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 you are a younger person, you have lots of energy and things in life to look forward to.
It’s only as you get older that you can look back with more knowledge and experience than you ever could before. That sounds obvious, but it’s a point society tends to miss, or ignore.
Every time an older person passes, a lot of their knowledge and wealth of experiences is gone and can’t be used again.
That is why it is important to spend and enjoy time with family and friends, as much as you can.
As Warren Buffett says, he is wealthy enough to buy anything in the world he desires… but he can’t buy time.
That’s why I like my beloved shares.
Unlike all of these other markets that trade 24/7 (like crypto, FX and CFDs) all major stock exchanges stop trading, so settlements can take place in an orderly manner and everyone can take some time out.
At one point you could trade Japanese shares on a Saturday morning but it lost its appeal because it just stretched out trades which could have occurred on the Monday.
Imagine being a fat, rich client sitting on your fat, rich client yacht. Your broker interrupts you just as you are ripping apart a giant juicy lobster, to tell you one of your stocks is down 5% – and it’s midday Saturday.
I know what the response would be. At least half of the words would be “off”.
I especially know this because when I first came to Australia, I would be the only broker in the office over the Christmas and New Year trading period.
I thought I was giving great service and had the edge on all the other brokers who were away.
Even when I came up with a balltearer of an idea, my phone call responses would end with “off” at the end of, start and middle of my pitch.
See, that’s experience. A ‘bit of a painful naive new Pommy just arrived’ experience.
Next year I would be with them on their yachts and enjoying myself. If any inexperienced broker called, they’d hand me the phone and I would shout out their standard two-word reply and hang up.
This turned out to be a far greater service for my clients than sitting at my desk and looking at my Christmas tinselled framed Bloomberg screen.
Sickies, smokos and long weekend
I should have known how much the Aussies loved their holidays. But that lack of research led me to gaining experience which now has become knowledge for me.
I can’t count the amount of times someone told me to jump into something as it’s going up, then two weeks later when I ask them “How’s it all going?” they’d tell me a whole lot more.
Normally it came out of a client who used different brokers. The brokers would be drumming up business with them and in turn they would tell me once they were set.
It was only after the tip started to go the wrong way that they would start to do their research. The broker would keep telling them “hang on, nothing’s changed, just the market”. Or “Would you like some placement stock, so you can average down?”
All of this the client would pass onto me and I would always ask them who the broker was. And how old they are.
I would then tell them they should have done their research first, not later.
This one’s for free
We all know it is human nature that Fear Of Missing Out makes people do things that they may later regret. My next suggestion to them would be next time, just buy 10% of your normal size and then do some research.
That way if they do go up, you make something. If they go down, your research will dictate your next course of actions.
“Try looking at the directors first,” I would tell them, “then the cash balance” and then “the amount of shares on issue”.
Simple stuff, passing on the knowledge you have gained from experience.
The ASX gives you civilised hours and the weekend and public holidays off to think about all this stuff.
Trading on these other platforms doesn’t give you any break to even stop for a minute.
Even Revolut now gives you USA stock trading, as well as currency, commodity and crypto plus a virtual credit card.
A young person’s version of trading Utopia? To me it’s like a glorified poker machine in your pocket.
How can you research a currency or a crypto when it never stops trading?
Oh, I know – look at their chart; that’s your research tool. Look at a picture of the past to tell you where its future lies.
Yeah, right! Something about “past performance”, something about “future gains”…
Here is a video of two of the richest men in the world talking about how they juggle their time. One recently got divorced whilst the other one seems happily married.
It’s no coincidence that Warren’s company just hit an all-time high and Bill ended up billions of divorce dollars poorer.
Having said this, I started writing this week’s piece at 5.00am, after constructed it in my head over the past week.
When finished and sent, I have the rest of the day to do whatever I want.
Sure, the market opens between 10.00am and 4.00pm, but that is only 6 hours out of 24. I only need a few seconds to check in every hour or so.
Then I have the weekend off, till 10.00am on Monday, during which I will have read the weekend financial papers to fill in my knowledge.
Yes and all of this I have learnt from experience. And on my deathbed, they will gather round and say, “You know, there’s no crypto in his portfolio”.
If they can say the same about you, then you will know that you have lived a wonderful and fulfilled life.
Now that’s knowledge!
Feel free to contact him with your best stock tips and ideas.