The Secret Broker: Whether, weather or wether?

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.

Being slightly dyslexic, I sometimes struggle with words and long numbers, unless I am fully focused and not too tired or hungover. So while composing an email to some twit who was annoying me, spellcheck indicated that I had misspelt a word.

I was trying to use wether instead of whether, so when I checked with Google, it gave me the meaning of wether, which turns out to mean a male ram, as in sheep.

This then got me thinking about the term that they always would use in broking, when describing a listed company that was either a leading indicator of the economy or of its industry type.

The term was ‘Bellwether’.

In the US, they would describe General Motors (GM) as a Bellwether of the underlying economy in the 40s and 50s.

If it was doing ok, then so was the overall country and vice versa. If they were laying people off, the whole country would be deemed as heading for turbulent times.

It was the leader.

I had always presumed that the term was somehow related to the actual weather and in some way nautically connected and never really thought about its correct spelling.

As it turns out and much to my horror, a wether is actually a male ram that has been castrated and a bell was hung around its neck, so their shepherd could hear the bell ding-a-ling-a-ling and easily find where his flock was.

Hence the term ‘Bellwether’.

This ram was the leader and all the girls would happily follow him around, which is why he needs to have some of his bits removed, otherwise his other distractions would mean that the flock would, well, just never move from one spot.

This reveal of information made me cross my legs tout suite!

BNPL Bellwether

In Australia, AfterPay (ASX:APT) would now be considered the Bellwether of all the companies involved in the buy now, pay later (BNPL) sector. In fact, you could probably class it as the Bellwether of all the companies globally involved in that sector.

Telstra (ASX:TLS), CBA (ASX:CBA) and BHP (ASX:BHP) would all be classed at some point as the Bellwethers of their sectors, however, just like male rams fighting over control, natural progression leads to the weaker ones becoming obsolete.

So the same can become of these once sector leaders as newer and stronger young ones become confident enough to have a go at the ones doing all the leading.

GM has now been taken over by Tesla, Telstra has been losing market share to the young and up coming telco’s, like TPG, and as BHP shifted away from heavy industry to being more commodity focused, it kind of fell behind Rio Tinto (ASX:RIO).

CBA is still managing to hang on as a banking Bellwether, be it though in a heavily regulated market, but there are plenty of young ones lining up to have a go.

Backing a young buck

This week it was interesting to see that Dr Andrew has invested $4m into a young buck that is leveraging itself into the banking payment system, via a long-time-coming change to how payments between banks billers are time delayed from the debit to the credit.

His investment won’t create a new Bellwether in the banking system but it gives you an indication of where things are heading.

CBA’s real challenge will come from the likes of Apple, Google or Facebook.

Apple now process more payments, in value terms, than PayPal and in their next system upgrade (due in September) iOS 14, it will allow the ability for an iPhone holder to scan a QR code or barcode and make a payment instantly, without the holder needing to press another button, at any shop or bar in the Western World.

It’s worth studying the story of KODAK, as you will see what can become of a Bellwether, and we all need to be looking forward to finding the next Amazon, Tesla or AfterPay before they get challenged for their bell and who that challenger will be.

So, whether you are a wether or a fair weathered wether, the trick is to work very hard and try and keep your ~~balls~~ bell attached, at all times.

I can tell you, I try very hard!