by Studs Terkel
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 go to the race track. When there’s fifty thousand people at the track, 49,990 are there to lose money. It’s kind of a self-flagellation. There’s maybe ten people in that park who are pros, who’ve been there at six in the morning and clocked the horses, who’ve felt the turf and talked to the jockey or stable boy. They’re the professional gamblers. They’re there for just one reason—to make money. The 49,990 other slobs, they’re there to lose. I don’t have to tell you about horses.”
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.)
“Look, we’ve got eighty billions of dollars worth of money floating around in Europe. It’s nonconvertible. We’ve fucked every country in the world. We’ve got every central bank in the world with dollars up to their ass. They can’t do anything with it. We said to ‘em, “We’re the Texans.” The world belongs to Connally. He told ’em in effect, ‘Live with that money. We’ve bought your companies, we’ve taken over your economies, we’ve given you dollars that are spurious. Don’t blow the whistle on us, because the whole fuckin’ sky is gonna come down, Chicken Little. Maybe two, three years from now, if the spirit moves us, we may talk about the convertibility of the dollars into gold. In the meantime, Fuck ya. Put those dollars in our treasury notes, buy our stocks, do somethin’ with ’em. But don’t come back to me to redeem ‘em, because they’re worthless.’ We fucked the world.
“I’ve seen ‘em do this. I buy gold, I buy silver. It’s the only thing that’s real. You can’t buy gold in this country. We don’t dare. If we let Americans buy gold, everybody’d be diggin’ up his fuckin’ back yard and buryin’ gold bullion in it. ‘Cause he knows the fuckin’ thing’s real.”
(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.
“People who have made money in the market have consistently had money. The great wealth in this country has bought Johnson & Johnson, has bought IBM. They never sold a share. To this day, sixty-six percent of the stock is owned by people that never sold a share. They bought General Motors in 1930, they never sold it. They didn’t put it in the banks at four percent return. They live on the return. They never sell the principle.”
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.
“IBM, Eastman Kodak, Xerox, these are called growth stocks. And they’re held by every major institution, every pension funds, every university. This is the backbone. Nobody questions the basic premise that these stocks will continually get better. Polaroid over the past four years has had an earning growth of minus eleven. But because they’ve got a camera that is unique, they pretend they will expand at an infinite rate. As long as you believe that, you can pay 130 for Polaroid, as it was today. You’ll pay anything as long as you believe this American Dream that growth is forever. But the people who make this market, at some bad hour they’re gonna sell Polaroid at 130 to shnooks like you and me. And they’re gonna pick it up again at 65 and start the whole process all over. They’ve done it continually.”
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.
Brokers merely are ribbon clerks. They’re order takers. They do very little if it’s a big house. It’s a profession that’s in its decline. Everyt
hing is being committed to computer, to systemized tapes. These are houses now on the Street that say, “Don’t you ever make a decision. We have a computer that tells you what to do to your customer, to buy and to sell.” At some point the function of a broker may be relegated to some girl who sits at a phone and repeats what the computer has told the customer to buy and to sell. I see Wall Street being reduced to kind of a supermarket. The biggest houses will be swallowing the others. You’ll wind up with four or five houses and not many more than half a dozen.
There are houses that guarantee if you utilize the machine, you’ll get five or ten trades a year out of your customers. They’ll put him in a stock and they’ll take him out. Beautiful. But in actual practice, when the market goes sour, the machine breaks down. It can’t take care of the vagaries. The machine can’t account for an economic crisis or a world depression. The machine can’t account for an unemployment rate that exceeds six percent. The machine can’t account for a military adventure in Vietnam. It’s a robot. It can do what the programmed tape tells it to. But it can’t account for the extraordinary world we live in.
People like me start out with a feeling that there’s a place for them in society, that they really have a useful function. They see it destroyed by the cynicism of the market. A piece of worthless stock can be given glamour and many people may be induced to buy it. Excitement, public relations. The people can be wiped out with the absolute cynicism that brings those who conceived it to the top.
Can you imagine? I really felt I could buck this machine. When I began, I was sure I could win. I no longer have that confidence. What’s happening is so extraordinary. It’s so much bigger than I am.
I’m just trying to go along for the ride. I have little to do with it. They believe the game because they know how the cards are gonna be dealt. I don’t believe the game because I know the cards are stacked. After being told about fiscal responsibility, they know the treasury’s gonna spew out all kinds of dollars, and all kinds of money’s gonna be made available to the corporations for them to put in the market. This is a contradiction. This is where the thing breaks down.
I can’t say what I’m doing has any value. This doesn’t make me too happy. If I could learn in some way to live with the wheel—but I can’t. If I make an error and it costs the customer money, it’s as though it were my money. This is extraordinary. The average broker lives to generate commissions and he goes home as though he were selling shoelaces or ties. He doesn’t carry the goddamn market with him. I carry it like it was a monkey on my back. Man, I wake up in the middle of the night remembering what I did right or wrong. Thats’ no good. But I really can’t make it happen.
When I built the houses, I hired a bricklayer, I hired the roofer, I determined who put the goddamned thing together. And when I handed somebody a key, the house was whole. I made it happen. I can’t do it in the market. I’m just being manipulated and moved around and I keep pretending I can understand it, that I can somehow cope with it. The truth is I can’t.
The broker as a human being is being demeaned by the financial community. His commissions are being cut. I joined the Association of Investment Brokers—we number about a thousand members as against forty thousand brokers—which tries to think of itself as though it were the Pilots Union. The terrible thing is we don’t fly planes. We handle the fuckin’ phone and punch out digits on something that translates from a computer. We pretend we have status in the community, but we’re expendable.
The brokerage firms just cut our commission again, while they increased their own rate by forty-two percent. The SEC approved a new set of commission rates. The SEC is just an arm of the stock exchange. They put their people in it. Like every regulatory agency, it serves the exchange and pisses on the public. The commissions for the houses are larger, but I make no more than I made before. This happened in every firm on the Street. It’s as though they went out and played golf together and agreed on it.
In this rip-off, we’re treated with contempt by the members of the stock exchange. You’re being told you’re not a useful member of society. They’re really saying, “If you make too big a noise, we’re gonna have a girl take the orders and the machine’ll do the rest. You’re better off to let us make your decisions. Don’t attempt to use your intelligence. Don’t attempt to figure out what’s happening, if you know what’s good for you.”
Oh, I’ll continue to cope. (Laughs.) I’ll continue to struggle against the machine. I’ll continue with my personal disillusionment. (Laughs.) Oh, I’d like one morning to wake up and go to some work that gave me joy. If I could build houses all over again, I would do it. Because when it’s finished, somebody’s gonna live in it, and the house is gonna be built and it’s gonna be there after I’m gone. (Pause.) Ahhh, fuck it!
BUREAUCRACY
STEVE CARMICHAEL
“I’m a coordinator. I’m project management.” He works for the Neighborhood Youth Corps. Though it is federally funded through the OEO, he is employed by the city. “Two of our agencies were joined together about six months ago. A further step toward institutionalizing the poverty program.” He heads a department of nine people. “We take young people of poverty income families and assist them through work experiences, those who’ve dropped out of school, and thereby better their potential of obtaining a job.”
He is twenty-five, has a wife and one child.
When I was with VISTA my greatest frustration was dealing with administrators. I was working in a school and I saw the board of education as a big bureaucracy, which could not move. I was disdainful of bureaucrats in Washington, who set down rules without ever having been to places where those rules take effect. Red tape. I said I could replace a bureaucrat and conduct a program in relationship to people, not figures. I doubt seriously if three years from now I’ll be involved in public administration. One reason is each day I find myself more and more like unto the people I wanted to replace.
I’ll run into one administrator and try to institute a change and then I’ll go to someone else and connive to get the change. Gradually your effectiveness wears down. Pretty soon you no longer identify as the bright guy with the ideas. You become the fly in the ointment. You’re criticized by your superiors and your subordinates. Not in a direct manner. Indirectly, by being ignored. They say I’m unrealistic. One of the fellas that works with me said, “It’s a dream to believe this program will take sixteen-, seventeen-year-old dropouts and make something of their lives.” This may well be true, but if I’m going to belive that I can’t believe my job has any worth.
I may be rocking the boat, though I’m not accomplishing anything. As the criticism of me steps up, the security aspect of my job comes into play. I begin to say, “Okay, I got a recent promotion. I earned it.” They couldn’t deny anybody who made significant inputs. Now I’m at a plateau. As criticism continues, I find myself tempering my remarks, becoming more and more concerned about security.
I’m regarded as an upstart. I’m white and younger than they are. (Laughs.) They’re between thirty and forty. They might rate me fair to middlin’ as a person. They might give me a sixty percent range on a scale of a hundred percent. As a supervisor, I’d be down to about twenty percent. (Laughs.) I think I’m a better supervisor than they give me credit for. They criticize me for what criticism they may have of the entire program—which is about the way I criticized my supervisor when I was in their position. He became an ogre, the source of blame for the failings of the program. The difference is I don’t patronize my staff the way he did. They make a recommendation to me and I try to carry it out, if I feel it’s sound. I think it’s built up some of their confidence in me.
My suggestions go through administrative channels. Ninety percent of it is filtered out by my immediate superior. I have been less than successful in terms of getting things I believe need to be done. It took me six months to convince my boss to make one obvious administrative change. It took her two days to deny that she had ever opposed the change
.
We’ve got five or six young people who are burning to get into an automotive training program. Everybody says, “It takes signatures, it takes time.” I follow up on these things because everybody else seems to forget there are people waiting. So I’ll get that phone call, do some digging, find out nothing’s happened, report that to my boss, and call back and make my apologies. And then deal with a couple of minor matters—Johnny ripped off a saw today . . . certain enrollees are protesting because they’re getting gypped on their paychecks.
So we’re about a quarter to five and I suddenly look at my desk and it’s filled with papers—reports and memos. I have to sort them out before a secretary can file ‘em. Everybody’ll leave at five o’clock, except for me. Usually I’m there until six ’. If I did all the paper work I should, my sanity would go. Paper work I almost totally ignore. I make a lot of decisions over the phone. It hits you about two months later when somebody says, “Where’s the report on such and such? Where’s the documentation?”
“I had a lot more hope once. When I came out of VISTA I wanted to work in education. I wanted a decent paying job, too. I started out here at ten thousand dollars a year. That’s good when you consider I had no experience in the field and was only twenty-three. I didn’t realize how much it meant when you said you were a VISTA. I didn’t think it was that phenomenal.
