right? For the glory of Weldon, and a private plane.” Warren smiled.

Alex shrugged. “Yeah. Whatever. All I know is, if I wasn’t doing this, I’d probably be one of those homeless guys washing windshields. I really don’t have a clue what else I could do for a living.” Something defeated in Alex’s voice depressed Warren. That Alex had an undergraduate degree in engineering from Princeton, an MBA from Harvard Business School, and had had nothing but success as a trader didn’t seem to have helped his confidence in his abilities at all.

“You know what? I think I’m going to go sit with Dougherty for a while. At least he’s probably enjoying his big trade. Jesus, you just printed four hundred grand. Shouldn’t you feel good about that?” Warren said, amazed.

“Sure. I feel great. Look at me. I could just bust into song or something. So Met Life bought my fucking tens. Now what? Now I gotta think of something else. Maybe we could do a strip deal. I don’t know. The month’s almost over, and if I don’t hit one point two mil, I’ll be behind last year. You know, last year was a record year. And we’re budgeted to be up twenty percent this year. Isn’t trading fun? I hate this fucking job. They’re going to carry me out of here in a goddamn box, but I’ll be all dried out, like a fucking prune, so it’ll be a small, light box. Am I cheering you up yet?” Alex wasn’t kidding. His shoulders were slumped, and he was staring tensely at the screens. He had been inactive for no more than two or three minutes, and you could see he was already nervous, bored, anxious. He punched an autodial button on the turret, then hung up before it rang. He scribbled a few notes, then picked up the handset to make a call, paused to look at the screens, then slammed the phone down on the desk. Warren got up and grunted a good-bye. At twenty-nine, Alex looked about forty, and Warren noticed as he got up that Alex was going gray at the temples, too.

Warren no longer had any doubts. Despite what Bill Pike had said in that terrible interview, he hoped that Weldon would let him make his own choice. He wanted no part of the trader’s life. Selling seemed a far better lifestyle, and deep down, Warren had to admit he wasn’t sure he could do trading or stand that kind of pressure. As Dirty Harry said, “A man’s got to know his limitations.”

eleven

Fortunately, Carl Dressler had been supportive of Warren’s decision to go into sales. He told Warren that he thought Warren would make a terrific trader, but agreed that with his “interpersonal skills” he would probably be more valuable to Weldon in sales. Plus, everyone was impressed with how well Warren understood all the mortgage-backed securities structures, which would be useful in sales. The only issue was one trader on the government desk who, for some reason, hated him. Sean O’Hara was known to be unstable, though, and a little anti-Semitic, and he suspected Warren might be Jewish. Jillene told him to forget about it. Frank Malloran agreed and had said, “If O’Hara would quit stuffing half a pound of coke up half his nose in the bathroom half the day, maybe that half-wit would be half-sane half the time.” Warren vowed to try to win O’Hara over.

The first attempt had started unpleasantly. Dan Goodman, a junior salesman, had asked O’Hara the same idiotic question three times about a trade O’Hara had suggested. Even Warren understood the trade—it was nothing more than a purchase and sale to take advantage of a spike in repo rates on a bond that was temporarily in short supply. Goodman’s client could earn an effective 10 percent annualized return just to lend another client some bonds for a week. The normal rate was about 4 percent.

“Jesus Christ, Goodman, what the fuck is wrong with you?” O’Hara had said. “You got shit for brains or something?”

Goodman told O’Hara to screw off, that the trader had the whole concept wrong. Everyone was a little stunned to realize that Goodman didn’t understand it.

Warren was listening to the conversation with the intermediate trader, and he jumped in good-naturedly, saying, “Hey, Dan, come on! You have to get it! This is embarrassing! Jews are supposed to be smart!” The traders all snickered—only another Jewish guy could get away with a joke like that.

Goodman looked confused for a second, then blurted out, “What? Oh, no, no. You don’t understand, I’m
not Jewish
!”

The sheer stupidity of his reply convulsed the entire desk, and O’Hara slapped Warren on the back, laughing so hard tears ran out of his eyes. From then on, every time Warren passed the desk, O’Hara would whine, “Oh, no, no. I’m not Jewish!”—and they’d share a laugh. O’Hara was no longer an obstacle to Warren—in fact he became a big supporter.

Jillene called Warren upstairs in early November and told him he’d been placed in institutional fixed-income sales. He’d be reporting to Malcolm Conover, his salary was raised immediately to $100,000, and he could expect a 50 percent bonus, or better, at year’s end if he acquitted himself well over his first eight weeks. He would likely become a commission salesman next year. They talked briefly about Serena Marchand, who had never come out of her coma and was not expected to live. Warren was surprised by the emotion in the older woman’s voice—she had only met Serena once for a short interview. Maybe Jillene wasn’t so tough after all.

He couldn’t wait to tell Larisa all the good news. The downside was that selling would probably involve more travel, but he hoped he might get some accounts in fun places to visit, not just New York. A lot of younger salesmen were given accounts in the Midwest or the South because the branch offices of Weldon were not tremendously strong in fixed-income sales.

“It’s really not that difficult to figure out,” he told Larisa as they ate their appetizers—green salads in a perfect mustard vinaigrette—at La Goulue, an intimate French bistro on Seventieth Street off Madison Avenue. The room was paneled in a rich brown mahogany with large mirrors and framed pictures lining the walls, the lighting warm and flattering. Crisp white tablecloths and an all-French staff lent the place a true Parisian feel made tactile by the mellow glint of the well-worn silverware that filled the air with the welcoming chatter of fork and knife against china plates. “Basically, the accounts are guys who get paid to buy bonds, and you get paid to sell them. We’ve got some pretty decent traders, especially in mortgages, and all the accounts have a lot of respect for Weldon. With some of the guys I’ve been watching, most of their business is just picking up the phone and taking orders, or repeating what a trader says is a good trade to a customer. And they make a ton of money just being parrots. But few of the guys really sell. I mean, they could sell anything—cars, real estate, shoes. There’s a guy in LA who’s amazing, and a few in New York and Chicago. It just doesn’t seem like it takes a lot of brains to do this. Being smart can help, but it sure isn’t a requirement.”

“You really think it’s so easy? Seems to me you can’t even keep your notes straight.” Larisa had made fun of the notebooks Warren was trying to keep. No matter how diligent he was, his organizational skills stank. He kept forgetting to take notes, or losing the whole book. “But what an amazing opportunity!”

“I don’t know about easy,” Warren said, taking a sip of his glass of Domaines Ott rosé. “But these senior guys literally make
millions
a year, and it seems like their most stressful decision is whether to order the Lafite or the Petrus at a client dinner. Plus, management doesn’t ride them like traders or finance geeks.”

“Now that’s the kind of sex talk a woman like me wants to hear,” Larisa said, leaning over the table and stroking his thigh. “Maybe tonight I can teach you a little lesson about dealing with management the right way.”