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.
The other day on Twitter, someone asked that if you had the chance to double $100,000, with the chance to lose the whole lot on one ASX stock, would you do it?
Would you risk $100,000 to make $100,000 or lose the whole lot is a question that an older me would say no to. But a younger 20-something me would have said absolutely.
When you are young, you can take on riskier positions, for if they do go wrong, you have the years and the energy to make it back. The older you are, the harder time you have to make back lost capital, as the hourglass is always going against you.
As Warren Buffett says: “I am wealthy enough to buy anything in the world I want, but the one thing that I can’t buy is time, which is just too precious.”
You may have hit the jackpot by marrying a beautiful woman but beauty is also like your time on this earth. They both have a due-by date and no matter how many nips, tucks and botox injections are used, once it is lost, it has gone forever.
Just ask Mickey Rourke:
So, when a client would come to us with a lump sum inheritance, it was all about trying to preserve their capital and help generate some income, whilst at the same time, having the capital grow in size.
In the early 80s, inflation was around 10% a year, so if your portfolio hadn’t grown by at least that amount in a year, you were going backwards.
The one thing I do regret about leaving broking in the UK and coming over here to broke, is that all the knowledge I had gained on International blue chip shares was slowly eroded over time, until it had disappeared forever.
A blue chip portfolio in the UK would consist of the top 10 UK companies as well as the top 10 European and USA companies, with maybe a few BHP and Western Mining thrown in to get some mining exposure. The only thing you had to watch like a hawk was the currency exposure that an International portfolio would bring with it.
There was no point in holding too many USA stocks if the US$ was going down to the £ but if it went the other way and £ was getting weak, then your portfolio got a double whammy.
Capital growth and currency appreciation all in one go.
Over here in Australia, no one was interested in International shares after everyone got burned in the Westpac Swiss Franc loan debacle, where ordinary folks were sold a loan that was lower in interest payments and based in the very steady conservative Swiss Franc.
When the A$ crashed, the borrowers were exposed to having to service a loan that got bigger not smaller, whilst A$ fell more and more.
So, no one would listen to a Pommy like me, with all my knowledge of international shares and currencies
No, no, no. All they wanted was to have a few BHP and Western Mining shares and the balance of 98% in specky Australian mining or industrial companies.
And that was that.
My new years as an arrival were spent meeting ASX company directors in dodgy bars, where they would prattle on about their company’s prospects as I would be staring blankly at their dyed hair and white shoes. Wondering if part of being requisite to becoming a director of an ASX company was that you had to be male and less than five and a half foot tall.
I can’t tell you the amount of times I had to help lift them back onto their bar stool, as their little legs couldn’t touch the floor.
I had one famous meeting, in-house, with a company that had acquired the Australian rights to some special technology from British Aerospace. I had to sit through a 30-page PowerPoint presentation blasted with British Aerospaces logos… and none of theirs.
They seemed to have all the answers to our questions. The next day, when I had to go and attend a new pre IPO mining company presentation, it was presented by exactly the same four directors as the technology company!
This time the 30-page PowerPoint was plastered with BHP logos, as BHP were the previous owners of their mining prospects. All I could do was stare at the Director giving the presentation, as his black hair dye was slowly dripping down his face, Giuliani-style, as he went bright red and brighter from his embarrassment of being caught out.
Stavros was his nickname and he was definitely under five and a half foot tall. The only person to ever make any money out of his companies was Stavros.
This was my introduction to the Wild West of Australian investing and when the Bitcoin and blockchain ICO money-raising big top circus tent arrived in Australia, these type of companies and these types of Directors were the first to don the Ringmaster’s red coat and try to milk shareholders for even more money via a crypto coin.
Who could forget this dyed hair and white shoe crypto shuffle from 2017?
So, to all you specky traders out there who think there is no alternative to trying to double your money, with the chance to lose the whole lot than on the spicy end of the ASX market, I have to tell you there is. And it involves much more fun.
In 2004, Ashley Revell sold everything he owned and went to Las Vegas and bet it all on red. He was 32 at the time. Sky made a documentary on him and they followed him around whilst he sold everything he owned, raising him US$135,300 in cash to go and place at the roulette table.
Whilst what goes on in specky ASX land seems to leak out on to forums and chat rooms, as grieving holders of suspended stocks tell the whole world of their woes and how they will never do it again, I think that if they had only gone to Vegas, they wouldn’t need to tell anyone. What happens in Vegas stays in Vegas.
And if you are the poor suffering other half to a moaning and groaning, grieving forum-divulging day trader, I suggest you start to book up flights to Vegas now, ahead of COVID lifting. Show them how to really punt with 100 grand.
At least you can sip on a cocktail and watch your capital go round and round on a roulette wheel, instead of the toilet, and enjoy your punt while you do it.
If you want to see how Ashley Revell went, click here.
Vegas, here we come!
The Secret Broker can be found on Twitter here @SecretBrokerAU or on email at thesecretbroker@stockhead.com.au.
Feel free to contact him with your best stock tips and ideas.