After 35 years of stockbroking for some of the biggest houses and investors in Australia and the UK, the Secret Broker is regaling Stockhead readers with his colourful war stories — from the trading floor to the dealer’s desk.

They say that a healthy person has a thousand wishes every day, whereas a person who is sick only has one wish every day.

This is a bit like when you end up long and wrong in a share. You are left with only one wish at the end of every trading day and that one wish is that the share price recovers at some point.

However, if you had managed to close out of a good quick trade, you are back to having a thousand wishes on what you can do with your gains.

I would always buy something in the physical world after a good result, as:

  • It’s a reward
  • It’s something to remind you
  • You can physically see it

Normally it would be a watch or a pair of cufflinks or a nice bit of jewellery for Mrs Broker to wear at award nights or post an IPO listing dinner.

If you don’t do something like this, then the next time you do get caught out, you have something to always remind you of a better trade.

Just like when we go out to a recommended restaurant and it turns out to be a wrong ‘un, we don’t complain.

We just never go back and we never take any notice of that person’s recommendations ever again.

And to me it’s the same with shares.

If a company CEO had lied and coaxed me into a placement and three months later it turned out to be a wrong ‘un because of their lies, I would just treat it like a bad meal.

I don’t complain. I have my Rolex to look at and to remind me of better times and trades, as my finger hits the sell button.

And just like a restaurant, we will never again have anything to do with that person or any of their companies.

No matter how good the story is, if they’re involved, then it’s a no.

If an institutional client wanted a quick liquidation to cover off on a big redemption, we used to bid blind on a portfolio of shares on their behalf.

The quality of the institution whom you were dealing with then determined the quality of the blind bid discount you would make. So, a blue chip client with a block of various shares valued at $100m may have attracted a blind bid of a 2% discount to market value.

If the client was happy with that, they would fax over the shares and their quantity and now we would be long of that list.

We would immediately sell some futures contracts as a hedge, go about liquidating those shares and when done, close out the hedge.

Done properly, it would be a win-win all round and once you got a feel for the client and how they operated, the next time this situation came round, then you may be happy to bid blind at a 1.5% discount.

A good outcome meant another watch was added to the collection and a nice dinner for the client and their partner, with Mrs Broker all blinged up for the night.

No, this is the GOAT

Unfortunately, as as time went on, other lower classes of institutional clients would sound you out. And if we ended up long of an illiquid stock from a new client, then the next time they approached us, we would blind bid at a 10% discount.

Eventually, as word got around on what we could do, this one particular client – let’s call him Dodgy Dabbler – personally started to become friendly to us. He’d make us his first call with a few portfolios for us to blind bid on.

Then, just as we were all getting comfortable with each other and a Vintage Rolex Oyster Perpetual 6564 Silver Dial was coming up for auction… BAM!

We would end up long of some rubbish that he could not get rid of and now neither could we.

It had been mingled in with some other OK shares and now I’m having to now declare a 5% plus stake in a ‘shit co’.

First though, I had to cancel my commission bids with the auction house before working on getting out of the hole I had now found myself in.

In fact we had a name for this kind of trade.

One of our mate’s dad ran a pawn shop and this sweet, old, immaculately dressed lady would bring in a bunch of family silver wrapped in a bath towel and hock it in.

Two weeks later she would come back in and unhock it.

This went on for a few months, until she said ‘I think you should revalue it a bit more’.

So his father took another look and advanced her another 40% on top.

She kept coming back to pay and collect week after week until one day, when she was due to pay and collect, she was in tears.

Her grandson needed an operation. Could he up the valuation?

After three months of their dealings, he was now at the stage where he would just take the tied up bundle and put it under the counter without looking.

He handed her some cash and was now on the line for 90% of the valuation of her hocked family silver.

After a few weeks had gone by when she didn’t turn up as per usual to pay and collect it, he untied the string around the bath towel thinking she must have died. All he found was the skeleton of a goat’s head.

He’d been done. He’d been goated!

Now picture this – phone rings. Mate from another firm.

“What is it?”

“I’ve been goated. Ryans bar, now!”

At bar, GnT in hand.

“What happened?”

“I’ve ended up long of 5m shares in a shit co.”

“You’re joking. They haven’t traded in six months. Who did this to you? Fark! We cut him off three months ago! OK put me down for 500,000 and give the others a call. Where’s lunch?”


“You paying?”


They thought that by throwing a few illiquid ‘shit co shares’ in with some good ones that we kinda wouldn’t have noticed.

Yeah right.

These trades became known as a ‘goat’s head’ trade.

Next time Dodgy phoned our mate up, just like us, he wouldn’t take his call.

Over their time, what had started out as a 2% discount trade was later widened out to become 10% and now, after their last trade together, it had now just widened out to become a 100% discount trade.

Fool me twice

Of course, Dodgy’s company no longer exists and he did spend more than a couple of years in jail.

Of course times are different now with direct through trading; however, things never really do change.

You can still get a bad meal that costs $250 a head and you can still get a person who tells lies to better themselves.

We would always say that the only way to find out if you can ever truly trust someone is to, well, trust them with something.

Give them the benefit of the doubt but if they crossed you, they were gone.

Just like a sick person, they would end up with only one wish and that was to find someone new who will trust them.

As for us lot, we carry on with our 1000 wishes every day, even if we do occasionally get dudded or, to use a more modern term, get scammed!

By the way, if you do have a collection of watches, make sure that you buy a vibrating device on which you can put your self-winding ones on. That way, when you are going out for dinner, you can always have one from your collection ready to match your suit.

More importantly, it will also remind you of all your good old trades.

And give you something to look at, as you tap your phone to pay, just in case the meal is rubbish, calming you as you leave already thinking of a better restaurant next time.

Now, that just leaves you with another 999 wishes left to go, before you turn in.

Sweet dreams!


The Secret Broker can be found on Twitter here @SecretBrokerAU or on email at [email protected].

Feel free to contact him with your best stock tips and ideas.