Warren always smiled and sympathized with the traders’ complaints, while marveling that anyone working there could be so unhappy with a job that any of two or three hundred thousand intelligent, well-educated applicants would literally give up their lives for.
Malcolm Conover, the managing director in charge of sales, had offered Warren a spot on the New York institutional bond sales desk, considered a plum assignment. Several of the senior salesmen had taken a shine to Warren and liked his pleasant, unthreatening manner. Unsure of which offer to accept, Warren had asked Carl Dressler to allow him to have some extra time on the trading desk, to see how he felt about it. He’d always had success when it depended on his getting people to like him, and after a few weeks of watching the stress traders operated under, he wasn’t sure it was for him. He had also noticed that Weldon had virtually no traders over thirty-one or thirty-two, while many salesmen were in their forties.
“Burnout. It’s like a dog’s age. Seven years for every one.” Alex Stevenson, one of the senior traders on the mortgage desk, at twenty-nine, explained. He had a hawklike face, with hollowed-out cheeks and curly hair around a severely receding hairline. It was the head of a much thinner man grafted onto a round body, his stomach rolling over his belt. His thick arms and neck showed he spent time in the gym, but years of sitting all day had taken their toll. He didn’t hesitate to tell Warren that he was earning $1.3 million a year but felt grossly underpaid, and he complained constantly. “This job sucks. You come in every day, and Carl’s standing there asking how much money you made. You’ve got clients on one side trying to pick you off if you make a mistake, and the rest of the Street trying very hard to fit their foot up your ass. Somehow, you’re supposed to always be right, because when you’re wrong, you lose money. Now, salesmen, though, they’ve got a great deal! Whatever they buy or sell, it doesn’t matter how the firm does, as long as they get their commission. Hey, most of the time we pay a salesman more to get us out of a bad position than for selling a winner. I’m a piece of shit for losing dough on the bonds, and they’re a hero for selling them to someone. Then, when you actually have a great year, management fucks you on payday anyway.”
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.”