The other day Fangen and I were bullshiting. As you do. He had made money out of xyz stocks and I had made money out of abc shares. Weren’t we the clever ones? The market had gone up 40 per cent and we had made money.
Fangen was until he brilliantly sold , a very successful businessman in the City so he knows a thing or two. I for my virtues was a financial journalist so ,at least before lunch, I know how many beans make five(what does that mean?). The point was we felt flushed enough to talk about the joys of making cash while you sleep and bask in the glow of our good fortune. In fact despite our relative knowledge neither of us has read any our investments balance sheets(I wouldn’t know how) and have little idea of the management style or probity of the companies we have chosen.
So the fact that two relative amateurs were confident enough to start lighting cigars, put their feet up ,start looking at the bottom of the wine list and generally play the financier is a statement about the consumer and the market. For as one pundit raved,”Any one not playing the market as an insider is like someone buying cows in the moonlight.”
The stock market as well as being a casino is also the home of clichés. Let the trend be your friend; top pickers and bottom pickers end up as cotton pickers; always leave something for the other guy; there are two golden rules don’t lose money and don’t forget the first rule; how do you make a small fortune-start with a large one; never wrong to take a profit – like warm toffee the clichés flow remorselessly out from the financial pages.
No cliché is bigger and so diamond that it never wears out than the JP Morgan story and why he got out the market before the crash in 1929. He is having his shoes cleaned( those were the days my friend,today bankers wear flip flops). The shoe shine boy(played by Will Smith) says to the banker(played by Gene Hackman). I think you should go big on US Steel. Morgan goes in to the market and sells everything. Logic? If a shoe shine boy is a) in the market it means there is no more new money to come in and b)thinks he knows stuff it means the market has lost contact with reality, that means the market is over.
Now Fangen and I between us have over 20 O levels. We know that the kind of hubris we are going through always ends in tears. So we should sell. We also know that only two of the last five predicted market crashes have happened and they are often predicted two or three years in advance-in the mean time the market just powers on. So we whistle Dixie.
So what to do? Reach for another cliché. Baron Rothschild on asked how he had got and more importantly stayed rich, states “I always sell too early.” You see its easy.
Fangen writes to me this week-its going up.its never going to end. How right is right. Right on. The next day he tells me to sell. Most of the O levels are mine. Most of the money his.