The Last Ones Left Standing

Apparently, the good times are here again for stock brokers. Thanks to a good 2003, stock prices and trading volume are both up sharply. Even the “little” guy is getting back into the market, so they say.

Times must be good. Morgan Stanley, Bear Stearns, Lehman and other brokerages reported better-than-expected first quarter profits. Things are really good at Morgan. It made a whopping $1.2-billion profit in the first quarter alone. Is it any wonder that it just sweetened its investor group-led bid for Canary Wharf?

What I find interesting is, despite a stronger market and higher trading volumes, the big brokerage houses have not been hiring staff like they usually do. Here are some numbers to ponder:

In the beginning of 1997, when the stock market was just getting rolling, New York’s securities industry employment was sitting at about 175,000 people.


By 2000, near the stock market peak, almost 220,000 positions made up the New York’s securities industry… that’s 45,000 newly created jobs thanks to a rising the stock market.

But today, only about 175,000 New York securities industry jobs are filled. The brokerage houses are at the same employment level today that they were at back in 1997, but the stock market is much higher today than in 1997!

Isn’t it interesting that, despite the rising market, higher trading volume, rising revenue, fat profits, and “the good times are here again” mentality, the big brokerage houses are not hiring again? Could they just want to see how the market fares before hiring? Or maybe they don’t believe in the rally themselves…

Maybe the big brokerage houses want to ensure that, if a big bad bear does develop, they are the last ones left standing. Makes sense to me. I guess that’s how they withstood all those bear markets over the past 100 years and why they are still in business today.

Now, where are their customers’ yachts?