Speaker 1:
From the library of the New York Stock Exchange, at the corner of Wall and Broad Streets, in New York city, you're Inside the Ice House, our podcast from Intercontinental Exchange on markets, leadership and vision and global business. The dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years. Each week we feature stories of those who hatch plans, create jobs and harness the engine of capitalism, right here, right now at the NYSE and at ICE's 12 exchanges and six clearing houses around the world. And now welcome Inside the Ice House. Here's your host, Josh King of Intercontinental Exchange.
Josh King:
The men and women who work on the New York Stock Exchange trading floor personify the world's capital markets. You see it in the newspapers, every morning and the evening news, every night. The euphoric face of an upmarket, the head and hands of a trader, when the averages swoon. You see the expectant crowds gathering around the designated market maker post when there's a hot IPO, and faces glued to the screens when a president or prime minister makes news. And the averages react in real time. That's, of course, what the public sees, from the trading community, when they put on their blue jackets and place orders on behalf of their clients. What isn't as visible are the people and the journeys that carry this crowd to the world's biggest market. Becoming a successful broker boils down to a simple paradigm, work hard and show you've got what it takes to get the best price for your customer's trade.
Josh King:
One of our past podcast guests, Kenny Polcari, described walking onto the trading floor, as a lair of lions, type A personalities, one and all. I would add, from what I've seen, that they also come together like a family, to support, argue and tease one another like a caffeinated, thanksgiving dinner. One that's held Monday through Friday, 9:30 AM to 4:00 PM. It's a site to behold. Over the NYSE's history, traders have come from all walks of life and took different paths to the trading floor. Yes, some were the privileged progeny of the Morgans, Vanderbilts, Sachs, or other venerable trading families, with roots that stretch back nearly to the buttonwood tree in 1792. But that's only a fraction of the total. Most of the more than 30,000 men and women who've been New York Stock Exchange members came up by their bootstraps. Our guests today are a father and son who both became members of the New York Stock Exchange.
Josh King:
Their careers, in many ways, are similar to the thousands of people who worked alongside them in the second half of the 20th century and these first two decades of the 21st. They both worked their way up from entry level clerking jobs, with just a high school education, to becoming seat holding members of the New York Stock Exchange. And as we'll hear the Johnsons, father and son, were also trailblazers, who broke barriers on their way to trading floor success. Our conversation with Reverend Thomas Johnson and Thomas Johnson, the fourth, or the Rev and TJ, as they were known on the trading floor, their careers and breaking boundaries, right after this.
Speaker 3:
We began with a vision to transform energy trading through technology, creating a modern accessible marketplace, that leveled the playing field and drove transparency. Today, Intercontinental Exchange operates markets around the world. We provide data people rely on and connect participants to support investing, trading, hedging and capital raising, driving the world forward. Well functioning markets play a critical role in advancing economies and create opportunities for those who build them. And we innovate to ensure our markets serve the world every step of the way. When you turn on a light switch, we help ensure that energy is priced efficiently. From fields to your cup each day, from farms to your table and products that enable financial opportunity. At Intercontinental Exchange we build, operate and advance global financial and commodity markets. It starts here.
Josh King:
Our guests today are former members of the New York Stock Exchange, Reverend Thomas Johnson and his son Thomas Johnson, the fourth. In 2000, they became the first African American, father and son duo, to hold seats simultaneously. Reverend Johnson was also the first African American member of the American Stock Exchange in 1974. He moved to the NYSE in 1979 as an institutional floor broker for Bruns, Nordeman and Company. Thomas Johnson, the fourth, joined his father on the trading floor for two summers, starting in 1982, while still in high school. He worked his way up through the ranks to become a member in 2000 as a market maker for Fleet Bank. He was assigned a company that would become infamous the next year, when he set a call market record of trading 495 million shares of Enron without making a single error. The Johnsons, father and son, welcome back to the New York Stock Exchange and welcome Inside the Ice House.
Reverend Thomas Johnson:
Hello. Hello, welcome. Thank you.
Thomas Johnson IV:
Good to be here.
Josh King:
As I mentioned at the outset, you were known as the Rev on the trading floor, even your trading jacket had that name stitched onto it. What made you decide to become an ordained minister while you were still working as a trader?
Reverend Thomas Johnson:
Funny you should ask. I did not decide to become a minister. It's a calling that you feel. I was always in church. I was raised in church. My father was a pastor.
Josh King:
Where'd you grow up?
Reverend Thomas Johnson:
I grew up, basically, in Brooklyn, in the projects in Brooklyn, Fort Greene projects in Brooklyn. And I remember my first promotion on Wall Street came because there was a transit strike, and I walked across the Brooklyn Bridge in a snowstorm, and made it to work, when most of my other clerks did not. And the phone rang at the end of the day, after a very busy day, and I was the only one there answering the phone. And when I answered the phone, the boss, Ben Lubin said, "Who's this?" I said, "This is Tommy." He said, "Let me speak to George." I said, "George didn't make it in." He said, "Let me speak to Al Katz." I said, "Al didn't make it in." He says, "Well, then give, let me speak to Spencer." I said, "Well, Spencer, didn't make it in." He says, "Well, who's there besides you?" I said, "No one." And there was silence. He says, "Well, who handled the phones today?" I said, "I did." He said, "Tommy, you handled 14 phones by yourself?" I said, "Yes Sir." "Any problems?" I said, "No Sir." He said, "Okay, thank you."
Reverend Thomas Johnson:
The Bible says, "Your gift will make room for you and bring you before great men." I believe that was the Lord giving me an opportunity to show the gift that, the God given gift, that he had given me and the boss recognized that. And some months later, he came down to the floor with a lit cigar in his hand, during trading. Because he was a big shot, he could do that. And he tapped me on the shoulder and said, "Come with me." And I didn't recognize where we were going. I thought of my job. I thought I was getting fired. He had come... The boss coming down at that time of the day. And he led me through the Trinity Church yard.
Josh King:
Just down the street.
Reverend Thomas Johnson:
Down the street. He took me through the Trinity Church yard and took me over to the American Stock Exchange. And when we got there, he shook my hand and says, "Congratulations, we're putting you on a seat on the American Stock Exchange. I get somewhat emotional when I think about it. Because when you look back at your life, things we call luck, some things we call happenstance, it's actually the leading of the Lord. And a lot of people don't understand that. But looking back, I see God opening door, after door, after door. It was proven again today, when I came back to the floor and I was welcomed by so many... The people I used to work with, a lot of them are gone, dead and gone, but we are still here. And it was just a good feeling. Come home feeling.
Josh King:
Now I'm not a deeply religious person. I accept that God can be all powerful, but how the heck do you manage 14 phones at once?
Reverend Thomas Johnson:
You don't have to be religious to understand this. God doesn't use you because you are equipped. He equips you because you're going to be used.
Josh King:
Yes. But how do you actually answer 14 phones? What's happening? You have 14 phones right in the desk in front of you?
Reverend Thomas Johnson:
I give you a visual.
Josh King:
Okay.
Reverend Thomas Johnson:
There's two banks, two big banks. On each phone there are seven wires. And on those 14 phones, on 14 wires, are different clients for the firm. Bruns Nordeman had various clients at various branch offices. Some of them were direct to the client and some were direct to the branch office. But those phones represented order flow. So every time one of those phones rang, it was somebody giving you an order. "Buy 20,000 General Motors at 74 and a half. Sell 65,000 JP Morgan at 19 and a half." You pick up one phone, it was a buy order. You pick up one other phone, it was a sell order. Sometime you pick up the phone and that person had three orders to give you. And in the heat of the battle, sometime you'd pick up the phone and say, "Hold on for a second." You put that phone down, and the other and say, "What did you say?
Reverend Thomas Johnson:
Buy 25,000 general motors at 67 and a half. Okay. What else you got? Sell 35,000." And you had to write all that down, buys and sells, buys and sells. And if you wrote one order on the wrong pad, if you wrote a buyer on a sell pad or sell order on a buy pad, it could cause a huge error for the firm. And because the Lord had blessed me to make it through that day, and take all of those orders, hundreds of orders, without error. I know that it wasn't because of me. Because humans make errors.
Josh King:
Yeah. But Rev, you have something. As a kid in Brooklyn, how aware were you of the stock market when you were growing up, and were you interested in a career in economics?
Reverend Thomas Johnson:
Didn't know a thing about the stock market. I got involved with the stock market because I was in church as a church organist. And because I could play the organ, I met a friend by the name of Grayson Brown, and he also played the keyboards. He heard me play, fell in love with my playing and said, "Rev, if you help me, I'll help you." He helped me get a job. And I got involved in Wall Street because he knew somebody. His Catholic priest knew a man by the name of Frank Merley.
Josh King:
That's at Hayden Stone?
Reverend Thomas Johnson:
Hayden Stone. And I got a job at Hayden Stone, and that's how I got my foot in the door at Wall Street.
Josh King:
What was your first day like?
Reverend Thomas Johnson:
Totally lost. Didn't have a clue. I didn't know a buy from a sell. I didn't know an exchange from nothing. I had no idea. I had never worked in an office before in my life. It was just... Kid from Brooklyn. I went from shoe shine boy to a clerk in Hayden Stone office.
Josh King:
And then after Hayden Stone, when did you realize there was a chance that you could become a floor broker and a partner at the American Stock Exchange?
Reverend Thomas Johnson:
Never thought I'd be a floor broker or a partner. I was just trying to get to the floor. Because at Hayden Stone I worked in the office, and I worked with these tickets. I saw these buy tickets, sell tickets, buy tickets, sell tickets, buy. And my job was to code those tickets, put the clearing number of the brokerage firms on the tickets. And I still remember them, Bruns Norderman, 330 Walston. They don't... Not even around anymore.
Thomas Johnson IV:
IJ Walston?
Josh King:
We're sitting here in the library that is surrounded by artifacts that my producing partner, Pete Asch and I, look at and we say, well, that must have been relevant 30, 40, 50 years ago. There's some Big Board numbers behind us that are very colorful, have pretty numbers on. One says 187 with a yellow, orange, white and green square on it. Explain this to me.
Reverend Thomas Johnson:
Yeah. That caught my eye. My son and I, it caught our eye because we realized where that came from. That block that says 187 with the colors on the bottom, the four different colors, there was a big, huge board on the floor in the main room. That's how this building got the name, Big Board. That was the wall or the board that the floor brokers had to look at. Those numbers represent the badge numbers that the brokers had. So if your number was 187, you were constantly looking up at that board, looking at 187 to see if the numbers under it were flapping. The numbers under it represented different locations on the floor. So if you had a yellow flap, if that yellow flap was going up and down, you knew that somebody in the garage was trying to get you. If the orange one was flapping, you knew that somebody in the main room was trying to get you.
Reverend Thomas Johnson:
If the white one was flapping, you knew that somebody in the blue room was trying to get you. They stood for different locations. And when you saw it flapping, sometimes you see three of them flapping at the same time and you were wanted in three different places at the same time. That's how squads, what we call squads, got their job. They were actually runners. That was their job. We brokers would hold our hand up and say, "Squad. Squad." They'd see your hand up, they'd run over to you, "Yes, sir. Pick me up in the blue room." And they would run to the blue room, run to that location and say, "187." And then that person in the booth would then give the squad the order to deliver back to the broker. The broker then would look at that order and go to the post where the stock was traded. That's how it got the name, Big Board.
Josh King:
Did you lose a lot of weight during these days? You must have sweat profusely?
Reverend Thomas Johnson:
Well, I was a lot younger. I wish I could lose some weight now. But back in those days, younger people... Yeah, I was a younger man. You got used to that pace, that adrenaline. You lived off of it. It made the place vibrant. You had to go be here. You had to be there. You look up. There's 30 seconds before the bell rang and you looked in your hand, you had five orders to execute and you got 30 seconds to execute five orders. One is in that room and one is in the other room. So you had to run. Or sometimes you would call the clerk and say, give this out, I can't get there. But it's something I wish I could explain. It's a feeling that you never ever forget. The adrenaline that flows.
Josh King:
Did you have a minute to grab a sandwich?
Reverend Thomas Johnson:
Many times we ate, running across the floor, with a sandwich in one hand and orders in the other, or lunch in the booth that you never got to. We had days like that too. But the camaraderie, the comedy, is what eliminated the pressure of the orders, because in your hand, at any given moment, you had millions of dollars in order flow. And if you stopped to think about what was in your hand, you could have a heart attack. You could panic. So everything was a joke. We laughed all day long. That's really what I miss about this place.
Josh King:
Talk about pressure though, Rev. Your membership to the American Stock Exchange was reported in the New York Times for its noteworthiness of being the first African American member of the Amex. Did you feel increased pressure because of the notoriety and?
Reverend Thomas Johnson:
Being an only child, the notoriety was nice. I must admit, I was a young man and my head got kind of big, and I did some stupid things as a young man in that position. But my mother was so proud of me. Her raising me by herself, because my father got killed when I was six years old, and she raised me and she was just so godly proud of me. I felt good about the possibility of opening a race barrier, which I immediately noticed on the floor. I felt good that I got my foot in the door, and I noticed there was no other African Americans on the floor. There were no other black clerks and certainly not a black broker. I felt good about the opportunity, being a male Rosa Parks, if you will.
Josh King:
I see you're both wearing your trading badges, probably of TJ number 1277.
Thomas Johnson IV:
My dad's original number was 908. Sometimes, as we were getting this together, he would call me and we would bounce off our memory. I had to remind him, I said, do you remember when you had 908? And then after he had switched a couple of firms, when he went back, the number was taken. So he had 1277, but at the time that we both had seats, he had 908. What's interesting to me about that is, I couldn't wait when my father said, "Look, I'm tired of running around. I'm going to go back in the booth." The first thing I did, is went upstairs and changed my number, because I wanted to emulate my dad. I always looked up to my father. We do everything together. I remember when I used to come down here at six, seven years old and my father, we would dress alike, put on three piece suits and my father would fold up an order and tell me to go and stay with the specialist.
Thomas Johnson IV:
And I think it was Julie Marcus. And my father had me go in and break up one of Mr Marcus' trades. And one of my funniest stories, is my father being a broker and me being a market maker. He came in and gave me, what they call, a market short order. And at the time the tick rule was around. So you couldn't short stock unless it was a plus tick. So being a market order, every time the market traded down, the order came down. My father gave me a market short order. The last sale of the stock was $50. I took it down to $45, and then the first uptick I bought my dad's stock, and then it traded back up. And I remember my boss yelling over to my father. "Hey, Rev, you better get that report over. I think your son just picked you off."
Josh King:
So I mentioned in the introduction that there's all sorts of reasons why markets spike and markets swoon, and one of them is when president makes some statement or there's an election that doesn't go where the market's expecting it to go. A few days after you started, President Nixon took to the airwaves. Let's hear what he said that day.
Speaker 6:
This is a special report from CBS news in Washington, where the president of the United States is about to address the nation.
President Richard Nixon:
Good evening. I have asked for this time tonight, in order to announce my answer to the House Judiciary Committee's subpoena for additional Watergate tapes, and to tell you something about the actions I shall be taking tomorrow. It was almost two years ago, in June 1972, that five men broke into the Democratic National Committee headquarters in Washington. It turned out that they were connected with my reelection committee, and the Watergate break in became a major issue in the campaign. I was assured by those charged with conducting and monitoring the investigations that no one in the White House was involved.
Josh King:
So that was April 1974, Rev. With the backdrop of Watergate, that year was a tough year for the stock market, with the US economy, and recession and ongoing oil embargo, and inflation. Did you have any regrets on starting in the middle of a crisis and what you were seeing on the floor of the Amex?
Reverend Thomas Johnson:
I think starting in the middle of a crisis was part of the education that I needed, because the stock market is the gauge of what's happening in America. We call it thermometer of the nation. Where best to learn but in the middle of a crises. We saw the market tank in a matter of... See, I can say days now. Now it's moments. But back then it took days. The market would tank over a period of days. You come in. It was do... I think the Dow was... I'm going to age myself now. I think we were looking for the Dow to be a thousand. 1000.
Josh King:
1000, compared to 24,000 today.
Reverend Thomas Johnson:
Yeah. You come in and you could hear that buzz on the floor. You could hear that noise, that hum. And just by that hum, you could tell, you could get an idea what kind of day you were going to have. And it's better to learn in crises, because it teaches you how to trade. The average public trader nowadays thinks, in order to make money in the marketplace, you have to buy and wait for it to go up and then sell. But a real trader learns how to trade whether the market's up or down, because you know.
Josh King:
Money to be made on both sides.
Reverend Thomas Johnson:
Yes sir. Yes sir. You don't have to buy and wait for it to go up. You can sell and wait for it to come down.
Josh King:
Are there other days, TJ and Rev, that stand out, in your mind, that you could sort of see the wave about to happen and you were able to get in front of it?
Thomas Johnson IV:
The crash of 1987, Black Monday. When you have... I was a specialist clerk at that time for Murphey Marseilles Smith & Nammack. I was trading Homestake Mining. Morgan Stanley and JP Morgan have been buyers for the last two months. The stock was up over 17%. That particular day, I had no buyers and doubled the daily average volume for sale. So you know what I did, the first thing I said to my specialist at the time was, hold on, get a supervisor. There must be some news out. Well what's going on overseas? Make a long story short, at that particular time, when something... If you have a tertiary stock that has a daily average volume of only 20,000 shares and you have 200,000 to sell on the opening, as a specialist.
Reverend Thomas Johnson:
Something is going on.
Thomas Johnson IV:
Something's going on and I'm not pricing that, and I want a governor here. I want to make sure my guidelines are, because as a market maker, I have a fiduciary responsibility, okay, to have maintained a fair and orderly market. When you have situations like that and there are no bids and you're the only one to buy it. And when you're a firm and it's your firm's money, and Christmas is coming right around the corner, I'm wondering, do I have a job in a couple of months or what's going to go on? I watched five different firms go under during Black Monday. My firm was able to buy up a couple of firms.
Thomas Johnson IV:
A lot of good firms went down. And it wasn't about the mismanagement of money. It's just, when you're trading on the floor at any given moment, anything can happen. I'm a buyer, now I'm a seller. Wait a minute. I'm short, you better go long, you better reverse your position, you better buy the puts. You better do something to be able to hedge yourself. And that's how you learned. I learned how to trade, just like my father did, baptism through fire. I think my career as a specialist clerk, when I say I had the hardest individuals to learn from, but they were sincere, and they yelled and screamed a lot because they wanted you to understand, that just because it's a piece of paper, that it's millions of dollars, and that was the difference then. It was a serious thing.
Reverend Thomas Johnson:
I think it's also important to understand this too. In my career, I actually saw men drop dead on the floor. I've seen other people just collapse from the pressure.
Thomas Johnson IV:
The pressure.
Reverend Thomas Johnson:
That's why most of the people that we just saw an hour ago, that are still on the floor. If you notice, they're laughers.
Josh King:
They know how to deal with the pressure.
Reverend Thomas Johnson:
Yeah.
Thomas Johnson IV:
Yes.
Reverend Thomas Johnson:
There you go. There you go. They're laughers. You laugh at everything. You got to. Because if you don't, it'll kill you.
Josh King:
A decade ago, the NYSE acquired the American Stock Exchange, which is now called NYSE American, just one of five exchanges that the Big Board owns. But when you joined, the two were the only national exchanges, 1979, Rev, you get the call up to the big leagues. How did the move to the NYSE come about for you?
Reverend Thomas Johnson:
It came about because on the American Stock Exchange, I had a Spanish guy named Mike Rios, and Mike and I became very friendly. Very good... Not only did he work for me, but we were friends. We had to be better than everybody else on the floor. You had a black and a Spanish guy working together, which was unheard of then, unheard of. And we were. How'd I get my big break? I guess, because God gifted me at that time to be good at what I did, I take no credit for that. I was good... In fact, I was real good. And that's how I got noticed.
Josh King:
After the break, the Rev, TJ and I will talk about some of the experiences together that they experienced on the floor. That's right after this.
Speaker 8:
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Josh King:
Back now with Reverend Thomas Johnson and his son, Thomas Johnson, the fourth, both former members of the New York Stock Exchange. And we've been discussing their careers in the 1970s and eighties. The New York Stock Exchange floor is well known for having multiple members of the same family working on it. When did you first think about bringing your son into the business?
Reverend Thomas Johnson:
Well, I was kind of waiting for him to get a little older. In the interim, I brought some other church members into the industry. I was pleased to bring my cousin, Phil Johnson, who is also now a pastor, upstate New York, my cousin, Phil. He worked for a firm by the name of Mitchel Schreiber Watts. Prior to that, I got him a job on the American working for John Jay Mann and Company. So my cousin, Phil and I, were like Batman and Robin. I was thinking about future. I was thinking about, I had my shot, let me see if I can open the door for other minorities. Because there was clearly not a lot of minorities down there. And then they allowed the women to come down and then I had bumped into competition. There was another lady down here by the name of Gail.
Thomas Johnson IV:
Pankey.
Reverend Thomas Johnson:
Gail Pankey.
Thomas Johnson IV:
Yeah.
Reverend Thomas Johnson:
Black girl. And I had it going pretty good down here, because when the minority firms on Wall Street found out about me on the floor, they were calling... They were getting hold of me and say, Rev, you are on the floor. There's a brother on the floor. There's an African American on the floor. So they say, we going to give you our business. And I developed a huge clientele of minority business. Only problem was, they had this attractive black girl, named Gail, who was also trying to get the minority businesses. And her and I used to laugh, but I felt good about opening the door for other minorities.
Josh King:
TJ, You were entering high school when your father moved over to the NYSE. What were your thoughts about getting involved with that summer program and how did your career progress in there?
Thomas Johnson IV:
Well, what happened was my father and my cousin Phil, used to come home to the apartment, and the whole conversation was trading. So once I got little old enough to understand that, I was, okay, I know what it is now. I want some of that, the energy. I would look at the look on their faces and the emotion that they would have. It was, I can't believe they did that. And he did this and he did that. And I would just sit in awe. I think every son wants to emulate his dad. My father's always been a musician. I'm a musician. We dress alike. We have the same name, the same mannerisms. I admire my father. Coming to the floor, I had mixed reviews about that. I knew of my father and how he carried himself. But I really didn't understand until I actually came down to visit with him as a young man.
Thomas Johnson IV:
And then I looked at all these people who he knew, and all these people running around, and I said to myself, "Wow, now I see why he's a little grumpy when he comes home." My mother and I used to have a on running joke. I used to watch the stock exchange bell, and if the Dow was down, we knew to let dad cool out for 45 minutes before, when he came home from work. It intrigued me. On the other flip side, I knew his reputation, which was outstanding. So being the same name as him, that means for me to get in this business, I'm going to have to be, not as good, I'm going to have to be better than him.
Josh King:
Do you have brothers and sisters?
Thomas Johnson IV:
Yes. I have two sisters.
Josh King:
Any of them follow the path?
Thomas Johnson IV:
Not at all. They wanted no parts out of it after they saw what me and my dad had went through down here. They wanted no parts of that at all. I can understand that, you have to be thick skinned. You have to be quick thinking. You have to be prayerful. My career down here, they used to laugh at me because I would get thrown in impossible situations. They would throw me in a situation that you're supposed to fail in, and it would reverse. With that being said, we would have a conversation and he reminds me all the time. He says, "I watched you deal with incredible pressure." He reminds me, when I was trading Enron, he says, "People will come out to the main room and say, you got to go in the blue room and see what your son is going through right now."
Thomas Johnson IV:
And when he would come up there, and when I tell you the crowd was amazingly large. If I look at the floor right now, imagine the main room, gentleman, the way it is now, with every broker that's on the floor at one post. Yelling and screaming career ending numbers. When I say career ending numbers, I'm talking about... We would open up Enron and the volume was so large, that, at that time, we used to have with, the exchange used to have a reporter who would catch all the sales, the trades, and put them on the ticker tape. We had the computer, so now we were responsible for everything. For the sales, the trades, everything on the floor. When you are opening up 22 million shares of stock, that's never been done on the floor. Those are career ending numbers.
Thomas Johnson IV:
So as these numbers are coming in, I'll never forget, I was working with Christopher Quick, and he looks at me, he goes, "Tommy, you got 80 people behind me. Why are you writing down every order?" I said, "Because if you're playing Russian Roulette and it's your turn, do you want somebody else holding the gun?" During the opening, you had to have your buyers, your sellers. When Chris yelled in the back, "All right, what's the buy count?" Everybody's count was wrong. I looked at him. I said, "I'm going with my count." And just hit the button and opened up the stocks. He said, "You better be right." We traded Enron from $130 down to 25 cents.
Josh King:
We said at the beginning, it's 495 million shares that day.
Thomas Johnson IV:
Yes.
Josh King:
Not a single error. People listening to this podcast, they may not quite understand what that was like back in 2000. Explain for someone who's just sort of has a level of understanding, no more than watching people with hand signals on the news, what that means? You go Rev.
Reverend Thomas Johnson:
When I started, the average daily volume was maybe 10 million shares, average daily volume. The Dow was 1000. Fast forward to Tommy's career, now you're talking about one stock. What was the average daily volume in Enron? Before the nonsense broke.
Thomas Johnson IV:
4.5 million.
Reverend Thomas Johnson:
Four or five million shares was the average daily volume in Enron before it tanked. Now on the day he's trading, this particular day, it's 495 million shares. One stock.
Thomas Johnson IV:
As far as to explain the errors, let me explain being a market maker. Understand that we are trading for our own account, but we are also a market maker. So I'm taking orders from, buy orders from Smith Barney, Merrill Lynch, Drexel Burnham, all of these different entities. So when I say with no errors, I want you to just imagine standing in front of 200 people and everybody's yelling at the top of their heads. And guys are yelling at me saying, "Sold" or "Take them," and I have to look through all of these people and plug in what they said to me. It's like, I'm looking at Peter right now, and Peter's looking at me going, "Tommy, I bought 30,000 shares from you."
Thomas Johnson IV:
I'm recording that. I'm documenting that. And at the same time, somebody else is selling me stock. So when I say no errors, it's almost... When I look at it, I have to say that's nothing but God, because I'm going to tell you something. My boss was amazed. First of all, in any given trading scenarios, what we have is errors. They call it a QT, which is a Question Trade. Back in those days it took three days to clear stock. If I bought stock from you on Monday, we knew by Wednesday. We got the price right, we have the amount right. We have your badge number. We have the clearing number. Now it's time for stock delivery.
Reverend Thomas Johnson:
Hold on. But right there, let's... Just to keep you clear. I bought it from you on Monday at 10. That trade doesn't clear till this Wednesday. The stock is trading at 10 on Monday. Wednesday is six. I didn't buy it from you at 10.
Speaker 9:
Unless there's a record.
Reverend Thomas Johnson:
Yeah, yeah, yeah. Right.
Speaker 9:
There you go.
Reverend Thomas Johnson:
So now that's called a DK. They call a DK.
Thomas Johnson IV:
On Amex.
Reverend Thomas Johnson:
That means, I don't know the trade. So you had people that would renege.
Thomas Johnson IV:
On your trade.
Reverend Thomas Johnson:
On your trade. That's where it paid off being black.
Speaker 9:
How?
Reverend Thomas Johnson:
Because I could say to the guy, you don't remember trading with me.
Thomas Johnson IV:
I'm the only black guy here.
Reverend Thomas Johnson:
I would laugh. I said, what, did you trade with the janitor? You traded with me. I want to share something with you quick, because I just remembered. Back on the American Stock Exchange, when you became a broker and they liked you, they played games with you.
Thomas Johnson IV:
Oh yeah.
Reverend Thomas Johnson:
They played set up games. When I first came out as a broker, my first day, they had set up a fake stock. All the brokers on the floor had gotten together, because before you come down, your name is in the bulletin, Tom Johnson, elected member of the stock exchange. He's going to be on the floor Friday. If I recall, they started you on a Friday. On Friday is going to be his first day. So they were ready for me. I came down to the floor that day. They had a fake stock called KMA, kiss.
Thomas Johnson IV:
Kiss my.
Reverend Thomas Johnson:
Yeah, yeah, yeah, yeah. I don't know this. My clerk's involved. My boss is involved, and the bell rings and there's this crowd at the post. They're all yelling and screaming. KMA. How is it? They're screaming. My clerk says, "Rev, take this order. Buy 650,000 KMA. Market order means to be no price. Get out there." Now a new broker, I got to get involved with this crowd. I go in and these big guys won't let me near the specialist. I can't get near the trader. And the stock is going from 10 to 12, from 12 to 14, from 14 to 16. And I can't get near the... I'm screaming, "Let me in, let me in." And then finally they let me in. The stock is now $20. I watched it go from $6 to $20 and I didn't buy one share. And the broker says, "What's the matter?" I said, "I got 650,000 to buy." And then they all grabbed me. They ripped my shirt.
Thomas Johnson IV:
Yeah.
Reverend Thomas Johnson:
They bend your badge and says, "Welcome to the club." Meanwhile, you're wearing a diaper.
Thomas Johnson IV:
Yes.
Reverend Thomas Johnson:
Because you thought you lost your job. You had stock to buy. You didn't buy a share. They ran $14 on you.
Josh King:
So all those shares of KMA moving up to 20, or you're talking earlier about sell IBM at 55 and a half, buy GE.
Reverend Thomas Johnson:
Right.
Josh King:
42 and a half.
Reverend Thomas Johnson:
Right.
Josh King:
Something happens as the market changes and we go from eighths to decimalization.
Reverend Thomas Johnson:
Right.
Josh King:
And suddenly your skill needs to go from the simple math of eighths to a hundred different points within a buck. How does that change your lives?
Reverend Thomas Johnson:
I could make a lot of money trading eighths and quarters. I buy it an eighth, I sell it at the three eighths. I buy it at a quarter, I sell it at a half. I buy it at a half, I sell it at three quarters. You're making money because each increment is 12 and a half cents, which is $12 and 50 cents a hundred. You see? So you do that. You buy a hundred at 12 and an eighth and you sell a hundred at 12 and a quarter, you just made $12 and 50 cents. Do that all day long.
Josh King:
Adds up.
Reverend Thomas Johnson:
Yes.
Thomas Johnson IV:
It adds up.
Josh King:
And so TJ, at what point did you say, dad's career, fantastic, my career, fantastic, it's time to take the badge off and get out of this business?
Thomas Johnson IV:
Well, actually I saw the turn in the business. The exchange definitely had to up step. We all know that. We have to go along with technology and the sign of the times. My only issue that I had from it was this, there's never going to be the excitement, and I think my dad can attest to this, that you will have with the energy of the family of the floor.
Reverend Thomas Johnson:
He lost his seat, basically, like a lot of them did.
Thomas Johnson IV:
Because of technology. So I had to reinvent myself. Since my father always made sure that I knew the ins and outs of the business from the PNS office and everything, I have a pretty good idea. So a lot of brokers that came from the Amex over to New York had much more of an advantage, trading wise, only specifically, because they dealt with options a lot. And a lot of the older brokers that I learned from learned how to hedge themselves.
Reverend Thomas Johnson:
We watched people, talented brokers, people that knew what they were doing. They knew how to trade up, down, sideways. These guys were good. We lost it to technology. Now I'm not knocking technology because I'm older. We need technology, but you got to look at the flip side.
Josh King:
This market that had such a struggle in 2008 and 2009, global financial crisis. But for the last nine years, you put your money in an index fund and it has done very well for your 401k. And we've had volatility, end of 2018, begin this year with volatility. Some of those 800 days, that you say, and yet still... It goes back to that old adage, if you stay in the market and hold.
Reverend Thomas Johnson:
And don't go off in and out.
Josh King:
It's not 1000 the way it was when you started with Nixon in 1974, it served you well.
Reverend Thomas Johnson:
It does serve you well. But I guess I'm just old school. I still consider it, for the most part. Every trade you see on the tape is telling you somebody bought it and somebody sold it. Both of them are not making money. Let me just say this. If you notice, financial advisors, come to work every day, if they know so much about financial advice, why are they working?
Josh King:
Rev, humor has always been, when you ask anyone on the floor, one of the ways in which you survived and persevered, and it remains so true today as it was in the 1970s, as I talk to you and TJ. As we wrap up, as you both look back at your careers, what stands out as the most memorable day for you six floors below on the exchange?
Thomas Johnson IV:
Well, one day that I'll never forget. I think that was 911. We were in this building and Dick Grasso got on the loud speaker and he was talking like something's going on. And then the towers fell. And I remember hearing Dick say, "Oh my God, what is that?" And for the protection of everybody in this building, they didn't let anybody go outside. They closed the doors and we were all in here. We had prayer together. My father and I actually walked across the Brooklyn Bridge that day. And the amazing thing about that is, I'll never forget, coming down here, and my father will remember this, that day, him and I were supposed to have a meeting, I think, with Cantor Fitzgerald.
Thomas Johnson IV:
Cantor Fitzgerald, the biggest bond firm. And for some reason we didn't make it to that meeting. And I lost so many good people that day. It takes me emotionally, still, to when I think about it. Because the things that we saw when we left this building, it affected me to the point of where I didn't mind getting laid off with my credentials. I just didn't realize it would take me four years to reinvent myself after doing that. That's one day that sticks out in my mind.
Reverend Thomas Johnson:
Well.
Thomas Johnson IV:
And the day I got my seat.
Reverend Thomas Johnson:
It's funny that my son said 911. Mine was 910, the day before the 11th. Because I had a client in the World Trade Center, minority firm, and it was payday, she had my check. And she called to the floor. This is on the 10th. She called to the floor and said, "Rev, your check is up here." I said, "Okay." She said, "Come on up and get it." I said, "Yeah, all right." And then I hung up the phone. I said, "Nah, you know what, I'm not going go up there. It's too hot out." I said, "Call her back and tell her I'm not coming. I'll come tomorrow." Meaning 911. My clerk at the time, Corey picked up the phone and said, "Rev says, he'll come up tomorrow." And she said, "Okay, fine. I'll be in."
Reverend Thomas Johnson:
He hung up the phone. And when he hung up the phone, I can still remember hearing the voice saying, "Go now." It was like somebody talking to me, "Go now." It's on the 10th. I said, "Corey, call her back, tell her I'm on my way." 9:15 in the morning, I walked the two blocks, got on the elevator, the World Trade Center, went up to the 85th floor, transferred to another elevator to take me to 110. And she met me there. She handed me my check and she says, "Rev, before you go, let me show you my new office." And she took me by the hand and took me to her office. Beautiful. I could see the Statue of Liberty. I could see Jersey. I could see the Hudson. I could see upstate. I could just see, beautiful.
Reverend Thomas Johnson:
And then I looked down, I saw a helicopter. Eerie feeling looking down on a helicopter. I said, "I got to go." And I left. What I'm trying to tell you is, if I had waited to the next day, I would not be sitting here now. If you think it's coincidence in your life, if you think it's just happening, you better think again. God is in control. That doesn't mean you're going to understand everything he does. It doesn't mean you're going to agree with everything he does. But he's in control and don't be religious, because God hates religion. He didn't say be religious. He tells us how to live. He didn't tell us to be Baptist or Catholic or some religion. He says be holy, for I am holy. That's what he says.
Josh King:
Rev, TJ.
Thomas Johnson IV:
Yes, sir.
Josh King:
Thank you so much for sharing your stories, here inside the NYSE.
Reverend Thomas Johnson:
Thank you for having me.
Thomas Johnson IV:
Definitely.
Reverend Thomas Johnson:
It's been a pleasure.
Josh King:
That's our conversation for this week. Our guests were Reverend Thomas Johnson and his son, Thomas Johnson, the fourth. Former members of the New York Stock Exchange. If you like what you heard, please rate us on iTunes, so other folks know where to find us. And if you've got a comment or a question you'd like one of our experts to tackle in a future show, email us at [email protected] or tweet at us @nyse. Our show is produced by Pete Asch and Ian Wolff, with production assistance from Ken Abel and Steven Portner. I'm Josh King, your host, signing off from the library of the New York Stock Exchange. Thanks for listening. And we'll take you out with some music from Reverend Johnson and Thomas Johnson, the fourth. Talk to you next week.
Speaker 1:
Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE nor its affiliates, make any representations or warranties, express or implied, as to the accuracy or completeness of the information and do not sponsor, approve or endorse any of the content herein. All of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell, a solicitation of an offer to buy any security or a recommendation of any security or trading practice. Some portions of the preceding conversation may have been edited for the purpose of length or clarity.