The Secret Broker: How to become a professional poker player!
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.
This week I had to go away deep into wine country for a couple of days.
As the weather is getting a bit colder, I saw this as a great opportunity to just chill out, phone off, no TV, a single malt (Glen Moray Peated Single Malt – on special at BWS and sensational) and an open fireplace.
I wanted a real open fire place and not one of those cast iron fires with a glass door on the front, as there is nothing like throwing a few logs on the fire like Bear Grylls and then when you poke it with an iron, it spits flames back at you.
Now fellas, if you ever want to impress a lady, being able to build a fire from a single match strike to full eye brow singeing burn, is a skill worth learning. Once built and roaring, only the occasional tweak every 30 mins or so is all that should be needed.
As you soak in the ambiance, the romance and the whisky, the next challenge is seeing how big a log you can hurl, without actually falling into the fire still holding it. At this point this becomes the signal that a move to the bedroom may be safer for both of you.
As I was throwing logs around with the occasional skilful poke, I was thinking that this is how your share portfolio should be.
You need the right wood, grate and draw of smoke to get it right and then sit back and admire.
I was laughing to myself as I was building it and wondering how the young smashed avo set would go, googling ‘how do I start a log fire’ as just like young, beginner day traders they wouldn’t have a clue where to start.
You first start out with a full frenzy day trading capital gains strategy and then as you learn and mature you go for the blue chip dividends, and no matter how much poking and blowing you do, if you have the wrong wood you are wasting everyone’s time.
I once worked with an older and wiser American broker and I always remember him telling me a story about one of his clients.
For over 60 years his client worked as a petrol pump attendant just outside of town, and once a month he would buy some shares with any spare cash he had left over after paying all the bills.
When he died, his ‘loose change’ Blue Chip portfolio was worth over $US7m ($10.7m). His trick was to have all his certificates and bonds held in a safe deposit box at his bank in town, making any temptation to panic sell very hard for himself.
He had the broker send all the paperwork direct to the bank and he only paid the occasional visit to accept a takeover bid, for which the bank needed his signature.
In this modern day and age, where information is moving 24/7, it takes discipline and quite a bit of will power not to react with a finger trigger panic or worse, not buy as the price had fallen back sharply.
A good example would be AfterPay (ASX:APT), which was trading away pre-COVID-19 panic at $39.26 (20th Feb 2020) before hitting a low of $8.90 (23rd March 2020) and now as I write it is trading at $44.68.
If you were a holder and actually did get carted off with the coronavirus before you could panic sell, there could be some good to come out of it (for someone, anyway)!
So, the next time you are driving through the countryside and you see an old fireplace still standing 150 years after the rest of the house had burnt down, and you think to yourself ‘Oh FFS’ why didn’t they just get the fireplace builder to build the whole house’, just change your mindset a bit and appreciate that your portfolio holdings should be like the fireplace — solid and still proudly standing even as everything else around it is left in a pile of blackened rubble.
The Secret Broker can be found on Twitter here @SecretBrokerAU or on email at email@example.com.
Feel free to contact him with your best stock tips and ideas.
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There is a flickering light at the end of the tunnel