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.

Well, we have come to the end of the financial year for Australians and the last six months have really been something we all want to forget.

Me and Mrs B have gone away for a few nights and I got us a place in the middle of nowhere. A big open fireplace and a BBQ the size of a small house were my only requirements.

No internet or phone reception, so really going back to the basics (well, the basics for an old broker like me).

As the nights roll on, the placing of the wood onto the roaring fire gets more and more ambitious. Soon the pieces of wood are so big that I’m in danger of throwing myself in with them and Mrs B decides that’s a good time to put me to bed.

It’s good to get away – stress is the one thing that you can control – but many don’t.

In the financial world, alcohol was deemed as one way to numb down the stress levels, though for some it would become their downfall.

I can feel the stress everyone is under, what with rising interest rates and falling asset valuations and the headlines about the worst six months for Wall Street since 1960.

In my local cafe, I can hear the local teachers talking about their super, which is something that only comes about when their balance is going down.

When it goes up, it is as expected, but when it starts to go backwards it becomes their main vocal point.

The irony, it burns

In the last few days, CBA has increased its mortgage rate by 1.4% and one of the most ironic things to have happened, for me anyway, is to see that a listed debt collector has actually managed to go bust.

That’s right folks, a debt collecting agency that chased everyone else’s debt, forgot about their own.

Collection House (ASX:CLH) had to call in the receivers after they couldn’t raise any capital to keep going and their story gets even more bizarre, as it was an investment in a startup, that was their final undoing.

So, the ripple effect from falling valuations in venture capital land is starting to bite.

Collection House for some reason had invested $8.5m into a neobank startup called Volt.

I was going off of the news headlines when reading about Volt and had to look up what neo really meant. According to Professor Google, it means either ‘new beginnings’ or ‘Near Earth Object’, as in an asteroid.

Both Collection House and Volt have certainly been brought crashing back to Earth after the brains behind their business plans seemed to have missed the bleeding obvious.

In Collection House’s case it was over-borrowing and in Volt’s case it was from trying to take on the Big Four banks and losing.

Volt managed to raise and spend over $212m between 2017 and now, building a software program that could approve a mortgage application in 15 minutes.

Its heroic action to raise another $200m just fell apart because of market conditions, so it decided to close doors and find a buyer for their software.

As Collection House had invested $8.5m of shareholders’ funds into Volt at a much higher valuation and then borrowed against this holding to keep its doors open, this news was the final nail in its coffin.

The debt collector got a call from a debt collector and even all the excuses that they must have heard over the years couldn’t save them!

Oh, the irony.

Digging your own hole

In 2005, the listed insolvency agency Knights Insolvency (ASX:KIA) became insolvent itself and drowned in its own sea of debt.

This one is up there for me, together with Harts Australia (ASX: HTS), an accountancy firm that got delisted in 2002, as it couldn’t even read its own balance sheet before it was too late.

$30m it raised in an IPO and managed to lose the whole lot.

Now, this past financial year, we have seen the collapse of the Buy Now, Pay Later brigade of stocks.

Most stocks are down 90% in that sector and have really now just become Buy Now, Pain Later, as their shareholders are finding out.

The above examples are what can happen to stocks, even with, you would have thought, experts in their fields running them. So, if you are long and wrong it may not necessarily be your fault.

The best way I deal with stress is through laughter and having an afternoon nap. Even on a busy trading desk I could fall asleep and wake up to black texta on my face or my pockets full of day-old food – but at least I was refreshed.

To help you all out with de-stressing, here is a joke that I heard at the golf club the other day that still had me laughing in the shower the next day.

A lady golfer has just finished her round and in the pro shop she complains to the pro that she got stung by a bee out on the course.

He asked her where she got stung and she said between the second and third hole.

The club pro told her that maybe she should think about working on her stance then…

A-thank you. I’ll get my coat on the way out.

On that note, happy new tax year.

TSB.

 

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.