NEW YORK — At Bateman Eichler, Hill Richards in Los Angeles, young brokers are so shocked by the stock market turmoil that "they're frozen; they can't do their jobs," said Executive Vice President Thomas Adkins, who has spent much of the past few days "giving them a lot of couch time to talk them through it."
In Philadelphia, a veteran broker at a regional brokerage is "hurting deeply" and "seriously considering" throwing in the towel. He urged a reluctant client to buy stock options and the client lost so much money this week that he has put his house up for sale in order to pay off the losses.
And in Birmingham, Mich., a broker was so paralyzed by Monday's market crash that he was incapable of getting up, shaving and dressing for work on Tuesday.
The fear and panic that has gripped Wall Street this week is taking its toll on emotions just as surely as on pocketbooks. Even veteran brokers and traders are tired and frazzled, and many newcomers to the financial markets are scared, distraught, even immobilized.
"I am seeing some very battered brokers," said one veteran stock market analyst. "We have yet to fully evaluate the emotional trauma and the anxieties this market has brought on."
Psychologists aren't surprised.
"Often the response is paralysis," said Judy G. Barber, a psychotherapist in San Francisco who specializes in the psychology of money. "I think people are really fearful and confused, and it's preventing them from making decisions."
Brokerage executives are so concerned about Wall Street's equivalent of stage fright that they are offering psychological counseling, meeting frequently with new recruits, setting up buddy systems between veterans and greenhorns and hosting impromptu cheerleading sessions over their nationwide internal broadcasting networks, better known as squawk boxes.
At Butcher & Singer, a regional brokerage in Philadelphia whose executives normally speak to employees via the squawk box twice daily, there are now pep talks every hour. And at Prudential-Bache, Chief Executive George Ball and other top officials have been reassuring employees on the squawk box virtually around the clock.
'A Little Unnerved'
"I was feeling a little unnerved" after two clients suffered big losses and pulled their accounts, concedes John McCargar, a broker for three years in the Long Beach office of the Prudential-Bache brokerage. "But then some of the veterans in this office who have been through bears before started talking to us about how to handle it and our managers started giving us a lot of hugs and doing a lot of hand holding."
Psychologists agree with that strategy. "You do the best to assure them that it's not the end of the world, that it happened because of technology. It's not that the earth opened up and swallowed them. They should try to be calm and relax," said Maury Elvekrog, a psychologist and partner in Seger-Elvekrog, a money management firm in Birmingham, Mich.
Brokerages are discovering that that the emotional response to the market tumult is largely generational.
"Our young people particularly seem to be mesmerized by what's going on around them, and their tendency is to withdraw and stop calling their clients," said Michael Howe, research director at Butcher & Singer. "So we have put on a concerted effort to make our older brokers--who are emulated by the younger ones--aware that there is this tendency for paralysis, and they are egging the younger brokers on to keep at their job."
Shearson Lehman Bros. has called a meeting of its trainees for tonight because they seem especially shellshocked. "We realize we need to do a lot of hand holding because they don't know how to deal with this," said Joel Margolies, who oversees Shearson's 5,700 brokers.
Anxiety attacks among brokers--especially young ones--are "my major concern," said Bateman Eichler's Adkins. "Call it buck fever or shellshock, but the effect is a lot of the brokers in our firm and elsewhere in the financial system just don't know how to cope with what has happened to them."
Veteran market analyst Perrin Long points out that more than 50% of the nation's brokers have been hired since 1980 and that until this month, there was only one downturn of notable magnitude--in 1984.
"So, it's no wonder they are immobilized. All these people are accustomed to doing is selling, and here suddenly you have investors lined up outside Fidelity (a mutual fund company) waiting to sell their stock, not buy it," Long observed.
David W. Stewart, a consumer psychologist and marketing professor at the University of Southern California, offered this explanation for the generational differences:
"Long-term investors were probably shocked by the drop and by the velocity, but they recognize the volatility of the market and they have seen swings before. But for those who came in in the last five years and have never experienced failure, they are suddenly confronted with failure for the first time in their lives and have become anxious about their self-images."
William LeFevre, a market strategist with the investment firm Advest in Hartford, Conn., has observed that trait in young brokers whose clients suffered huge losses. "Suddenly, their confidence in themselves has been shaken; before, they could do no wrong."
Some veteran stock market watchers see some value in experiencing failure.
"My mother used to say it is always good to lose your job at least once, because it forces you to make decisions," said Long, a market analyst for Lipper Analytical Securities in New York. "So I think it will be beneficial for younger brokers in the long run to go through something like Monday and last Friday."
The seeming irrationality of Monday's collapse also contributed to the paralysis.
"They could grasp it emotionally" if the market collapse had been triggered by economic weakness. "But the economy seems to be going along OK," Elvekrog said.