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 left to their own devices, people often stray off into wayward areas before being guided back on to the path that they should have stayed on.

This can cover all facets of your life, including marriage, buying a boat or as a young me found out, buying shares in a listed company.

They say that the happiest day is the day when a person buys their boat and then their next happiest day is the day that they sell it.

The exact same analogy can be said for shares.

When I was a few years into discovering shares, I found myself in a bit of a pickle.

I had put too much into a company, after thinking I was onto a sure winner, but ended up snookering myself.

It was coming up to Christmas and our bonuses were paid to us in January, so I had tickled up my overdraft in the knowledge that my bonus would cover it off.

Instead of waiting for it to be paid and then having a crack at a listed company, I was leveraging myself up before it had actually arrived.

In my head, I was thinking that all the old farts in the office would be waiting for their bonus to actually arrive, whereas I could double mine with some crafty financial wizardry.

I had told my bank that I needed to book up and lock in a holiday before my bonus had arrived and they kindly obliged by giving me an overdraft to match my forthcoming payment.

There was a small company that all of us junior brokers had been eyeing up and after they came in to present to our firm, their main man took us all for a drink afterwards.

None of the older brokers came out, just us youngsters who appreciated a free drink and the chance to get a bit of insider knowledge.

Armed with a fully loaded bank balance, alcohol and an inside ‘nod and a wink’, I was heading towards the financial stairway to heaven (in my head anyway).

What could possibly go wrong, I thought to myself as I slowly slid down the back seat of my Friday night 3.00am black cab taxi ride home, very happy with the knowledge that I, unlike everyone else, had a winning strategy.

Come Monday morning, I was getting myself settled in and watching my now favorite stock like a hawk. Anyone approaching my desk got a “Don’t talk to me, I’m busy”.

I’m watching this baby open. I’m going to nail it.

They opened up 5p at £1.19 and started to move up even more. Within five minutes they were at £1.25 and then £1.28. When they touched £1.30 I knew I just had to get some.

I phoned down to the floor and got a quote of £1.30 to £1.32. I gave them my order on a limit of £1.30 and sat back and watched my screen.

They start trading at £1.32 and then they hit £1.35. I quickly phone the floor and the quote is now £1.35 to £1.38.

I adjust my limit up and ask if the dealer could have a word with the jobber and see if I could get some at the bid price and hold on the line.

“OK, you’ve got your parcel at £1.35 and you owe me and Jenkins a pint.”

I put down the phone in the knowledge that I am now set and start daydreaming out of the window.

I wonder if Tracey in accounts would come to Spain with me for some booze and fun in the sun and escape the winter snow? That would blow up her spotty-faced boyfriend. Ha! Yet another plan hatching!

Back to the screen and they are holding steady… and then they start to drift back down to £1.28. But that doesn’t matter, I tell myself, as I put on my jacket and head out for a 11.30am heart-starter (double gin and tonic).
 

Show me the money!!

Now back in the office, after telling all those at the bar who will listen what a great stock this company was. (And, “I should know as I was having drinkies with their main man last night.”)

Ignore all the messages on my desk and go straight to my screen and see that they are back to £1.32, which is where they close for the day.

Next day they open at £1.28 on reasonable volume… then they start to drift over the day. I phone my new friend at the company and he assures me everything is like he said and “Just wait”.

It’s the 15th December and only 10 days to Christmas Day and everyone is gatecrashing everyone else’s Christmas parties. My shares are around the £1.25 mark and I tell myself it’s just Christmas trading and they will come good.

Five days later and my shares are not quite doing what they should. When they touch £1.18, I put another call into the company but my new friend is away from the office and back tomorrow.

Mmmm, not quite going to plan. On the last trading day before Christmas they close at £1.15 and I spend the 25th of December moping around Mum and Dad and all of our annoying relos.

After we come back from our break, my beloved shares are £1.12 and my man on the inside is away ‘on his usual family holiday in the Bahamas’ as his secretary informs me.

Now I’m feeling a bit lonely and depressed. One of the lads on the desk tells me he’s meeting his father for a drink and would I like to come along.

Now, his father was a senior broker and highly respected and when I had the chance, I cornered him and explained to him my predicament. I told him what a great company it was and how they should be “£2.00 a share minimum”.

He looked at me and said: “Are you holding them because you like them or do you like them because you’re holding them?”

I said: ‘Sorry. What? I don’t understand.”

“Are you holding them because you like them or do you like them because you’re holding them?” he repeated, and patted me on my back and went and rejoined the others.
 

Something about good riddance, bad rubbish

I thought about what he said all that weekend and was grappling with myself on which side of the question I was on.

The realisation that I liked them because I was holding them started to sink in.

They’ll never go back up to £1.35. Tracey from accounts is never coming to Spain with me. I’ve managed to lose most of my bonus before it had actually arrived.

Every bit of my cunning plan had given me the complete opposite result of what was meant to happen.

Even after realising my situation, I naively still kept hanging on to them in the hope that they may recover but every small rally was greeted with an even bigger fall.

I think I finally cut my position at 85p (a memory buried deeply. Not the action but the money amount).

After I walked away, a sense of utter relief came over me.

I no longer had to think about them. They were gone.

I no longer had to tell anyone who would listen how great a company they are and how at under £1.00 they are ‘a God sent bargain’.

I never touched them again and I never touched anything that ‘the main man’ was ever involved with again.

The weight lifting off my shoulders was the same feeling that a selling boat owner must feel.

So, just remember the saying and maybe write it into your crypto trading son’s Christmas card or into the card of any relo who’s into day trading.

“Are you holding them because you like them or do you like them because you’re holding them?”

It’s a classic saying and applies to everything that can affect you in life; not just shares.

(Some of the words in this week’s column are an extract from The Good Reverend Broker’s 2021 Christmas Sermon).

Amen.

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.