It's Midnight at the Oasis for the California Trader

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SAN FRANCISCO -- Steve Nash is standing in front of the

Transamerica building

at 5:45 a.m., reaching the end of his workday. The stars are still out, and all of the city is dead quiet -- all of the city except for this particular stretch of Montgomery Street. Nash mans a catering truck holding the remnants of "regular and French roast" coffee, muffins, bagels and fresh fruit. "Not too many donut eaters around here," he says, with a fresh-air,

Robert Redford

-like healthy grin. "This

is

Northern California."

About 80% of this pyramid-shaped landmark is occupied by the

Montgomery Securities

headquarters, and though the night still hangs over the Bay, employees are scurrying into the building late to work, digging through pockets and purses for their blue magnetic ID cards. "It really slows down after about 5:30 a.m.," says Nash, "when most everybody has to be here for a sales meeting. I'm just about to get out of here."

At 6 a.m., 101 sales traders begin to take their spots on the the 12th floor trading desk. Five long rows of seats are lined up like church pews facing south, looking at a big digital altar where the latest quotes will soon cruise across the ticker. Facing them is a sixth row, slightly elevated, where senior traders sit in high-tech gray metallic seats against the quote wall. In the middle of that wall sit the two managing directors in charge of trading: Frank J. Connelly, who supervises the

New York Stock Exchange

traders on the east side of the aisle, and on the west side, the

Nasdaq

traders and their director, Scott Kovalik.

As the entire crew settles in for the day, their Styrofoam cups of coffee dot the desks, with each trader sitting before three computer screens showing the latest news from

Bridge Data

, dozens of market quotes, order screens, games of computer blackjack. A few traders have their PCs tuned to

Maria Bartiromo

on

CNBC

.

Perhaps the only concession to this ungodly hour is that there's no opening bell. Nobody hollers. Nobody yells, "There goes Swifty." Indeed, the activity builds steadily -- incessantly -- into and through the opening. Traders watch their dozens of phone lines begin to ring. The intercom -- whose fuzzy quality is the only sign of technological limitations here -- starts to crackle.

And then at 6:30 a.m. the tape starts to roll, and the traders are working the phones full force. "Five thousand

AMAT

(AMAT) - Get Report

at an eighth, I'll take it." Salesmen dart to traders (for there are few saleswomen), throwing orders on the desk: "Here's 100,000 -- sell it." The pace quickens even further. The intercom is unintelligible -- "We have a large seller in

Columbia Healthcare

(COL)

," it says in distorted tones. "A seller in

size

." -- and carries these messages to the smaller Montgomery operations in New York and Boston, where the sun is already up. But here in the dark, where most of San Francisco hasn't even turned the lights on yet, they're already cooking.

"Yeah!" shouts one Nasdaq trader, as he smacks his hands together loudly. He shouts into the phone, "We got an order here! You got somebody that wants to play and I'm your man. How 'bout I sell you 33 at an eighth?"

It's 6:35 a.m.

Managing director Jerry Markowitz walks out of his glass-walled corner office. He's heavyset and only slightly disheveled from a late-night dinner at the house of Montgomery CEO Thomas Weisel, where they celebrated yesterday's close of

NationsBank's

(NB)

buyout of Montgomery. Each of the firm's 68 partners are expected to collect an average of $17.6 million. So the muckety-mucks are in a pretty good mood, though they've only had a few hours' sleep. "You're the guy from

TheStreet.com

?" he asks. "How come my password doesn't work anymore?" Traders all around him are working the phones with abandon. "Keep trying the GT Bike for sale:

GTBX

, six figures for sale," the intercom intones.

Montgomery runs the largest trading operation on the West Coast. And as the nation's economy is driven by the incredible growth of Silicon Valley, San Francisco investment banking and trading operations like this,

Hambrecht & Quist

,

Robertson Stephens

and upstarts like

Genesis Merchant Group Securities

are growing apace. Even back in 1991, Montgomery flexed that muscle by leading a revolt against New York Stock Exchange officials who wanted to move up the start of the trading day by a half an hour. Monty won that fight, so now they can still have the luxury of a 5:30 a.m. morning sales meeting.

"I've been out here 11 years, and you don't ever get used to these hours," says Richard Smith, managing director of syndicate sales. "But in some ways it's better than New York. Our day is actually shorter than the New York trader. We have no traffic in the morning, so we can get up at 4 and be here at 5. So right there you get an hour. And it's nice to get out at 2 p.m."

At about 6:50 a.m., somewhat suddenly, the black wall behind Markowitz's office lights up with the first light of dawn. It turns out this office has an incredible view of Coit tower and the hills of Berkeley, but the fog and the darkness shroud it until the trading day is well underway. By 7, as the first bits of traffic appear on the streets of San Francisco, the early-morning buzz of the open has worn away, and trading has subsided somewhat. Just as rush hour starts here.

In 1994, Montgomery offered itself up as an alternative to Wall Street. In a splashy public relations campaign, they donned the motto "The Other Street." But as the firm started to miss out on the giant block trades that generate giant commissions for other firms, Montgomery began to smart at unfavorable comparisons to bigger New York firms. Montgomery, for example, has never done a trade larger than $215 million. So when

Doubletree

(TREE) - Get Report

-- a Montgomery client -- needed a $600 million commitment, they turned to New York-based

Morgan Stanley

. Soon, Montgomery stopped arguing that they were different from the rest of the Street. They even opened a swank new office at 9 West 57th Street in Midtown Manhattan. And eventually, Montgomery did the NationsBank deal, so one might expect their trading operation to see even more dramatic growth now that the firm has access to NationsBank's $24 billion in equity capital.

Senior managing director Robert Kahan sits in the corner office opposite Markowitz. Kahan is a

Goldman Sachs

veteran, and his office is chock-full with plaques and bronzed deal tombstones, and pictures commemorating his 25 years in the business. He staunchly defends the firm's ability to keep pace with Wall Street in every way.

"There is no difference between what we do and what New York does," says Kahan. "Our day is far longer in the West because we start earlier and work later. Our communications is not any different than the communication of any other trading desk in New York."

So why be here on the coast? "Have you been to New York?" says Kahan, who has been with Montgomery for 15 years but maintains a hint of a New York accent. "New York is a cesspool! It takes you longer to drive four blocks in New York than it takes to go four miles out here."

By noon, with an hour left in the trading day, the people on the desk are looking a little worn. Sleeves are rolled up, ties are loosened, traders are running their hands through their hair, phones are being slammed.

"It takes a special kind of person to work in this business," says Kahan of his crew. "And it's not a California-type of person. This is a beautiful laid-back place to live, but I think you need to have a different type of stress tolerance to be a trader. California people are not of the mentality to be yellers, so we do all our recruiting in New York. But they can't be worse traders for living out here."

As the trading day ends at 1 p.m. and a few last over-the-counter trades are completed via

Instinet

, traders head for home as most of San Franciscans are heading to lunch. By 2 p.m., the bars in and around Montgomery Street like the

Occidental Bar and Grill

and

Bix

are getting packed. By 3 p.m., a yuppie crowd is in a full-swing raging party, drinking and dancing at the outdoor bar called

Pier 23

, planning weekend bike trips to Marin County, afternoon golf outings and winter ski houses in Lake Tahoe. By 5 p.m., most will be home, having missed rush hour traffic altogether. "It's a different life out here," says one Montgomery trader. "But, you know, it's a damn

good

life."