The markets have
crashed; the buyers are in retreat. Merrill Lynch and Morgan Stanley both
announced cutbacks in their retail stock-flogging ranks. Analysts like Morgan
Stanley’s Mary Meeker and Merrill Lynch’s Henry Blodget have been named in
class-action suits filed by investors.
Retail brokers, the weary men on the front lines, have lost
their clients’ money-as well as much of their own-and now are getting sued by
their customers, who, it seems, hate them.
But Alden Cass doesn’t hate them. Mr. Cass, a candidate for
a doctorate in clinical psychology, aspires to be the Frasier Crane of the
broker set. He hangs out with brokers, does the club scene with them, even takes the odd flyer on a penny stock or two. With his
slicked-back hair, briefcase and deep summer tan, he even looks like a broker.
But the 25-year-old New Yorker is pursuing his doctorate by
trying to quantify the depressive tendencies of retail stock brokers. His
theory is: Brokers may be more vulnerable to clinical depression than the rest
“A lot of these guys have manic-depressive personalities
that are enhanced by the volatility of the market. They also lack the insight
or the coping skills to deal with the stresses of the market,” said Mr. Cass.
“As a result, it’s natural to find higher levels of depression amongst them.”
He said he thinks he has the empirical evidence to support his case.
Two years ago, preparing for his doctorate in clinical psychology at Nova
in Fort Lauderdale, Fla.,
Mr. Cass interviewed 26 brokers, age 22 to 32, from seven major Wall Street
firms. He got his brokers into a room and asked them a series of professionally
formatted questions in order to gauge the extent of their blues:
I blame myself for
everything bad that happens; I am critical of myself for my weaknesses or
mistakes; I don’t get satisfaction out of anything anymore; I worry that this
job is hardening me emotionally; I have trouble going to work in the morning.
The questions were
clinical and scientific, used to determine the extent of a patient’s
depression. The results of his survey, published in association with Nova
Southeastern under the supervision of Professor John Lewis, showed that 23
percent of the brokers interviewed met clinical standards of major depression,
meaning that they might require professional help or medication, and 38 percent
met subclinical levels of major depression, suggesting that they would benefit
from the services of a mental-health professional. Granted, his survey sample
was small, but 23 percent seemed a compelling figure to Mr. Cass, considering
that research shows only 7 percent of American males suffer from depression.
Currently interning at St. Luke’s-Roosevelt Hospital, Mr.
Cass was drawn into the stockbroker’s world out of curiosity. Wondering why
many of his broker friends from college seemed morose and frazzled, he started
doing the happy-hour rounds at downtown bars like Moran’s, listening, observing
and eventually persuading a bunch of brokers to participate in his study.
His brash, fast-talking demeanor and willingness to drink
with them helped win their trust. Before long, they were his subjects in a
conference room, answering 100-odd questions- My sex life is not as good as it used to be; I find myself using
obscenities at work -in some cases, even breaking down in tears. A few
became friends after the survey was finished and have kept in touch.
One of his subjects was Ned Merrill-not his real name-a
30-year-old with a wife and a brand-new condo in Brooklyn.
Each day he reports to his Wall Street office at 7:30
a.m., flicks on his computer screen and starts on the 100 calls he
will make to doctors and lawyers around the city. There was a time when he made
600 a day.
He doesn’t want to make the calls-nine out of 10 will hang
up on him-he hates doing it, in fact, but times are tough; for the first six
months of 2001, he didn’t take home one penny. In 1999, he made $500,000 in
“Except for my mortgage, I’m behind in everything,” he said,
his tone matter-of-fact. “I’ve liquidated every investment I’ve ever had; I’ve
got $25,000 in credit-card debt, and now I’m dipping into my 401(k). Two years
ago, it would have meant nothing to me to be walking down the street, see a thousand-dollar
painting and buy it, just because I liked it.”
These days, there are no paintings, just nightmares. “I’ve
been having them every day,” he said. “It’s been driving me crazy. One time,
our dog attacked us, then a neighbor came in through the terrace and a close
friend came crying to me that he was depressed. I get about three hours of
sleep a night. I wake up with eye twitches, neck twitches, everything
twitches.” He has also developed a bad case of eczema, with his skin frequently
breaking out in a hot, itchy rash.
Indeed, most days, when the full force of another bright,
shiny day shakes Mr. Merrill from his fitful slumber, he would prefer to spend
the day in bed. But he gets up and goes to work. “I have palpitations every
day,” he said. “Yeah, for the most part I’m depressed.” His voice was low and
heavy. “It’s not really myself that I hate, it’s my
life. I hate my life. There always seems to be something.”
Now that the great bull market has withered away, the buyers
feel snookered and the salesmen have nothing left to sell. Currently, the vogue
is to blame it all on your broker-that sweet-talking dream peddler who made the
giddy case to you that a position in JDS Uniphase at $140 would set you up for
retirement. Now, with JDS at $10, you hate his guts and want to sue him. You
can’t even get him on the phone anymore. Well, there’s a reason he’s not taking
your calls: His pain is greater than yours.
“These guys are blaming themselves for the market correction
and for picking the wrong stocks,” said Mr. Cass. “It’s the cognitive theory of
depression-negative thoughts will lead to negative emotions. If you really
think, ‘I’m a horrible person because this stock went down,’ that’s irrational
behavior, and that’s when the depression hits.”
Ned Merrill remembers when the market turned on him: It was
April 2000, and he had piled all of his and his clients’ money into ICG
Communications, Global Crossing and Healtheon, now WebMD-all bull-market tech
stocks, their charts straight arrows pointing to the sky. When his world
started collapsing around him, his pain was physical, a churning in his gut.
Sitting there in his coat and tie, his screen blinking red, his stocks plunging
10 percent a day, the screams and yells of his margined-to-the-eyeballs clients
pounding in his head, he got sick.
“I was throwing up in the garbage pail right by my desk,” he
recalls. “You have to realize: This was not like Intel going from 40 to 20. At
least then, you still have the stock. My guys were on margin-their stocks went
to zero and they still owed $10,000. You try telling a client whose stock has
gone to zero that he still owes 10,000 bucks. That came off me.”
In the 18 months since the tech bubble popped, many of his
clients either deserted him or filed suit against him.
Brooklyn-born, he has been a salesman since his freshman
year at Baruch College
and has sold everything from subscriptions to The New York Times to porn videos. Selling stock is what he does.
“I’m a good salesman,” he said. “I understand it. And you know, even when you
are depressed … you just put on an act. There is a reason that Cats played for so many years. You don’t
think those actors ever got sick of it? I know that I’ve got to do the same
thing every day.”
Mr. Merrill pays the rent and utility bills for his mother.
His wife is on disability and his expenses run to $5,000 a month. Since he’s
paid no fixed salary, everything must come from commissions. “Crazy things go
through your head,” he said. “Like trying to hurt yourself
and go on disability.” How about suicide? He paused, taking some care
with his words. “I think about it, like how I would do it-it would probably be
pills, not the Verrazano Bridge-but
it always leaves my mind. That’s a quitter’s way. It took me a long time to get
where I am. Doing that would make me a real loser.”
Mr. Merrill tries not to bring his angst home. But sometimes
he will crack. “Your fuse gets short,” he says. “If my wife starts talking to
me about some stupid TV show or a recipe, I can go nuts. But I try not to be
like my father. When he wasn’t making money, the whole house felt it.”
Ned Merrill is no pump-and-dump boiler-room smoothie looking
to make a quick buck. All his clients have his home number, and he’s fielded
their late-night calls as they wept over their wiped-out portfolios. Although
he wanted to make his and their lives a bit better, he would always tell them:
The market is a strange beast; there are no guarantees. “Look, I don’t have one
bad mark on my brokerage license, and I never will,” he said. “But every day
now, someone is threatening to sue me. And you know what? I still don’t know
what’s wrong with losing money …. [I]n this business, you are
allowed to lose money.”
Should we worry about Mr. Merrill? Mr. Cass, who speaks to
him about once a month, said no. “Ned is not a risk, although his quality of
life is certainly suffering,” he said. “But he is married …. It’s all the other
guys who are self-medicating through drugs and alcohol-those are the guys I
would worry about.”
And as for Mr. Cass, he’s still a customer of Mr. Merrill’s.
“Ned got me into this stock at around 6 and said it would go to 20,” he said.
“It’s around 1 now. He’s still my broker, though, even though the stock was
garbage. You have to take responsibility for your own decisions.”