A Rocky Road to Wall Street

Right here, in a haze of tobacco smoke and cheap hamburger fumes, I was on the skid row of finance … places like this specialize in the walking dead of failing corporations.

AT THE AGE of ten, I resided in some kind of a marital no-man’s-land, a beautiful but loveless gabled house in the leafy little township of Bolton, Massachusetts, some twenty miles west of downtown Boston. My father, Lawrence G. McDonald, had accepted the end of his marriage and had left my stunning fashion-model mother to bring up their five children all on her own. I was the oldest.

The general drift of the breakup was rooted in my dad’s hard-driving business career. Owner and chief executive of a chemical engineering company, he might have stepped straight out of a suburban cocktail party staged on the set of The Graduate: “Plastics, son. That’s the future.”

And I guess in a way it was the future. At least it was his future, because plastics made him a stack of money, enough to start his own brokerage firm, and it only took him about twenty-nine hours a day, seven days a week, to do it. He was obsessed with business.

So far as my mom was concerned, that was the upside. The downside was his devotion to the game of golf, which took care of his entire quota of spare time. For all of my formative years he played to scratch or better. As the club champion of Woods Hole Golf Club, down on the shores of Nantucket Sound, he had a swing that was pure poetry, relaxed, precise, and elegant, the clubhead describing a perfect arc through the soft sea air as it approached the ball. Also, he could hit the son of a bitch a country mile.

Mom never really saw him, since she never landed a job as a greenskeeper. And he saw her principally in magazines and on giant billboards around Boston, where dozens of images showed her modeling various high-fashion accessories.

When I referred to the marital home being loveless, I was not quite accurate. There was a burgeoning love in that house, but it did not involve Dad. He’d moved out, and many months later, a new suitor for my mother appeared on the horizon. Years later they were married, but even at my young age I realized he must have been some kind of latter-day saint, taking on this very beautiful lady with the staggering encumbrance of five kids and a kind of rogue husband prowling around the outskirts of her life, keeping an iron grasp on every nickel of her finances.

The name of the new man, who would one day become my stepfather, was Ed O’Brien. He was an extremely eminent lawyer and a grandson of a former governor of New Hampshire. Ed was a very classy guy, and he adored Mom and helped her in every way. He was not so big and tough as Dad, who had a touch of John Wayne about him, a kind of western swagger and a suggestion of unmistakable attitude, which often goes with entirely self-made men.

Anyway, right now I want to get to the point. Remember, Dad did not live with us anymore, and Ed occasionally stayed the night. Well, on this particular morning I was standing in the living room staring out of the window at Ed’s brand-new Mercedes-Benz convertible, a $100,000 car even way back then in the late seventies. Suddenly I saw a car pull up outside the front gates.

Into the expansive front yard strode Lawrence G. McDonald, wielding what looked to me like a seven-iron. He came striding up to Ed’s automobile and took an easy backswing, left arm straight, and completely obliterated the windshield in a shower of splintered glass. The clubhead struck right above the wipers, a little low. I thought Dad might have raised his head just a tad on impact.

Never breaking stride, he walked resolutely to the front of the car, took aim, and smashed the right-side headlight. Moving left, he ripped the club back fast. I thought I detected a slightly tighter swing, hands a little farther down the club. Anyhow, he did precisely the same to the headlight on the left.

By this time there was glass all over the place, and still I just stood there, gaping, wide-eyed. I watched Dad stride around to the back of the car, and for a moment I thought he was planning to survey his handiwork. You know, like standing back after you’ve dropped a ten-footer.

I was wrong. Once more he took his stance, swung the club back, and fired it straight into the taillight on the left side, shooting red glass all over the lot. Then he moved two paces right and with precisely the same shot, slightly wristy with a lot of backspin, punched out the other one. If either taillight had been a golf ball, it would have flown high and dug in on landing, probably pin high. There was a lot of precision about Dad’s play that morning.

I mention this because the incident is branded into my memory. It took me ten years to ask him about it, and he replied as only he, or perhaps John Wayne, could—real slow. “It wasn’t a seven-iron, son. Didn’t need any more than a pitching wedge.”

It would be another thirty years before I would witness at very close quarters another such act of wanton, willful destruction. And that took place on the trading floor of a Wall Street investment bank.

I BEGIN MY story with that brief insight into the character of my father because he had, even after the divorce, a profound influence on me. By nature he was a bear. That’s not a straightforward grizzly, seeing world disaster in every downward swing of the Dow. Dad was a perma-bear, seeing potential catastrophe every hour from the opening bell to the close of business.

For some investors the floor of the New York Stock Exchange is the last refuge of the Prince of Darkness, a place where demons of ill fortune lurked behind every flickering screen. Dad was not that bad, because he was an instinctively shrewd investor, often a wizard at stock selection, spotting the corporation that was about to tank. But his attitude almost caused him to miss the two greatest bull market rallies in history, because to Dad, cash was king, and he might need to prepare for the end of the world. He was the ultimate value investor. In outlook he was a cautious, somewhat skeptical pessimist. In personality he made Howard Hughes look like an extrovert.

In his own business Dad was extremely successful. He earned his bachelor of science degree in chemical engineering at Notre Dame, where he was number one on the golf team. Then he went to work as a salesman at General Electric’s plastics division, the Google and Microsoft of its day. He ended up a multimillionaire, owning his own plastics manufacturing plant in Massachusetts.

When he told me to beware, that history, without fail, repeats itself, he was not thinking of the sunlit uplands of triumph and achievement. He had in mind events like the eruption of Krakatoa, World War II, the fall of the Roman Empire, the collapse of the Soviet Union, and above all the crash of 1929. Always the crash.

With a worldview like his, it was scarcely surprising that the peace and quiet of the golf course was his principal escape. And he was one hell of a player. He held the course record of 65 at Woods Hole for more than twenty years, and on one near-legendary occasion he nailed the three par-fives in birdie, eagle, and double eagle. He played the great golf courses in serious competition, once losing on the last green at Winged Foot Country Club to one of the best Massachusetts amateurs of all time, Joe Keller—and even Joe had to sink a forty-footer to beat him.

Dad had already set me on the road to becoming a scratch golfer when my world caved in. He and Mom split, leaving Mom with us kids in the big house without the means to support either it or us. Ed had a law practice in Worcester, and to that tough Massachusetts city we upped and transplanted ourselves, mostly because Mom needed a friend, just someone to be there, in the absence of Dad and his weighty bank balance.

Bolton, where we had always lived, was a little gem of a town, an upper-middle-class haven set in green rolling country with the families of well-to-do business guys in residence. From there, my mom, now in desperate financial straits, my three brothers and one sister, and I ended up in a housing project in the worst part of a distinctly suspect city—the absurdly named Lincoln Village Apartments, gateway to nowhere. I was too young to go into culture shock, but hell, even I realized that somehow the roof had fallen in on my life.

With five children to care for, my mom, the hugely admired Debbie Towle, could not possibly go back to work. She was still, by all accounts, spectacularly beautiful, and would once again have been in demand as a fashion model, but that was impossible. We were not so much hard-up as bereft.

The apartment was in a nightmarish neighborhood, run-down and dirty, with a slightly sinister atmosphere, as if at any moment some shocking crime might be committed. Mom was always in tears. I could tell she hated the place, hated living at the wrong end of this urban version of Death Valley.

As you can imagine, the people were an absolute treat, many of them shifty-eyed, leering, unkempt, and full of resentment: some really shaky kids, white trash, drug dealers. There were also gangs of trainee criminals staging shoplifting raids and nighttime burglaries all over the city. They kept trying to recruit me, but I knew enough to stay well out of it. I refused to join them, and one night their leader came to the door of our apartment, dragged me out onto the front steps, and punched me right in the face.

Mom nearly had a heart attack, and Ed O’Brien came to the rescue, trying to help with money. Dad? He pretty much disappeared. In my first eighteen months in Worcester I went to three different schools, each one a bigger disaster than the last. This was life as I had never imagined it. Academically I was slipping behind; mostly I was afraid to go outside the door because of the sheer danger of the place. It’s hard to explain every vestige of the change in our lives. But the difference was total. There were no more trips to the Cape, no more golf, no more elegant dinners at our home. We were prisoners of the cells of Lincoln Village.

My dad did pull one masterstroke on my behalf. He arranged for me to report to tranquil, green Worcester Golf Club, where I spent time caddying. I was too young to understand I was hauling a huge bag around for one of the immortals—Bob Cousy, the six-foot-one point guard for the great Celtics teams of the fifties and sixties, and an excellent golfer. The sweet-swinging point guard called me “kid”; I called him “Mr. Bob.”

But those trips around the course were only a tiny respite from my real world. I earned $100 caddying, all of which I gave to my mom. As a family, we were sinking into depression. I remember it all so well—no laughter, no joy, and the unmistakable feeling that we never should have been anywhere near Lincoln Village. Finally, the entire family got together, both Mom’s people and Dad’s, and decided, “We have to get those kids the hell out of there.”

So one bright morning in the spring of 1979 we all moved to Cape Cod, where Dad had always had a home. We went back into the sunlight, back to life as we had once known it in Bolton, away from the glum recesses of Worcester.

When I began at my high school in Falmouth, I was at a huge disadvantage, way behind in my work in all subjects. I fought an academic war to become a C student, struggling to catch up. During my junior and senior years, when it was time to make a decision about college, I most definitely was not regarded as a candidate for a top university. So you can imagine my surprise one day when Dad showed up and told me he was taking me out to his alma mater in South Bend, Indiana: Notre Dame, the hallowed campus of the Fighting Irish, which also houses one of the greatest libraries in North America under the watchful eye of the Touchdown Jesus, set in massive mosaic glory on the eastern wall of Memorial Library.

He took me to all the sacred places: the Grotto, the library, the Rockne Memorial, the Sacred Heart Church, the palatial South Dining Hall, and of course the stadium. I thought then, as I think now, it must be one of the most fabulous university campuses on earth.

Plaintively, I asked my dad, “But why now? Why bring me here so late? I obviously could never make it, not after the years in Worcester. If you wanted me to come here, I should have stayed at my school in Bolton.”

He was a man of few words at the best of times, and he greeted my comments with even fewer words than usual. There was no explanation of his intentions. And we traveled home to the Cape with hardly any further discussion about my lack of academic future. I think Dad knew I was doing everything I could to regain lost ground at school, but there was no possibility whatsoever that I could ever aspire to a place like Notre Dame.

When we reached the house, Dad took me by the shoulders, turned me around to face him, and said in that rich baritone voice of his, “Son, remember this—it’s not where you start, it’s where you finish.” Spoken, I have often thought, like a true hard-driving son of a mailman—and for that matter, a bit like John Wayne. A student’s gotta do what a student’s gotta do.

What I had to do was scramble my way into a university of some description. Any description. In the end I made it to the University of Massachusetts at Dartmouth, a small seaside town that sits in the southernmost corner of the state, where the Atlantic washes through the trailing headland of Cuttyhunk, the last of the Elizabeth Islands.

Before I reported to UMass for my economics courses, I spent a summer working in Falmouth pumping gas. I swiftly developed a deadly rivalry with the gas station next door, which was manned by one of my local buddies, Larry McCarthy.

He was a whip-smart kid, built like a jockey, 120 pounds wet through, and about five foot five. He got a pretty hard time at school partly because he was so small and partly because he was frequently seen reading the Wall Street Journal when he was in seventh grade. But he was a feisty little devil, and he fought like a tiger, ever ready to swing a roundhouse right at any perceived slight. Just how feisty he was would be demonstrated to me in Technicolor when we both had our backs to the wall at Lehman Brothers twenty years later.

His dad was a bank president, and he sent his son to the expensive Sacred Heart School. Right from the get-go Larry was being groomed for a Wall Street career. He sailed into Providence College to study economics and business administration.

Even as a teenager, I should have known he’d go far, because he was hell as a business rival. One week things were a little quiet, so I cut a cent off the gas price at my station, guessing the notoriously parsimonious New Englanders would go for that with enthusiasm. I was right, and for a couple of days I was doing real well. Then it all went south and I was back in the doldrums.

It did not take me long to find out why. Across the street Larry had slashed his price by more than two cents and mopped up almost all of the town’s regular business at the pumps. The summer drew to a close leaving us still best friends, but with the business pecking order established.

As a freshman, I lived in Falmouth with my dad and made the hour journey to school each day. That had the advantage of being free except for gas, and the disadvantage of my being watched beadily by a very advanced financier as I toiled my way through the demanding curriculum. Dad was making a big effort, seeming to want to make amends for things in the past, and we got closer. I guess I started to like him more, as I have done ever since.

By the time I moved into junior year, I had become a top student, straight A’s, while majoring in economics, with probably the best grades in my class. Dad regarded all this with a watchful gunslinger’s gaze. Never said anything. Probably figured there wasn’t any need. But I bet he secretly knew I could have made Notre Dame if I’d had a shot.

When we talked, it was usually about business. Sometimes about our other shared interest, golf, but mostly Dad let his short irons do the talking. Although I do remember he once told me he’d dropped a sixty-footer on the fifth green of the exclusive International Club out in Bolton. This was reputed to be the largest green in the game, a 120-yard-wide upside-down apple pie generally regarded as impossible from all angles. Dad, who was the best player in the entire membership, recounted that putt with a paucity of words. But he told it like it was, straight and true, the upholding of good over evil, like a scene from the back lot of High Noon.

Those were the terms in which he saw the world, and he looked at the financial markets with a mixture of suspicion and cynicism, watching, waiting for the chink in the armor of the mighty that would allow him to cash in. Like all bears, he was intuitively drawn to the art form of shorting stocks—acquiring shares in a corporation in anticipation of a downward spiral. In the broadest possible terms, if one thousand shares are acquired at $100 each and the price then falls to $50 per share, the bear tucks away a succulent $50,000 profit. It’s a bit complicated, because the original $100 shares are not actually purchased by the bear. They’re borrowed through a broker and immediately sold. All the old bruin needs to do is buy them back at the cheaper price and pocket the difference. And so, while all around him the stockholders are licking their wounds, losing their cars, selling their houses, and watching their portfolios blow up, men like my father bask in the sheer scale of the disaster, counting their cash and staring balefully around for the next potential casualty.

No doubt in my mind: Dad was a bear’s bear.

And all the while he stressed to me that no matter how bad things were, they could always be that bad again, or worse. In his view, “it couldn’t happen again” rates as just about the stupidest comment ever uttered. Yes, it could, son. Yes, it could. History invariably repeats itself. The mantras of my father. Forever in my mind.

By the time I graduated from college in 1989, I had learned enough about Wall Street to understand that was the place I wanted to be, right out there in New York with the big dogs, playing in the major leagues of finance. The trouble was, my chances of getting in were zilch. Those big finance firms recruit from the best colleges in the United States. They ransack the top business schools, scoop up the outstanding talent from Harvard, Princeton, Yale, and Penn. And they land them early, often bringing kids into the firms for work experience before they even graduate. UMass Dartmouth was not one of the regular stops on their recruitment drives. They wanted the best, and their recruiters headed straight for the institutions where they were most likely to find it.

I understood that big finance in the United States was probably the toughest of all careers. It was such a ferocious learning curve that young people were quite often burned out at forty, unable to take it anymore—the endless hours, the pressure, the fear of missing a chance. And yet I still knew that it was for me, even though it would be a long, hard road, mostly uphill. I didn’t broach the subject with anyone. Instead I decided to tackle it alone, armed only with my economics degree from a relatively obscure university. Whichever way you cut it, I was at some disadvantage against a kid from Choate and Harvard with about seventeen relations in the boardrooms of the great finance houses. Still, as Dad had said, it’s not where you start, it’s where you finish.

So there I stood in search of my personal holy grail, metaphorically staring at the north face of the Eiger, wondering which way was up. I was long on ideas but destitute when it came to contacts and connections. I had no clue where to start. While a hell of a long way from Worcester, I was still light-years away from Wall Street. And I was braced for rejection on a mammoth scale, but I believed that every no brings you closer to a yes. See that? A psychologist, even at that young age!

In my secret thoughts I set myself a five-year target to make Wall Street—not some plush carpeted office, but right down there in the Colosseum of the trading floor, where the rubber meets the road, where the toughest characters in the game stand guard over the firm’s capital. I was holding on to a dream that my dad had instilled in me, the lure of finance on the grandest scale, illuminated by another of his mantras: that someone somewhere is going to screw up big-time every trading month of the year … the anthem of the bears.

I can’t say why, given that I had witnessed my dad stepping gingerly through those big bull markets, but I have always been sympathetic toward the bears, even though I understood that the real big hitters of the investment world traditionally have been men who seek stocks in corporations that are on the rise, the ones on the verge of a breakthrough with a new idea or discovery.

In any event, that summer of 1989 I set about establishing a career for myself. I would begin with a mass attack on the financial institutions of the Northeast, buoyed up by yet another of Dad’s mantras: even a blind pig will occasionally find an acorn. I bombarded the industry with letters of application, probably a thousand of them, accompanied by a resume that was light on substance but long on ambition. I spent hours in the Falmouth library researching chief executives of New England brokerage houses, chief financial officers, marketing directors, human resource guys, and God knows who else.

When I hit them, I hit them big, dozens of letters at a time which I personally fired into the Falmouth Post Office, armloads. The rejection slips came back like a machine gun fusillade. But I never went down. I just kept mailing: Boston, Hyannis, Quincy, Plymouth, Buzzards Bay, and points west all the way down to Newport. Result: zero.

The fact was, I could not even gain entry for an interview, never mind receive a job offer. So if I wasn’t invited, I thought, I’d get in some other way. Armed with my list of addresses, I went on a kind of brokerage house patrol. I just turned up with the name of the guy I wanted to see, trying to wheedle my way past the advance guard of receptionists and secretaries—all of whom, of course, tried to get rid of me, since I had no appointment.

As each one of these sieges was repelled, resulting only in ignominious defeat, I slowly came to understand I needed to be a great deal more cunning. So I evolved a new strategy. I would sneak in, barge in, lie my way in, or make my entry in disguise. From that point on I was a changed person, a new specialist in low cunning, deviousness, and subterfuge. Some of my tactics were so preposterous it was all I could do to prevent myself from falling over with laughter.

There was the out-of-breath, well-dressed young exec who was simply so late for an appointment there was no time to argue at the desk. At some of these brokerage houses I just charged straight in, as if I owned the place, and headed for the boss’s door. (That was in the more innocent days of the early 1990s; today I’d probably be shot.) Other times I’d simply say I had an appointment, no ifs, ands, or buts, and I’d traveled two hundred miles to keep it. Other times I researched my target and turned up on his birthday or anniversary with chocolates or flowers that had to be delivered personally. I had to invest in a couple of blue tradesman’s work coats for these forays into the enemy camp. Ed O’Brien, by now my stepfather, funded this operation right down to the flowers.

My most successful deception at the New England offices of Merrill Lynch, Lehman, Morgan Stanley, or Smith Barney was the role of pizza deliveryman. Ed stood me a long white coat that hid my business suit for that one and even offered to finance the pizzas. But since the boxes were always empty, I explained, that would not be necessary.

There’s something magnificently ordinary about a pizza, something delightfully mundane. It’s a word that can soften the stoniest heart. “Pizza for Mr. Matthews” was not the way. You needed the jargon of the pro: “Sausage, mushrooms, and extra cheese, Mr. Matthews, right away while it’s hot.” Or “Linguisa, peppers, and tomato, Rick Matthews, gotta be hot.” Or “Rick Matthews wants it real hot—extra cheese and sausage. Let’s go, let’s go!” For that last one, I hit the reception desk with my best Italian accent and barged straight in, quivering with urgency, as if any delay would cost the receptionist her job, not to mention mine. Once I was past the receptionist I was able to ditch the white coat and the pizza boxes.

Of course, having stormed the first line of defense armed only with a pizza box, I was still one hell of a long way from my final objective, a job on the trading desk of one of the big Wall Street–based finance houses. But I was in the door, in the most literal sense, and I was seeing a few branch managers—mostly for about four and a half seconds before they had me escorted from the building.

A few, however, doubtless amused by my chutzpah