NEW YORK, OCT. 19 -- The chief trader in the flannel shirt had lost nearly $20 million of his own money in the last four days of frenzy on Wall Street, but today he sat joking in front of his blinking computer screen, giving associates orders to buy.
"We'll take 10 on that," said the trader, buying 10,000 shares of Allegis Corp. stock, which had plunged in recent days. He said he was betting that the stock market's record-breaking decline was "just another sell-off" and that "this is not 1929."
The trader runs a medium-sized firm of arbitrageurs who gamble on the volatile stocks of companies that are takeover targets. He allowed a reporter to observe his trading desk today on the condition that neither he nor the company, whose portfolio was worth about $300 million before the recent decline, be identified.
The company has no clients; it uses the chief traders' money and that of some investors. Still, the atmosphere was surprisingly loose along the rows of computer terminals and telephones as the staff, in shirtsleeves and jerseys, watched the losses mount on the screens before them.
"It just so happens that this time we were lucky," the chief trader said, explaining that his firm had pulled much of its money out of the market before the recent collapse. But he said 10 or 15 other small securities firms will likely go under in the coming days.
"We almost walked away in September, almost sold everything," said the blunt-spoken trader, who has been doing this since he graduated from college 15 years ago. "We made so much money in the first seven months of the year. But we said we're in business to make money; how can you go home in September?"
The trader's firm has lost $9.5 million on Allegis stock, which had drawn speculators in droves when the company began selling off United Airlines and other assets. Yet today he bought fresh shares of Allegis from panicking arbitrageurs.
The trader punched a few computer buttons and saw that Allegis stock was being sold almost every minute: 20,000 shares, 5,000 shares, 150,000 shares ...
"It's still a good buy. The facts haven't changed ... if this is not 1929," he said. He picked up the phone beneath his desk and spoke to an arbitrageur he knows.
"You're out of the stock now?" he said. "You have no more Allegis at all?" He turned to an associate. "The arbs have had it, and we're willing to buy when they've had it."
Word came over the Dow Jones wire that the Securities and Exchange Commission was carefully monitoring the markets and might even suspend trading. "Idiots!" the trader said. "That's all you need. That's the stupidest thing anyone could do."
The chief trader told an aide to buy Standard & Poor's futures, betting that selected stocks would bottom out and begin to rise. Within 20 minutes, this had happened and the trader had turned a quick profit of about $1 million, catching what he calls a "bounce" in the market.
But he remained impassive, recalling that this was only a fraction of his overall losses. "It's enough to pay some bills," he said.
As phones kept ringing, words of commiseration could be heard among the din. "Everyone is saying, 'What do you think?' Who knows? The damn market is down 500 points."
The trader said he thought the market's collapse would have been even worse if there were more buyers for stocks that the speculators were trying to unload. But he said the flight of the arbitrageurs was placing many stocks "in new hands, and what makes new hands better than old hands is they don't have losses yet." "It's not that I'm not scared," he said. "It's just that we try to make the same decisions in an environment like this as we would in a calm environment ... any time you get emotional, you're going to lose money."
At 1:20 p.m., the screen flashed final figures showing a big drop on the London Stock Exchange. The trader's eyes widened slightly. "Hey, maybe this is 1929," he said.