Salon Money | The greatest gambling hall on earth

T A B L E__T A L K
Dow Jones Industrial Average 10,000: Predict a date and discuss the whimsical fluctuations of the stock market in Table Talk's Business and Personal Finance area

R E C E N T L Y

The geology of investing
By Dave Zgodzinski
What investors can learn from sedimentary rock
(10/16/98)
Hedging their butts
By Heather Chaplin
While the world's mega-players bail out a wrecked hedge fund, one befuddled reporter tries to figure out just what these arcane vehicles actually are
(10/09/98)
Rooting for the crash
By Dwight Garner
Retirement fund be damned, this market watcher is looking forward to the end of the Wall Street boom
(10/02/98)
The grueling world of work
By Heather Chaplin
Bagels on Fridays, teammates and jovial bosses can hide the ugly truth
(09/25/98)
Move over, Susan B. Anthony
By Lance Gould
Sacajawea and a new tribe of currencies are on the loose
(09/18/98)
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[ T H E_.R E L U C T A N T_.C A P I T A L I S T ]________
The greatest gambling hall on earth
A VISIT TO THE NEW YORK STOCK EXCHANGE OFFERS A GLIMPSE INTO THE HUMAN AND HISTORICAL MELEE THAT DRIVES THE ENGINES OF CAPITALISM.
Hedging their butts

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BY HEATHER CHAPLIN
I have been to Las Vegas, Tahoe, Reno and Atlantic City. I have gambled on Indian reservations in Northern California and in strange one-room card houses in South Dakota. Until last week, however, I had never been to the real hot seat of gambling in the United States, and arguably the world: the New York Stock Exchange.
Of course at the stock exchange, I couldn't just pull up a chair and whip out my usual $2 bets, but I could, hands and face pressed against the glass of the observation booth, ogle the intricate working of the trading floor. I was there to witness the spectacle of the exchange -- to see firsthand the old auction system updated with everything late 20th century technology has to offer, but still clinging to its most basic human components, the harried broker and the temperamental investor.
As anyone who's been to Las Vegas will tell you, you haven't really been to Las Vegas unless you've done more than just disappear into a casino: You've got to walk the strip, see the sites, check out the people. It is the same for Wall Street, although I was rather disappointed by the NYSE's strip equivalent, the financial district itself. I entered the cavernous neighborhood at 8:00 a.m. last Thursday expecting to see the fruits of a decade of gluttonous wealth-building strewed across the streets. Instead I found myself dodging a hailstorm of tired-looking office workers hurling down Broad Street. I wanted the modern-day equivalent of an old Dutch master's painting of rotting peaches and spoiled fowl. Unless Dress Barn and Radio Shack are where the titans of the world's financial markets blow their spoils, Wall Street is clearly not the place to go for visible signs of decadence, glamour and waste. For every Delmonico's, there are a hundred salad bars.
The 206-year-old stock exchange is located at the corner of Wall and Broad Streets, in the heart of New York's financial district. It's housed in a giant, turn-of-the-century marble building, stretching only eight stories high but almost a city block wide, with Corinthian-style pillars in front. Granted, it's not as awe-inspiring as, say, the Bellagio, Steve Wynn's $1.6 billion new casino in Las Vegas, but it's surely got even the most expensive casino beat in terms of hard cash. An average of $29 billion in trades are made daily at the exchange -- and that's in only six and a half hours of trading per day.
Waiting in line outside the exchange for tickets to see the trading floor -- behind a retired couple from Texas and in front of two 6-foot German teenagers in feather boas -- I kept one eye cocked toward the brokers, clerks and specialists smoking in little knots along the edge of the building. (As long as the exchange exists, the tobacco industry has nothing to fear. There are clearly more smokers per square foot in the four-block radius around the exchange than anywhere else on the globe.) They don't look like masters of the universe, I thought. In fact, they looked stressed-out and overworked, and they have bad haircuts. Were it not for the brightly colored smocks many of them wear to identify their firm, they could have been workers from any office in the country.
My hope for some excitement was sparked a little when I spotted a well-groomed man in a nicely tailored suit and a London Fog overcoat walking a dog on the sidewalk in front of the exchange. Executive perk, I thought, picturing this obviously important man and his dog in some sleek corner office -- the man barking orders to sell, sell, sell; the dog barking for some food. But when a postman jumped out of an unmarked truck carrying baskets of mail, and the dog leapt toward them, burying his nose in the letters and packages, I realized we were dealing with security, not executive peculiarities. It was then I noticed several other men in well-tailored gray suits and London Fog overcoats lurking about the building.
In fact, security at the exchange must rival that of the White House and even Caesar's Palace. It aims to protect against forces from within and without. The street in front of the building is permanently blocked off to traffic with police barricades, and two entire floors of the building are dedicated to surveillance of the trading floor. Every delivery man must put his tray of bottled waters and coffees through an X-ray in a van behind the exchange; every broker must submit to constant oversight of his every movement.
Inside, the trading floor looks as if it was once a ballroom before being taken over by 20th century technology. It's a high-ceiling room crisscrossed with gilt work and flower designs. Suspended about a third of the way down and covering the breadth of the room is a network of oversize gold-colored pipes, which house all the wires and cables needed to keep the exchange churning. From the pipes up, it's straight out of an Edith Wharton novel. From the pipes down, it's more Philip K. Dick. Altogether, with its visibly overlapping layers of history, the room is downright surreal.
On the floor itself are 17 "trading posts," which look like oversize, futuristic kiosks, each of which is hooked into the gold pipes hanging above. Multiple TV monitors displaying financial information run along the outside, sometimes sticking out from the post at crazy angles so those inside can see them. Trading assistants -- the men and women who actually process the orders when deals are struck -- work inside the posts, jostling each other for room in their cramped quarters and typing wildly at their computer terminals. Their bosses, called specialists, lounge outside the post, each with a foot resting on a little red cushion that unfolds from the posts' walls.
Each of the 3,090 companies listed on the exchange is represented at a certain spot on one of the trading posts. (NYSE-listed companies are the big boys -- the General Electrics, the Fords, the Sonys of the world. ) Every time a broker wants to make a trade of a certain size (smaller orders at market price can be handled electronically) he makes his way to the appropriate trading post and finds the specialist responsible for the company whose stock he wants to trade.
The specialist, who handles five to 15 companies, is a less publicized figure with a more risky role than the broker. Unlike brokerage houses, which trade on behalf of clients and earn their money through commissions, specialist firms trade on behalf of themselves, earning their money through their day-to-day decisions on the floor. The specialist acts as auctioneer between buyers and sellers, but he can also buy and sell shares himself. For example, if a buyer offers a price too low for a seller's liking, the specialist can step in, offer a higher price and buy the stock himself. On the other hand, he is required to buy stock that has only sellers and no buyers for a certain period of time, cushioning the stock's descent by paying gradually declining prices. (The idea is that prices will naturally rise again, and that what seems an unlucky break one day can turn into a windfall the next.)
The specialist is considered a top dog on the floor. Sharing the honor is the floor broker. These are the guys carrying out orders on behalf of, say, Merrill Lynch or Salomon Smith Barney, which in turn are carrying out orders on behalf of clients. Floor brokers are based out of trading desks, which are essentially chairless cubicles circling the perimeter of the trading floor, divided by partitions and crammed full of computers, telephones, half-eaten sandwiches and broker assistants. Broker assistants remain at the desk all day, taking orders from the home office and transmitting buy and sell orders via pager and cell phone to the floor brokers, who roam the exchange making deals.
At times the exchange seems like a functioning archeological site. There's the 200-year-old aura of the institution's birth, the turn-of-the-century manifestation in which it's housed, the ghosts of the Great Depression, the rapid pileup of technological advances -- from the first stock ticker introduced in 1867 to the "circuit breaker" rules implemented in 1988 to the enhanced SuperDOT system, which routes orders electronically from brokerage office to trading floor and back in 22 seconds. Compared to the NASDAQ, which is run completely electronically, the stock exchange is downright quaint. It still presupposes that capitalism needs a geographical locality in order to exist. But seeing the New York Stock Exchange -- this real place filled with real harried workers -- impresses us with a fact that will grow evermore elusive as capitalism disappears into the disembodied ether of computer networks. Despite all the space-age toys, the exchange runs on human emotion. The board that governs it can have all the regulations it wants -- and it is a very strict place -- but it can't regulate greed and fear, which have undoubtedly been the prime drivers of the market since its inception. Because, after all, it's still just a gambling hall without a single dancing girl.
SALON | Oct. 23, 1998




T A B L E__T A L K Dow Jones Industrial Average 10,000: Predict a date and discuss the whimsical fluctuations of the stock market in Table Talk's Business and Personal Finance area R E C E N T L Y The geology of investing By Dave Zgodzinski What investors can learn from sedimentary rock (10/16/98) Hedging their butts By Heather Chaplin While the world's mega-players bail out a wrecked hedge fund, one befuddled reporter tries to figure out just what these arcane vehicles actually are (10/09/98) Rooting for the crash By Dwight Garner Retirement fund be damned, this market watcher is looking forward to the end of the Wall Street boom (10/02/98) The grueling world of work By Heather Chaplin Bagels on Fridays, teammates and jovial bosses can hide the ugly truth (09/25/98) Move over, Susan B. Anthony By Lance Gould Sacajawea and a new tribe of currencies are on the loose (09/18/98) - - - - - - - - - - - - - - - - Browse the Reluctant Capitalist archives - - - - - - - - - - - - - - - - Salon Columnists S A L O N E M P O R I U M FREE! 12-ounce bag of Salon Blend with a purchase of $30 or more. While supplies last.		[ T H E_.R E L U C T A N T_.C A P I T A L I S T ]________ The greatest gambling hall on earth A VISIT TO THE NEW YORK STOCK EXCHANGE OFFERS A GLIMPSE INTO THE HUMAN AND HISTORICAL MELEE THAT DRIVES THE ENGINES OF CAPITALISM. - - - - - - - - - - - - - - - - BY HEATHER CHAPLIN I have been to Las Vegas, Tahoe, Reno and Atlantic City. I have gambled on Indian reservations in Northern California and in strange one-room card houses in South Dakota. Until last week, however, I had never been to the real hot seat of gambling in the United States, and arguably the world: the New York Stock Exchange. Of course at the stock exchange, I couldn't just pull up a chair and whip out my usual $2 bets, but I could, hands and face pressed against the glass of the observation booth, ogle the intricate working of the trading floor. I was there to witness the spectacle of the exchange -- to see firsthand the old auction system updated with everything late 20th century technology has to offer, but still clinging to its most basic human components, the harried broker and the temperamental investor. As anyone who's been to Las Vegas will tell you, you haven't really been to Las Vegas unless you've done more than just disappear into a casino: You've got to walk the strip, see the sites, check out the people. It is the same for Wall Street, although I was rather disappointed by the NYSE's strip equivalent, the financial district itself. I entered the cavernous neighborhood at 8:00 a.m. last Thursday expecting to see the fruits of a decade of gluttonous wealth-building strewed across the streets. Instead I found myself dodging a hailstorm of tired-looking office workers hurling down Broad Street. I wanted the modern-day equivalent of an old Dutch master's painting of rotting peaches and spoiled fowl. Unless Dress Barn and Radio Shack are where the titans of the world's financial markets blow their spoils, Wall Street is clearly not the place to go for visible signs of decadence, glamour and waste. For every Delmonico's, there are a hundred salad bars. The 206-year-old stock exchange is located at the corner of Wall and Broad Streets, in the heart of New York's financial district. It's housed in a giant, turn-of-the-century marble building, stretching only eight stories high but almost a city block wide, with Corinthian-style pillars in front. Granted, it's not as awe-inspiring as, say, the Bellagio, Steve Wynn's $1.6 billion new casino in Las Vegas, but it's surely got even the most expensive casino beat in terms of hard cash. An average of $29 billion in trades are made daily at the exchange -- and that's in only six and a half hours of trading per day. Waiting in line outside the exchange for tickets to see the trading floor -- behind a retired couple from Texas and in front of two 6-foot German teenagers in feather boas -- I kept one eye cocked toward the brokers, clerks and specialists smoking in little knots along the edge of the building. (As long as the exchange exists, the tobacco industry has nothing to fear. There are clearly more smokers per square foot in the four-block radius around the exchange than anywhere else on the globe.) They don't look like masters of the universe, I thought. In fact, they looked stressed-out and overworked, and they have bad haircuts. Were it not for the brightly colored smocks many of them wear to identify their firm, they could have been workers from any office in the country. My hope for some excitement was sparked a little when I spotted a well-groomed man in a nicely tailored suit and a London Fog overcoat walking a dog on the sidewalk in front of the exchange. Executive perk, I thought, picturing this obviously important man and his dog in some sleek corner office -- the man barking orders to sell, sell, sell; the dog barking for some food. But when a postman jumped out of an unmarked truck carrying baskets of mail, and the dog leapt toward them, burying his nose in the letters and packages, I realized we were dealing with security, not executive peculiarities. It was then I noticed several other men in well-tailored gray suits and London Fog overcoats lurking about the building. In fact, security at the exchange must rival that of the White House and even Caesar's Palace. It aims to protect against forces from within and without. The street in front of the building is permanently blocked off to traffic with police barricades, and two entire floors of the building are dedicated to surveillance of the trading floor. Every delivery man must put his tray of bottled waters and coffees through an X-ray in a van behind the exchange; every broker must submit to constant oversight of his every movement. Inside, the trading floor looks as if it was once a ballroom before being taken over by 20th century technology. It's a high-ceiling room crisscrossed with gilt work and flower designs. Suspended about a third of the way down and covering the breadth of the room is a network of oversize gold-colored pipes, which house all the wires and cables needed to keep the exchange churning. From the pipes up, it's straight out of an Edith Wharton novel. From the pipes down, it's more Philip K. Dick. Altogether, with its visibly overlapping layers of history, the room is downright surreal. On the floor itself are 17 "trading posts," which look like oversize, futuristic kiosks, each of which is hooked into the gold pipes hanging above. Multiple TV monitors displaying financial information run along the outside, sometimes sticking out from the post at crazy angles so those inside can see them. Trading assistants -- the men and women who actually process the orders when deals are struck -- work inside the posts, jostling each other for room in their cramped quarters and typing wildly at their computer terminals. Their bosses, called specialists, lounge outside the post, each with a foot resting on a little red cushion that unfolds from the posts' walls. Each of the 3,090 companies listed on the exchange is represented at a certain spot on one of the trading posts. (NYSE-listed companies are the big boys -- the General Electrics, the Fords, the Sonys of the world. ) Every time a broker wants to make a trade of a certain size (smaller orders at market price can be handled electronically) he makes his way to the appropriate trading post and finds the specialist responsible for the company whose stock he wants to trade. The specialist, who handles five to 15 companies, is a less publicized figure with a more risky role than the broker. Unlike brokerage houses, which trade on behalf of clients and earn their money through commissions, specialist firms trade on behalf of themselves, earning their money through their day-to-day decisions on the floor. The specialist acts as auctioneer between buyers and sellers, but he can also buy and sell shares himself. For example, if a buyer offers a price too low for a seller's liking, the specialist can step in, offer a higher price and buy the stock himself. On the other hand, he is required to buy stock that has only sellers and no buyers for a certain period of time, cushioning the stock's descent by paying gradually declining prices. (The idea is that prices will naturally rise again, and that what seems an unlucky break one day can turn into a windfall the next.) The specialist is considered a top dog on the floor. Sharing the honor is the floor broker. These are the guys carrying out orders on behalf of, say, Merrill Lynch or Salomon Smith Barney, which in turn are carrying out orders on behalf of clients. Floor brokers are based out of trading desks, which are essentially chairless cubicles circling the perimeter of the trading floor, divided by partitions and crammed full of computers, telephones, half-eaten sandwiches and broker assistants. Broker assistants remain at the desk all day, taking orders from the home office and transmitting buy and sell orders via pager and cell phone to the floor brokers, who roam the exchange making deals. At times the exchange seems like a functioning archeological site. There's the 200-year-old aura of the institution's birth, the turn-of-the-century manifestation in which it's housed, the ghosts of the Great Depression, the rapid pileup of technological advances -- from the first stock ticker introduced in 1867 to the "circuit breaker" rules implemented in 1988 to the enhanced SuperDOT system, which routes orders electronically from brokerage office to trading floor and back in 22 seconds. Compared to the NASDAQ, which is run completely electronically, the stock exchange is downright quaint. It still presupposes that capitalism needs a geographical locality in order to exist. But seeing the New York Stock Exchange -- this real place filled with real harried workers -- impresses us with a fact that will grow evermore elusive as capitalism disappears into the disembodied ether of computer networks. Despite all the space-age toys, the exchange runs on human emotion. The board that governs it can have all the regulations it wants -- and it is a very strict place -- but it can't regulate greed and fear, which have undoubtedly been the prime drivers of the market since its inception. Because, after all, it's still just a gambling hall without a single dancing girl. SALON \| Oct. 23, 1998