How the Stock Market Swallowed New York

It was a warm September morning, but Kate Aurthur suddenly awoke chilly and anxious in her Cobble Hill apartment. “I’d had a full-on dream about one of the CNBC reporters!” Aurthur says, sounding rattled all over again. “I don’t know why, but in the dream, I was on the CNBC set, and Susan Lisovicz slipped me a note saying that Abby Joseph Cohen actually thought the market was unsustainable, but we don’t want to cause a panic by admitting it.”

She pauses, exhales, laughs nervously at the memory. Aurthur, 29, splits her time between freelance writing and investing. “So now I was burdened by this knowledge – I was one of only three people in the world who knew this, that Abby Joseph Cohen thought the market couldn’t hold at 7,500!” she says. “I woke up really scared.”

In 1987, when the stock market melted down, Aurthur didn’t care: “I was still into Kill the capitalists! at that point.” Now even the wild fluctuations of the past two months can’t spook her out of the Dow Jones. “This is no trendy thing,” Aurthur says. “I can’t imagine ever not being involved in stocks.” Especially since she’s still haunted by October 1997, when she sold most of her AOL stock as the market plunged, only to watch helplessly as the price later tripled. “I won’t,” Aurthur says, sounding as steely as a Morgan Stanley lifer, “make that mistake again.”

Since August 31, when the Dow Jones Industrial Average shed 6 percent in one frenzied day, the nonstop, unavoidable New York conversation has been about the stock market, exposing just how obsessed and market-savvy this city has become. Pizza bakers in Carroll Gardens argue about the valuation of On the steps of St. Patrick’s, a man in expensive pinstripes shouts into his cell phone, “Qualcomm is down 6!” A friend of mine describes his fiancée as having “tremendous upside potential.” The boom, besides enriching hundreds of thousands of people and revivifying the city, has permanently altered the New York mind-set. We have become a city of traders.

Way back in 1987, a true crash did far more economic damage than August’s tumble, but the immediate suffering was confined to a red-suspendered financial-industry elite. Reams of business-section stories have documented how Main Street has been directly connected to Wall Street since 1987, through the explosive growth in 401(k) plans, mutual funds, and online investing. In many ways, the revolution in personal finance has been hopeful and democratizing. But the deep emotional investment of New Yorkers in the stock market, the way in which Dow consciousness has pervaded the collective unconscious, doesn’t fit neatly into charts and graphs.

Suddenly, everyone in New York thinks like a businessman: Clinton’s testimony is coming out Monday. I know the market’s going to move – but which way? It’s also a Jewish holiday, and Alcatel, the French phone company, is going to buy back some of its stock. When I turned on CNBC this morning, Europe was finishing a sharp overnight sell-off. How do I position myself?

The strange genius of this moment in the city’s life is that instead of letting the complex flood of world events wash over us, we’re seizing all this data and acting on it. With Bloomberg real-time stock quotes on our office computers and the Motley Fool guide on our bookshelves, we’re brokering our own future. In a period of record-setting volatility – twelve of the past twenty trading sessions (as of last Thursday) have seen triple-digit swings – any public anxiety has been offset by the thrill of being in the game. And in that sense, the boom has finally given the information age a purpose; everything, now, is news you can use.

Suzie Vasillov opened Keesal & Mathews, an Upper East Side store selling fine housewares, in October 1988. “One year after the crash, and just as the city was really heading into recession,” she says now, with wry sarcasm. “That shows you how much attention I was paying to the stock market, and what a financial genius I am.”

One recent night, Vasillov walked over to her favorite neighborhood Italian restaurant. Enjoying her pasta, she suddenly noticed she was surrounded by empty tables. Vasillov’s first thought wasn’t that Mondays are slow in the restaurant business. “No,” Vasillov says, “I thought, The Dow went down 500 points today. Are people cutting back already?

Perhaps she thought that way because her store has thrived and she’s got more at stake these days; maybe it’s because she’s more sophisticated. Or maybe it’s because this city has grown so acutely attuned to the stock market that Dow awareness alters everyone’s reflexes.

For thousands of New Yorkers, the nineties boom has been a transformative experience, not for the change in their income and consumption but for the shift in their sensibility. “Being involved with the stock market has absolutely changed the way I think and the way I look at the world,” Vasillov, 38, says. “Besides giving me a feeling of control over my life I’ve never had before, once you’re intimate with an investment portfolio you realize how everything is interconnected, from ball bearings to Dell computers. And you realize that all businesses are exactly the same – everyone’s making a product and trying to sell it. And whether you’re a mommy or the owner of a tony housewares shop, we’re all businesspeople. I think it’s a great thing that’s happened to this country.”

The triumph of stock-market culture is visible everywhere you look in the city. A decade ago, Wall Street was represented in the visual imagination by a TV shot of the floor of the New York Stock Exchange, crowded with harried, faceless guys in ill-fitting coats who appeared for a few seconds. Now the market is a ubiquitous, streaming electronic presence all over town, a rush of price quotes flickering through the windows of Fidelity branches.

A decade ago, Times Square was an anarchic neon jumble of small businesses peddling sex and novelties. Walking through Times Square now feels like stepping inside a spreadsheet: The famous news zipper at 1 Times Square is sponsored by Dow Jones. NASDAQ will soon have its own mammoth stock-quote screen directly across the street, rising three stories high on the face of the Condé Nast building; there will also be a gallery, à la the Today show, that’s part TV backdrop and part tourist attraction, featuring live traders. Five blocks north, on Morgan Stanley’s headquarters, huge glowing orange stock fractions and corporate symbols move so fast they’re unreadable.

But then, reading comprehension isn’t really the point of the Morgan Stanley zipper, and the new Times Square isn’t really about tourists. It’s about giving business the feeling of entertainment, and creating a central, tangible locus for the new, borderless capitalism. Sure, there are old-fashioned plays and musicals down there on Broadway, but the real drama is in those numbers overhead, and multinational titans of the info-industrial age, companies like Disney, Viacom, and Warner Bros., dominate the landscape. In a world where there’s little inherent value anymore in a thing itself, and the cultural sensibility reduces questions to who’s a winner and who’s a loser – what did the movie gross? Did the president’s speech play, or didn’t it? – then the stock market becomes prime theater.

“The new Times Square,” says New School semiotician Marshall Blonsky, “is an agora of global business. If you’re going to have a new-money economy, you have to have a center; there has to be a place to go and dream about it, and an image that these companies can film and broadcast. It’s about the imaginary – people worldwide have to be able to form an image out of this new globo-business.”

Certainly the getting and spending of money, the doing of deals, has been a central element of New York life from the moment Peter Minuit bought out the Manhattan Indians. And Wall Street has been a defining presence in the city’s mythology for nearly as long. But the stock market was only one, albeit powerful, guest at the cocktail party; now it is the loudest voice. Carl McCall, the state comptroller, recently detailed the city’s extraordinary economic dependency on Wall Street. But McCall didn’t try to quantify New York’s growing spiritual dependency on the market. What does it mean to a city’s soul when the rise and fall of the Dow occupies so much space in the civic heart?

It’s the Friday before the long Labor Day weekend. The Dow rocketed down 512 points on Monday and wobbled for the next four days. Dr. Kin Tsoi is on his way to visit a friend whose office is next to Grand Central, but first he pops into a Charles Schwab branch across East 42nd Street to check stock quotes. “A lot of money will be made on Tuesday, when the real traders are back from vacation,” Tsoi says coolly. “I’ve already plotted out what I’m going to do.”

One of the things that marks this moment in New York life is the lack of investor panic, despite the six-week Dow roller coaster. Personal-finance best-sellers have pounded an investing orthodoxy into New Yorkers’ brains, and whenever the market lurches, people mouth its slogans with cultish repetition: We’re in it for the long term. Dips are great buying opportunities. The fundamentals haven’t changed.

Tsoi is typical: He’s sure his theory of the market is right, and that he’s got the stomach to ride out any turbulence. Tsoi, the son of acupuncturists, grew up in a mainland China where private profit was far from encouraged. Today he manages hundreds of thousands of dollars in investments for his parents’ retirement portfolio, and swears by a ten-day average he’s developed, mixed with judicious purchases of index options. For the past seven years, Tsoi, 32, a research fellow in oncology at NYU, has spent at least twenty minutes a day studying the market, downloading software to help with his calculations, charting the trends. “If the ten-day average of prices is down, I’m out of the market,” Tsoi says. “All the psychology, all the pricing is built into the graph rating. Nothing else matters. You don’t make a lot of money, but you make good money. I don’t believe ‘experts.’ They’re a bunch of liars. You have to do the homework by yourself and make your own decisions.”

The city’s younger investors, who are at the core of the new market mentality, are fascinatingly, breathtakingly confident – not that the boom will last forever, but that they’ll have the knowledge and endurance to stay with it, and profit, when it falls.

One reason the city’s mood feels so intertwined with Wall Street’s is that this generation of twentysomethings has an unprecedented mix of computer fluency and market sophistication. Todd Rosenberg, 29, doesn’t work on Wall Street, but he has nevertheless made the market his own. “In the tech stocks, like CNET and EarthLink,” Rosenberg says, “people like me, who are using the programs every day, have more insight into what’s working than Wall Street does – we’re using the programs before Wall Street knows about these companies. Instead of reading reports about income growth from quarter to quarter, we’re judging them by the quality of the program. It creates a level of excitement. It’s the same as Warren Buffett’s philosophy: He only buys things he knows, uses, and likes.”

In fact, the stock market, formerly the epitome of Establishment power, now can serve as a badge of youthful rebellion. Rosenberg, an account executive at, tried consulting the traditional authority figures. “I asked my uncle Stanley, who’s a broker, about Amazon and Yahoo,” he says. “He didn’t know them, and all he could find out was that they had a lot of debt. Well, I was at Yahoo every day, everyone I know is using Yahoo every day, so I bought it when it was at 38 a year ago.” Yahoo stock now hovers around $115 per share.

Mention the word recession to Rosenberg and he gives it a brief, reflexive nod. “Yeah, eventually the stock market is going to come down,” he says, “but that’ll just be a good time to buy. It’s just the pattern – the market drops, but then there are huge gains. It’ll always come back. It’s kinda cool.”

It isn’t exactly money-changers in the temple, but it is a bit disorienting to sit in St. Bartholomew’s Church on Park Avenue and listen to people worship Peter Lynch, George Soros, and Warren Buffett.

This is the monthly meeting of the MVP Club, one of the hundreds of investors’ clubs that have sprung up around the city in the past decade. The fourteen members of MVP range from an architect in his mid-forties to a retired chemical engineer in his mid-seventies, but they’ve all become ravenous students of the stock market. Their portfolio, spread among riskier high-tech stocks like Dallas Semiconductor and steady performers like Home Depot, has grown by 12 percent this year, while the S&P 500 has gone nearly flat. In the past five years, MVP’s stocks have tripled in value.

The club follows the principles of the National Association of Investors Corporation, a nationwide network of small investors. “You could say we’ve been brainwashed,” says Anita Hunter, a public-relations executive who gives her age as “mature.” “You can’t pick up anything these days without reading ‘Sit tight; that’s how you make money.’ It’s the people who are in the market without a philosophy who are nervous and talking all the time.”

One NAIC tenet is to stay “fully invested” in the market, so the members of MVP, sitting on $6,000 in cash, are impatient. There’s a sharp, loud, fast-moving evaluation of possibilities (“Everyone’s talking so much, this sounds like a seder!” jokes one member), full of arcana about P/E ratios and insider stock options, before votes are taken. It’s decided the club will buy 75 shares of Diebold (makers of cash machines), 50 shares of Manitowoc (industrial cranes and ice machines), and 70 shares of Jones Medical. Then the floor is open to a discussion of general financial conditions. The mood is pessimistic; all of the speakers outline the reasons they’re sure a recession is just ahead. John Slater, a 63-year-old retired market researcher, offers some insight he’s gleaned from a professional money manager he knows and trusts: “He tells me the Asian recovery isn’t going to be V-shaped or U-shaped,” Slater says. “It’s going to be an L. This big slide is going to be followed by a flat horizontal line.”

Bernie Brachfeld, an Upper West Side dentist, hasn’t said a word in the entire two-hour meeting. But now he pipes up. “So with all this bad news ahead,” Brachfeld says, “why are we pushing this money back into stocks right away?”

Dead silence. Then Bob Freeman remembers the doctrine, the canon that they all cling to: “We’re not market-timers!” he shouts. “The system is that you stay fully invested, or you miss the great leaps up! There’s been 28 days in the past ten years that if you were out of the market, you would have missed the biggest advances.” The others jump in, a babble of voices, reciting the mantras: We’re in it for the long term. We’re not speculators. A balanced portfolio. The fundamentals haven’t changed.

Brachfeld, the heretic, shrugs and goes along. Later, he says he’s far from convinced. “The other people, they’re all strongly into NAIC and its principles,” he says. “There’s all these rules, but they’re generalities. I just feel one should look at the specific situation. No matter what the philosophy, if the market goes down, you’re going to lose money.”

Downtown, the market’s shedding another 175 points. But inside Prada’s sleek, minimalist new Fifth Avenue flagship store, the walls are a soothing light green – the color of happy, guilt-free money. The charge-card terminal is hidden out of sight, so no one has to be reminded this is a transaction. Prada has ridden to stylish prominence in the past five years, courtesy of a black nylon backpack and the bull market.

On the main floor, a shopper, Aljean Stuart, nods to a saleswoman – yes, she’ll take the $1,950 appliquéd organza sheath. “We’ve done well in the the past five years,” Stuart says; her husband is a bond trader. “It isn’t time to worry,” she says.

A few amateur investors, though, are admitting to market fatigue. “The last few weeks have been really draining,” Steve Hoffman says. “When things are going good in the market, I pay a lot of attention. I try to ignore it when it’s bad, but it’s been hard not to look lately. It’s been nerve-racking. There are stock zippers everywhere. You go into Citibank on 50th Street, and they have all those flat-screen monitors with stock quotes going by your face as you’re standing in line. It’s like the hearth of the nineties.”

Hoffman, the creative director at Sports Illustrated, is 47, married, with two children and a brownstone in Park Slope. “In 1987, I was blessedly poor,” he says. “I wasn’t paying any attention. I didn’t have that much at stake. Now so much of our family’s savings is tied up in the market. A few months ago, I said to myself, If I have this much money, something’s wrong. Why has my money doubled? It’s a sign the apocalypse is coming.

So did he sell and walk away with handsome profits? “No,” he says with a rueful laugh. “Of course I let it ride. It’s greed. Now I don’t know which way things are going to go – maybe I should sell, but the taxes make it worse, and I’ll end up with less than I paid. But maybe I should panic.” He’s been calming himself with some small moves, shifting around the discretionary money in his 401(k) plan, moving some money into bonds. “But now I expect things to double every year, and it’s depressing when they don’t,” Hoffman says.

When he was a child growing up in the sixties, Hoffman says, the stock market wasn’t a subject of dinner-table discussion, which is one reason he’s ambivalent about his current obsession. “I knew nothing about this world,” Hoffman says. “During the nightly news, right before a commercial, they tagged on a thing about, ‘And the Dow Jones Industrial Average rose ten points today.’ I had no clue what it meant. Today, my kids know so much about the stock market. It’s everywhere they look, on the news, in the air.”

And that’s a good thing, right? More information, more knowledge? “No, it’s not a good thing for kids to be hearing all this,” Hoffman says. “They hear the stock market crashed, they see KISS YOUR ASSETS GOOD-BYE on the front page of the Post, and they think the world is ending.”

He pauses, mulling the values the boom has inculcated. Then he laughs. “Of course,” Steve Hoffman says, “my 9-year-old does own Disney stock. His godfather gave it to him when he was born – one share. Now there’s been all these splits, he owns twelve shares, and it’s been worth as much as $500. My 9-year-old is a player!”

And the kid is holding his Disney. For now.

How the Stock Market Swallowed New York