The day trading clients hanging on the telephone at the Charles Schwab brokerage house were begging for mercy.
"Please don't tell my husband I've just lost $50,000," one woman sobbed.
The brokers were calling to tell the private investors hunched over their home computers that it was time to settle their positions and cut their losses before they became any bigger. The amounts involved were not monstrous - most day traders do not hold on to much stock for very long - but still big enough in some cases to warrant second mortgages, sell-offs of assets, cancellations of Caribbean vacations.
On the West Side of Los Angeles, where for months home-based investors have reaped the stock market whirlwind and contributed to a furious boom in house prices and trendy new restaurant openings, the sobriety of the moment was sinking in fast.
"I'm down 20 per cent, what can I tell you?" said day trader Lorraine Conn, who missed part of the big slide in prices over the past few days because she was sunning herself on a beach in Mexico. "This may be a bust moment for e-tailers and e-commerce companies, but the big backbone companies like Cisco will bounce back. We're seeing a lot of margin selling but I think the market will hit bottom pretty soon."
Glen Mathison, a spokesman for Charles Schwab, acknowledged there had been "some level of dizziness" but said most of his company's clients were level-headed enough to take a long-term view and not give themselves over to panic.
"It's been a busy day," he said. "But we haven't seen a big volume of requests for help. We try to encourage people not to over-react to short-term fluctuations in the market."
That did not mean the atmosphere was any less than frantic in the homes of day traders or at securities brokerage firms.
Most at risk were the short-term individual investors who had bought up batches of a few hundred shares in hi-tech stocks on the Nasdaq index. When the index plummeted, as it did on Monday and again yesterday, those stocks reached a value so low that the difference in purchase price and current selling price exceeded the credit limit those investors had with their brokerage firms. The brokers then "called in the margins" - a polite way of saying that they were collecting their debts by forcing their customers to sell, triggering automatic losses running into the tens of thousands. One investment fund noted that day traders were getting "blown out" of the market in this way.
In homes and offices, phones were ringing constantly, with many callers forced to call back four or five times as lines constantly cut off without warning.
"Can you call back when the markets have closed?" asked a harried Michael Strahan of Round Hills Securities in Los Angeles, before offering the tentative view that the market, in the "semi-long-term", would hit a "semi-bottom".
In the internet online chat rooms where the New Economy stock boom started, there was a frenzied mixture of elation, despair and greed as stocks plunged down, then caught their breath again. Many - if not most - were as gung-ho as ever, in the relentlessly optimistic atmosphere that characterises the world of cyber-trading.
"Really wish I had more money to throw at the market now ... great leverage opps," said Mercury in the Daytraders chat room. "Covered all my short positions - first time ever," said Segman, who was being more cautious. "Alot of houses going to market this month," said DayRaider.
Who were these people? Senior citizens day-trading from their Boca Raton condominiums? The independently wealthy who became dot.com millionaires on the tech-stock boom? Or the taxi-drivers, concierges, cleaners and bus-boys who have been sucked into the vortex of the stock-market boom?
They went on: "Oh, this is going to be a NIIIIIIIIIIICE ride," said NDennis0249 in the peculiar grammar-free rhethoric of the chat room. Racecar called it "CHARCOAL TUESDAY!" while CDN was looking on the bright side: "Tomorrow the markets ROAR back as everyone senses a bargain!" "So so mad no more money to trade," said Mercury, still desperately seeking bargains. "This is a buy of the year opportunity right this instant." It was 1.23pm Eastern Time; the Dow was down 210.7, the Nasdaq down 430.8.
"You guys think this is fun?" said Node, who apparently had little time for the fiddling while the Nasdaq burnt. "This is CRASH! ... We beat 1987 CRASH today!
Only a few weeks ago, market commentators were complaining vociferously about "panic buying" in the technology sector. That was all a dim memory yesterday as people watched the initial collapse in shocked disbelief.
"It's a body in motion," commented Arthur Hogan, the chief market analyst at Jefferies & Co. "There is really no floor for this. It's impossible to stop this until they ring the bell."Reuse content