The Secret Broker: History will always repeat itself. That’s why God created grey hair
The Secret Broker
The Secret Broker
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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.
When we all started our careers in ‘The City’, you would have to commute to work on a train, as there was nowhere near work where you would want to live.
The City of London, where all the posh people worked and where all the cleaners and lower class lived, was not only literally divided by the River Thames.
On one side you would have the Bank of England and on the other side you would have the East End, where the TV show EastEnders is based.
Coronation Street and EastEnders remain popular UK TV shows because it gives the middle classes the ability to titter at the lower classes’ misfortunes and struggles.
Upstairs Downstairs was also a popular TV show, though Downton Abbey, with its big f..k off house, really sums up how the ‘haves and have nots’ live.
The nearest place for a real posh person to live was Mayfair and the poorest place for the lower class to reside was the Old Kent Road, in the East End of London. Sound familiar?
We all played Monopoly as kids but never really knew what all the names of the roads actually meant, though later in life, you start to understand.
The game was released in 1935, but even today in the real world, Mayfair is still the most expensive place to live and the Old Kent Road is still the cheapest.
Even the meaning of the name ‘Monopoly’ didn’t really sink in and what the term really meant, until you discovered one or found yourself in one.
As Kerry Packer once said “monopolies are not good things, unless of course, I own it”.
I discovered one alright, when starting to work as a stockbroker in 1980.
Commission rates were fixed at 1.5% and you needed to engage a stockbroker to buy and sell shares for you. There was no competition allowed, as it was a club for the rich and no one else was allowed in.
The partnership firm I first worked for started life in 1827 and was first based in Finch Lane, but when I joined them they were based in Gresham Street.
These road names won’t mean much to you but Finch Lane still exists today, as does Gresham Street, which is still based near London Wall.
London Wall may also not mean much to you but it was a real wall that was built by the Romans and bits of it still survive today.
Being a spotty faced 16-year-old, none of this history meant anything to me but now it does.
The very fact that every day, when walking to and from work, I could physically touch something so old but never did, fills me with cultural disappointment.
The contempt of being there just to have a career and make money by clipping the coupon on wealthy peoples’ buys and sells meant that I remained ignorant to my surroundings and their historic meanings.
Now it is almost impossible to touch that Roman wall because since the 1980s it has been partly demolished or moved to a museum.
Also being 12,000 miles away doesn’t help me, though Wikipedia and Google Maps can electronically take me there.
I think that’s all a long way of saying that it is only as you get older that you appreciate older things and their meanings, before both they and you disappear from this planet.
I think this is why it is always older people who appear on ‘Who Do You Think You Are’ – never young people curious about their family tree. The young ones have other things on their minds.
All of these morose feelings I’m currently experiencing are due to all the recent articles I have been reading, and seeing history repeat itself.
One was about a single mum, who got sucked into a new-build house at the top of the market and now has run out of money and can’t afford to finish the driveway. It was just a sea of mud.
The other was how people had lost their life savings, by investing into a now collapsed crypto scheme, which offered a deposit rate of 17%, when official interest rates were 0.01%.
Both of the above stories could have been avoided if the people involved had the knowledge and wisdom on why both were bad ideas and would end in tears.
When interest rates are 0.1%, they can only go one way and if you are offered 17% interest on your money, then there is something wrong.
History will always repeat itself, as inflation is showing us all at the moment.
Unfortunately, those who do not study financial history will always make mistakes, though it is not necessarily their fault.
Being at a younger age may be their mistake.
Luckily for us, we always had a wiser and older work colleague, who was 30 years into their career, to pull us back into line.
If we turned up with a property developer who was offering three times the going rate on money loaned, they would have a story as to why the risk doesn’t add up.
If we then turned up with an exciting (or as we thought) start-up that was about to IPO, they would come in and listen and then do nothing.
When pushed, they would explain that it is better to wait for them to create a market as they head to profitability before becoming involved.
They would rather pay £2.00 a share than 20p on a pray and hope situation.
So we would be young and keen; they, wise and cautious.
We of course had our whole lives in front of us whilst they had theirs almost behind them.
Our team would rather invest in a mining company that had experienced management, rather than have an entrepreneur running the show.
As the saying goes, ‘A mine is just a hole in the ground with a liar standing at the top of it’.
That’s why so many miners became dotcom companies or now all of a sudden have a lithium deposit to explore.
Sixty-plus at the last count, for a mineral that is as common as tin. But billions of dollars raised will keep them all going until another mineral becomes fashionable, with a tweet from Elon.
If you come from a country where its most famous icon was built and funded by a lottery in 1960 or a bridge built less than 100 years ago, then you could say you come from a young country that likes a punt.
That’s why in UK portfolios we would hold the producers – RIOs and BHPs – and very rarely an explorer. If we did, no more than 5% would be allocated to speculative start-ups and miners, in total.
Just remember to always study history before jumping in or as my mentor would say to me:
‘With research comes knowledge. Without it comes experience.’
Oh, and he would also say: ‘Happiness is an inside job.’
That’s why my portfolio and I are always smiling and my hair is greying.
Feel free to contact him with your best stock tips and ideas.