The Secret Broker: When buying the dip means pumpkin with Morrocan spices
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.
Move over Donald, we have another King of the Twitterfest. It’s Elon.
Having lost my main Twitter muse, it was refreshing to see Elon pick up the mantle and carry on just where The Don left off. With a few tweaks with his thumb, Elon can also create financial havoc on both the upside and downside.
On the 13th of May he tweeted this when Bitcoin was at US$57,747:
Tesla & Bitcoin pic.twitter.com/YSswJmVZhP
— Elon Musk (@elonmusk) May 12, 2021
By the 19th of May Bitcoin was U$33,701 and as I type it is showing me a value of U$39,998.
It was his tweet earlier in the month, that Tesla had invested some US$1.5bn in Bitcoin, which had sent it to a US$60,000 valuation.
Mrs Broker loves a bit of the old BTC. But when she came on the line whilst I was on another call on Wednesday morning and asked “very quickly, should I buy the dip?” I told her “for Christ’s sake, NO.”
It is only later that evening, when we had some friends over for sunset watching and nibbles and the crackers come out with the wine, that I realised that I may have created an Elon-inspired domestic mix-up.
Poor Mrs Broker hadn’t bought the dip.
I only compounded my error by enquiring (after a couple of glasses of wine, and in front of everyone): “Darling, why didn’t you buy the dip?”
The reply wasn’t your regular glare; more the “guess who’s getting the cold shoulder tonight” glare. The glare that sends a shiver down my spine.
You see, we had only just installed a crypto wallet on her phone, so she could spend or trade some of the crypto coins that the kids use to pay the housekeeping with.
She knows all the terms and can put on the odd mean trade in shares but is learning in cryptoworld.
But I didn’t want her to buy the dip. Not this time and unlike other times.
Bitcoin holders would have felt the exact same cold shiver as I did, after reading Elon’s tweet on the 13th May. It must have dawned on them, just like it did to me, that all fun is off the table.
This is the problem with Bitcoin and in fact all of the crypto coins. They never stop trading. Their values change every second, 24/7. Nobody gets to take a break and gather their thoughts.
That’s why it’s so appealing to the want-it-now, need-it-now generation, but not to the older set.
It’s like having a constant poker machine online and on your phone 24/7 – and it’s on a global scale.
You’re able to be sitting on the toilet making money, or flushing it away twice. But the main thing is there is always some movement. No prunes needed.
That’s why I have always loved my equities.
The market is only open from 10 till 4 and it allows you to have weekends off. FX trading kind of gives you some part of the weekend off but it also requires you to trade pairs. You have to sell a currency to buy a currency, whereas with equities, it’s just cash in or out.
If crypto is an asset class that changes value every second and equities are revalued every second six hours during the week, then what about property?
Can you imagine reactions if the banks decided everyone’s house was valued daily and was indexed to the ASX 200 one-minute movements?
One day your house is up 1.6% and another day it is down 2%. Ordinary people would not be able to cope or concentrate at work, as they would be checking their ASX app every five minutes.
It’s the main difference between those three asset classes. They can change in value every second vs six hours a day vs when a local sale is recorded.
It’s how you have the mindset to handle those different assets and their valuations that sometimes needs a shift in your thinking. I was lucky enough to be conditioned early on but others just can’t cope.
Many don’t realise that their superannuation changes in value every day, as they only get a statement every six months or so. Even then, it always shows it going up, which could be a result of their monthly contributions, rather than the performance.
They only connect the two together when there is a major correction, like the GFC. Then they all start blaming the shorters.
Because I am mainly in equities, it means I can go away for the weekend and not worry.
In fact I am going away tonight. By myself, for a couple of days, to a remote cabin in 144 acres of mountain wilderness.
No internet or phone connection, just the sound of nature. When the brother in law found this out he insisted on coming to stay on Saturday night. I showed Mrs Broker his text message and she said “Well, you may come back a changed man. Let’s hope.”
I didn’t fully get the gist of what she meant, but he has been in the Navy and his text did end with #brokebackmountain. He also doesn’t mind mixing Baileys and vodka shooters whilst wearing a cowboy hat. So we shall see.
Feel free to contact him with your best stock tips and ideas.