The Secret Broker: Weekend at Bernie’s, trader style
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.
Once when I was doing some due diligence on Retirement Villages, I found out a fact that still sticks in my mind today.
When a married couple get shoved into the retirement village by their too busy to cope children, it is a known industry fact that the woman will outlive the man by an average of 13 years.
This fact, as I found out, comes into play when using an industry valuation matrix.
When a couple arrive, they are allocated a bigger space and if he then carks it, they lose 13 years of his fees.
The retirement village then has to try and persuade her to move into a smaller one-person unit, so they can get two fees in again. Sometimes, the old biddies will just not downsize.
So, depending on their individual ages and the combined ages of couples, together with how many villas and units involved and how they are allocated, a valuation can then be attributed to any retirement village at any fixed moment in time.
At the time this all sounded too morbid and cut and dry, which is why it has always stuck.
In one of the old broking houses I worked in, they had a situation where a clerk had worked there his entire life and after his friday retirement party and gold watch ceremony, off he went, fully pensioned up, to join his wife in happy retirement.
On Monday morning all the partners were called into an emergency meeting, as he had dropped dead on the Sunday. The shock of it all had just sunk in.
After 45 years of work, the thought of retirement was too much for his heart and it just gave out on him.
The partners had to decide if they should cancel his retirement and allow the widow to get an insurance payout, as his pension payments stopped the moment he died. All I know is they did the ‘right thing’, whatever that was.
A few years later one of those partners, let’s call him “Humphrey”, decided to improve his health by leaving the city bars, pubs and warm beer of London behind and become an Australian broker. He went to Australia for two weeks of interviews and pints of icy cold Fosters.
We warned him about the quality of the beer broking houses he was visiting and he said he would decide which broker to join, once he had seen the whites of their eyes shoes.
Man, we had to laugh. He didn’t join any.
In one of his better interviews, he had a view behind the interviewer down to the trading desks. Halfway through being told ‘mate we can do this and mate we can do that’ Humphrey could see a commotion going on and all the brokers suddenly gathered around one desk. CPR was being performed to some poor soul on the floor.
The interviewer told Humphrey not to worry, he would get used to the ‘Australian’ style of broking, just as the sick broker was being wheeled past with two paramedics struggling to push him into the lift.
It turns out that an issue the firm had underwritten was a disaster and when the broker was told his A$500,000 allocation had a 70% shortfall, he shrieked and collapsed to the floor clasping his dealing pad and pen to his chest.
(Perth or Queensland?) I’ll let you decide.
But all of this is nothing compared to how they handle a heart attack in the trading pits of the USA.
Many years ago, when one trader had a heart attack in a very busy pit, the other traders knew it would take about 10 mins before an ambulance could reach him, so they continued to trade whilst keeping him propped up.
As they waited for the paramedics and took turns looking after their poor immobile colleague, his trading jacket pockets became filled with backdated losing trading dockets. When he was eventually wheeled out his pockets were more stuffed than Dolly Parton’s bra.
As with these things, an inquiry had to be held and the officials in their wisdom decided that the heart attack was certainly brought on because the trader ‘had performed the most losing trades ever seen in 10 minutes of trading floor history’ and that his firm had to honour them all.
So fellas, keep fit and well because if the traders (or brokers) don’t get you first, the wife will and that will give her 13 more years to enjoy your money without you. Now, we don’t want that, do we?
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.