My time at Stratton Oakmont (The Wolf Of Wall Street)

"CAN I HAVE YOUR MONEY?" is my autobiography that includes my time at Stratton Oakmont, THE WOLF OF WALL STREET

(chapter two)

The Pitch

Ah, the pitch. That marvelously crafted money making script was something that I had rehearsed saying repeatedly ever since it was handed over to me from Victor.  It was the basic story you told a potential client to get them excited and to entice that individual to buy shares of stock in that company from you. One thing that I had going for me when I started the process was that I possessed a photographic memory. It helped me get through college and I was confident that it was going to be a tremendous help now.

Another piece of good news going in my favor was that I was being taught and trained by one of the best ‘account openers’ at the firm. Victor was an individual that was considered one of the gurus of account opening and many thought I was extremely fortunate to be working for such a salesman.  The key, as Victor always emphasized to me whenever the opportunity arose, was that you needed to have every word of the pitch memorized.  Just as an actor must memorize their lines for a movie a broker has to have a full recall of their pitch. Victor stressed that you had to know the pitch frontward as well as backward if you had any hopes of being successful.

Once that was accomplished, the next thing to master was managing your voice inflection when saying the words. Changing the tempo as you presented the pitch to a potential client was imperative. “You need to be excited so that you can get the client excited,” Victor would always say. 

Victor would finish every teaching session with me telling me to always, always, always ask for the order at the end. That was the ABC’s of sales, always be closing. And when asking for the order you must just assume the close then sew up the sale. Assuming the close meant that instead of asking for the order you automatically assumed the individual was a buyer. Then you would go straight into asking questions that allowed you to fill out an account form.

At this point, you would basically tell the client that they are buying a certain number of shares at a specific price and that it will cost him this amount of money. Then you would casually ask for their social security number and so on.  

There were several other basic rules that were burned into my brain on a daily basis from Victor and the rest of the senior brokers and those were to never think with your own pockets and never pitch the bitch. The first rule was the hardest to grasp because if you never had money, I mean millions of dollars, how could you know what a millionaire would be thinking or ask someone to buy a stock that will cost them $250,000 or more.  So, the basic idea behind the methodology was to believe that a rich guy thinks differently than you do and therefore you must just follow the script and do not believe the bullshit excuses he throws your way. The reality, we were told, is that the rich buy stock all the time over the phone and if he wasn’t buying from you, he would probably buy something somewhere else. 

The second rule was self-explanatory and emphatically adhered to. Do not call any woman and you had definitely better not open an account with a woman! An explanation that was told to me was that women complain way too often, that they are never satisfied with anything that is done for them.  A final reason for the no-call rule was that they like to call into the office way too often looking to get updates on their stocks. They just weren’t worth the time and effort that it would require to service them. 

That Friday, Victor took me to a nice dinner at a well-known local steak joint. He told me that night that I was being promoted into the big leagues. From mow on a typical workday was going to be from 8:00 in the morning until 7:00 at night. During that time, I was to be on the phone constantly pitching my ass off. He kept driving home that the money that I would be making as long as I worked hard and followed the pitch would be huge. Focusing on that point, the adrenaline was soaring through my veins. All that rehearsal of going over the pitch and practicing my rebuttals to make sure that I had every nuance mastered was about to be tested on the grand stage. 

That weekend seemed to take forever as the anticipation inside me was playing absurd tricks with my mind. Doubts about my ability tried to creep into my thought process but I refused to allow myself to go down that path of non-positive thoughts. Staying as positive as possible, my wife helped in keeping my spirits high. Having worked in the financial sector, she understood what was floating around inside my head.

When Monday finally arrived, I was up and out of the house early. As the morning sun was still coming up into the sky, I was arriving at the office. Eager to get started, I was on the phone at 7:30. After taking several deep breaths to try to relax my tense body, my fingers flipped over the top DNB card on my desk.  On the cards were the name and phone numbers of presidents of businesses making more than ten million dollars in gross revenue that I had previously cold called that became leads.  Reading the first number as my fingers began dialing to speak to whoever answered the phone on the other end.

The first call that I made that morning was to a doctor’s office in Georgia. It was to a qualified lead that was on the top of my lead pile, purposely placed there by me to kick off my next stage. When cold calling him, he gave me the impression that he would be someone willing to hear my pitch.  Going purely on my gut impression, he seemed like a guy that would buy a hot stock.

After dialing the number, waiting for someone to answer was an eternity.  With each unanswered ring, a portion of nerves began creeping into my body.  When the voice that answered was the actual doctor himself for which I was calling for, I went silent for a moment.  Expecting a secretary, his voice surprised me a bit since.  After saying hello for a second, I sprang into action.  Blocking out everything around me, I did what I had been training to do. I immediately went straight into my pitch, determined to pitch him hard. My mind was now relying on autopilot. My mind had total clarity of vision as I methodically went through my progressions just as I was taught to do.

The call went like this: 

“Mr. Jones, Michael Della Donna from Monroe Parker,” I stated in an upbeat voice, my mind focused on what was burned into my brain. “How are you doing today?” 

“Ok. What can I do for you?” was his hurried reply. 

“Well, if you recall,” I answered in a quick paced, excitable voice, “you had spoken to one of the members of my staff several weeks ago and we had sent out some information to regarding my firm. I hope you had a chance to review the information?” 

“I don’t remember seeing anything,” he commented, sounding a little puzzled.

“That’s OK,” I immediately jumped in and continued the pitch before he could say another word. “I know you’re a busy man and the package is probably floating around your office somewhere and when you find it, I am sure you will be fairly impressed with our track record here at the firm.”

“But more importantly,” I continued, elevating the tone of my voice, “the reason for the call, and I will be brief, is that we are working on a situation here that looks to be a huge money maker.” 

“Listen, I’m not really interested” he stated coldly. 

“I understand, but you have heard of Nestlé’s, right?” I responded, totally ignoring his not interested reply. 

“Yeah,” was the half-hearted response back to me.

“Well, we are moving very aggressively with all our clients to position them in this company because we believe that they will be moving to the New York Stock Exchange over the short term. The stock is trading right now at $38.25, and we believe that this stock can easily triple over the next ninety to one hundred and twenty days. Isn’t that the kind of investment that you would want to be part of?” 

“Yeah, it sounds good, but I am really not interested in buying stock at this time,” he commented thinking that I would just hang up the phone and go away. 

“I understand but have you ever heard of Cadbury Schweppes?” I asked in a firm voice in an effort to show my conviction in what I was saying. 

“Yeah,” he replied in a somewhat cautiously sounding voice. 

“Of course, you have,” again jumping in quickly and not allowing him to take control of the conversation. “Well, when that stock became listed on the New York Stock Exchange, it went from $35 to $76 and then split 3 for 1 and ran back up to $40 a share. A triple! I am sure you also heard of Dr. Pepper?” I continued, not waiting for any type of response,” it went from $23 a share all the way to $97 after it got listed on the New York Stock Exchange. I am sure when you see what we see here you are definitely going to want to get involved with this company any way that you can. And with Nestles, which is a much larger and faster growing company, really a mutual fund when you think about all the businesses they own, with much better earnings than the others, it seems pretty obvious where this one is going to go.” 

Then lowering my voice and slowing down the cadence of my speech, I proceeded, “I think that we should do this, position yourself with a block of 10,000 shares, a trade of approximately $380,000, and you know you have five days to pays for the trade, and the commission, I am only going to charge you a hundred bucks.  You know by the time I split that with my firm and Uncle Sam takes his cut, I barely have enough for breakfast, but that’s OK because I know when I get you into a stock that’s a winner and you get to see what a real broker can do for you next time out we will work a little bigger and better. What do you think?”

“$380,000?!” his voice rising from the cost,” That’s a bit out of my league,” 

“That’s fine,” I said calmly, knowing at that moment he was a buyer and now I just had to negotiate the price he was willing to spend. I then continue slowly and inquisitively, “But do you like the idea? Does it make sense to you?” 

“Well, I guess so,” he said cautiously,” but.” 

Again, I cut him off at that point. After all, I got my buy signal so now was the time to close the box and trap him. 

“Well, let me ask you a question. Are you familiar with what a PE Ratio is?” I quickly asked. 

“Yeah,” a hesitant voice came across the phone. 

“Exactly,” I said as mouth ratcheted up the excitement in my voice knowing that my excitement would come through over the phone and hit him right between the eyes. My excitement would get him excited about the prospects of owning this stock, “it’s the price of stock divided by its earnings. Now, this is what most of the experts use to determine how a company is doing against its peers. In the case of Nestles, the stock is trading at eight times earnings. That’s right, just eight times earnings. The industry average is right around twenty-four. So, if Nestles, the largest, the fastest growing and the most profitable company in the group just trades to the industry average, we will have a huge winner. However, say I am just half right and it only trades to half the industry average, and the stock just doubles, I am sure you won’t be to upset with me, right?” 

“Well…of course not,” he chuckled, a sign that his protective guard was being lowered, making the man vulnerable to my onslaught of logic. 

“Ok, let’s do this,” I responded, again assuming the close, and slowing down my speech.  “We will take down a small block of 1000 shares, a $38,000 investment. It is less than what we previously spoke of, and you will make less, but on a percentage basis, and if you judge me on that alone, I think you will be impressed. Now do you typical have the confirmations sent to the home or the business address?” 

“The home,” was the reply in a muted voice that acted like a green light to my way of thinking. 

“That would be at 7667 Amsterdam Lane, correct?” I asked calmly, repeating the address that was printed on the card. 

“Yes, that’s right,” was his answer as I continued my march through the new account form. 

“What’s your social security number, for the form?” was the next question that needed to be asked and the one that let them know that they were personally responsible for paying for the stock that they were about to buy.

“Wait a minute. I did not say I was buying anything,” the voice on the other end of the phone retorted in a quasi-angry tone as he realized what he was getting involved with. 

“That’s fine,” I assured him in a calm but firm way, not slowing down in my quest to open this account. “Let me ask you a question, though,” I quickly responded not wanting to lose control of the conversation or give him an opportunity to get me off the phone.

“When you like an idea, I mean really like the idea, how much do you usually put on that idea?” 

“I don’t know,” was the response as the idea which I presented was something he was pondering.

“I mean, just a ballpark number, nothing specific,” was my next question I persistently asked, attempting to get a dollar figure that he was comfortable investing in.  “If you like the idea, dollar wise, typically, what would you put behind an idea like that?”

This was the moment of truth.  This was when he told me the dollar amount that he feels comfortable sending to me. If he gives me a number, this would be the confirmation that I needed to let me know that the chase was over.  Once he told me that number then all that I needed to do was hit him with one more reason why he needed to own the stock and the game was over. Salivating like a wolf that spotted a lost sheep, my ears perked up.

“First time with a new broker,” Richard responded in a vain attempt to thwart my persistence to what I perceived as the inevitable conclusion, “around five to ten thousand. But let me think about this idea and I will call you back in a day or two.” 

“Great, let me ask you one thing,” I continued without missing a beat, totally ignoring his half-hearted request in wanting to call me back.  “I am sure that you’ve heard of E.F. Hutton, right?’ 

“Yeah, sure,’ a sure sounding man responded, “but aren’t they out of business?” 

“Exactly!” I exclaimed, knowing at that point the chase was over.  The bartering back and forth was in the rear view mirror. The prospect was now going to be buyer of the stock. A buy signal was ringing out loud, so all that was left was to close hard then head straight to the account form for the vital information,  

“They are out of business,” was my response in a definitive voice as to let him know that he was correct.  “They are out of business not because they did not have good ideas or that they were a bad company but because they allowed their clients to call them back. And to be honest with you Richard, you have on the phone with you a broker that only deals with presidents and CEO’s of companies and I must tell you that the only reason my clients are happy with me and refer me to their friends and colleagues is that they trust my pricing and timing. Let’s face it, if take away my pricing and timing then I am just another dopey-assed broker looking to sell you stock and not someone that is going to make you money.” 

“So, let’s do this,” I continued as my cadence slowed way down again while my voice dropped to a near whisper, “We will pick up 200 hundred shares of Nestles, one of the best and fastest growing companies on the planet, for about $7,600 and like I said and I will only charge you a hundred-dollar commission for the transaction.” 

I am really slowing down dramatically now that I am confident he’s buying before throwing in a line that will wrap everything up, “Now it’s less than we originally talked about and you will make less but the percentage gains will be the same.  Judge me on that and I firmly believe within a few months you’ll be recommending me to your friends and family. Now, do you want the confirmations to be sent to your home or your business?” 

“My Home is fine,” the voice on the other end of the phone said in a relieved, yet contented, voice.

“And that’s at,” and I continued filling out the account form, going line by line until all the questions were completed. 

“I want to thank you for having confidence in me here and I want to let you know that if you have any questions about this company, or any other stocks that you may already own, please don’t hesitate to call me,” a short but sweet way to end the sale.

Then the man thanked me for the call and for getting back to him. 

I hung up the phone after the thirty-five minutes of back and forth negotiations. Opening my first account on my first call as a real stockbroker was a dream come true. Total euphoria was the feeling running through my body as every nerve in my system was tingling as I stared down at the account form. 

After the phone call was terminated, a massive roar rang out through the entire boardroom that took me somewhat by surprise.  So loud was the noise that the thunderous sound made me jump out of my seat to see what was going on.  As my eyes looked around the room, everyone was whooping and hollering and clapping their hands while moving towards me.  They were acting as though we had just won the Super Bowl and I had just scored the winning touchdown.  

I was so oblivious to what was going on around me because I was so focused on remembering my lines on getting the sale closed. What I failed to realize was that the other brokers, along with the cold callers, had filled the room to start their day. Since I was the only broker on the phone, the manager decided to put the call on the speaker.  Everyone that was there listened to me pitch my masterpiece that ended up in opening my first account. 

“That is what I am talking about when I tell you that you have to make someone to the mat,” a jubilant Billy yelled into the microphone from the front of the room. “That is why that guy is going to be making a lot of money!”

Right after the morning meeting was over, I glowed as I listened to all the praise that everyone was heaping on me. Sitting back in my chair, my heart was still pounding from the emotional high of landing an account. Breathing a sigh of relief now that my cherry was broken, visions of fancy cars and big houses danced in my head. I now understood that I could be a legitimate stockbroker with the ability to sell stock over the phone. That allowed me to continue dreaming of making millions of dollars for my family. 

My first week as a broker went amazingly well.  It was better than I ever could have planned or even dreamed about.  I had opened eleven accounts that week and brought in an additional $655,000 into my book! I could not believe that I was doing so well so fast. What was truly mindboggling to me was that these people were willing to send money to me after one phone call and to someone they had never talked to before. On top of that, these people were sending the money to someone that was at a firm of which they had never even heard.  None of it made any sense to me, but I was not going to fight it as I was on cloud nine. 

All the accolades that were being thrown my way by the owners were welcoming sounds. Having the veteran brokers in the room praise me as well was definitely feeding my head with visions of grandeur. Later that day, they called me up to the front of the room after the close. Billy announced to the room that I had broken the firm’s record for most new accounts opened by a rookie broker in their first week of action by five accounts. During the applause, Billy handed me $5,000 in crisp one hundred-dollar bills for my effort. 

That weekend I celebrated like I had not done in years. My confidence level was through the roof, and I could see myself as a successful broker going forward. For the first time in months, my mind was able to have a worry-free weekend. There was no studying and definitely no practicing for anything that had to do with work. I remember telling my wife that Friday night at dinner after destroying the record for most accounts opened up the first week by a new broker, that if it was going to be that easy, we are going to be rich very shortly. 

My account opening skills became sharper and more developed over the coming weeks. I had opened forty accounts in less than a month and again, I had accomplished something that no one had ever done before at the firm. This was the next crucial step in the progression of becoming a broker. You see, you needed to open forty accounts to go on your own and get out from under the wing of your training broker. And, yes, the broker you were opening got to keep the forty accounts that you had just opened, and every bit of the revenue derived from them.  In truth, once I opened my fortieth account, I truly didn’t care. I was now going on my own now and finally I could begin to open accounts for myself and begin to make the big money that the other brokers were making. I could taste it and I was driven to make sure it happened. 

One of the measurements that brokerage firms used to compare your overall effectiveness at opening accounts was that a good broker, whether at a large wire house or a small brokerage, was how many accounts did a broker open versus the number of individuals that the broker got to pitch. An average broker should be able to open up one account for every one hundred twenty qualified leads that they had. A really good broker was opening up one out of sixty of the qualified leads that they had spoken with. And here I was a guy who had been in the business for less than four months with no prior knowledge of the markets and I was opening up one out of every eight people I talked to. 

After my third month of working as a full-fledged broker, I had opened a massive number of accounts.  During that time, that hard work resulted in me taking home a check for $38,000 after taxes. The next three months were even better for me.  My pace of bringing in new clients continued to border on the remarkable, allowing me to take home checks that totaled $44,000, $57,000, and $61,000 respectively over that time. 

Working hard every day that I was in the office, my goal was to get two new accounts every day.  My mind set was that I wasn’t leaving my desk if there was not at least one new name in my broker book. Continuing with the same routine from my first day, my focus was clear. I was still one of the first brokers in the office every morning and always the last one to leave every night. Determined not to let all the money that I was making to be a distraction to what I had set as my career goals, smiling and dialing was all everything.