Travels with Grumpus

Since I started this post, the Dow Jones Industrial Average has risen another 123 points, and ended the day at 11850. That’s a new high, of course. The big number though was 11727 which is where it closed yesterday, setting a new high six years, eight months and some days after its previous high of 11722 point something in January 2000. Why the sudden interest in the stock market, you might ask. Well those numbers tell a story which, as it happens, dovetails quite neatly into the most recent phase of my life.

When I started business school in August 2000, the Dow had been on a steady rise and was hovering at the 11000 + level. Venture capitalists were pouring ungodly amounts of money into anything dotcom. The S&P and most especially the NASDAQ were breaking records daily. Investors were in a state of what Greenspan called “irrational exuberance,” buying stocks in the blind faith that they would keep appreciating in value - because they had been for the past several years - without necessarily looking into the reality behind those numbers. We were operating in a new economy, we were told, one that didn’t follow the old rules of diminishing returns, marginal costs and generally accepted accounting principles.

What this meant for me and my classmates was that we were in high demand. Investment banks and consulting firms, traditional employers of newly-minted MBAs, had to line up behind upstart dotcoms for their fresh supply of warm bodies. The dotcoms, flush with cash and dangling the promise of strange new worlds, new civilizations, and fat signing bonuses, had their pick of smart, ambitious, smooth-talking b-school grads . And even those dotcoms were fighting amongst themselves - I remember a Business Week cover story in 1999 about three young MBAs who were on their third dotcom in 11 months, lured away buy successively higher offers. So, come the first week of school, we were all pretty confident that each of us would have our 6.8 job offers come graduation.

And then shit happened.

I was in the cafeteria having a peanut butter and jelly sandwich and chatting aimlessly with my groupmates. It was probably mid or late October 2000, since the USS Cole had just been attacked and the markets were a bit jittery. One of my groupmates was 32, a senior citizen in b-school years, where the average age upon entry was 27, and many students were 24 or 25. “Uh oh,” Jen said after watching the stock indices dance around for the second day in a row. “This isn’t good. The last time there was a recession I had just finished college and there were no jobs to be had.”

“This isn’t a recession,” someone piped in. “Just a couple of bad days.” None of my younger classmates had ever seen a bad job market and couldn’t fathom the idea. Come recruitment season for the summer though, Jen’s words proved eerily prescient.

Dotcoms had started going belly-up and that source of jobs dried up. As it turns out, the dotcom kids weren’t very good at converting their ideas into sources of real revenue (hard cash) and had nothing to run their companies with once the venture capital money dried up. And what that meant was that those high valuations and incredible stock prices were really based on nothing. As that fact became increasingly clear, the tech bubble burst, and with it went the stock indices.

Banks and consulting firms, sensing a change the wind, slashed their recruiting targets and were making their interviewees jump through hoops with multiple rounds of interviews. Recruiting season stretched out into April, then May and instead of multiple job offers, people were happy to have just one. The boring “old economy” jobs in good old manufacturing or retailing operations looked suddenly appealing, but since they didn’t follow a set recruiting cycle, they didn’t feel like a viable alternative when the banking and consulting jobs dried up - who wanted to wait until June to learn they had a summer job lined up?

Things got worse in the first semester of second year, of course. I was in my apartment getting ready for school in the morning of September 11, 2001 when the planes hit the World Trade Center. I got to school in a state of shock and disbelief, and it almost didn’t register that, six days later, the Dow had its largest single-day drop in history. So there we were, brash, young and formerly overconfident, in the unenviable position of being deep in debt and desperately needing that high-paying job in the middle of the 10th worst stock market crash in history.

My classmates got jobs anyway, but nowhere near as good as the ones available just a year before. I heard a rumor that only 60% of the 2002 class had job offers upon graduation; but I never saw that number in the official statistics. Things got worse for the overeducated in the coming months. The layoffs began in April 2002, and just kept coming and coming and coming. I knew several people in every round - of course the first to go were the foreign hires (there was some logic there that escapes me at this moment).

And what about my part in this story? Well by dumb luck I escaped the job market by getting very sick in the first half of 2002, then recovering nicely in time to get engaged and leave New York City in early 2003. Got married and moved to Hong Kong later that year, which of course was deep in its own SARS recession. If I’d stuck it out I’d have a lot more money right now, probably a whole lot more aggravation too. Who knows, though? Maybe it’s the right time to jump back into the game.