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Thursday, 23 March 2017
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The ones that got away

In 2003 I held 250,000 Oil Search at 60c. Sold them at 70c, they later hit $9.83. Thatís $2.5m missed. 

I also once held 50,000 Zinifex at 200c (it turned into Oz Minerals). Sold them at 240c. They hit $21.60. Thatís another million. 

In 2003 I held 250,000 Oil Search at 60c. Sold them at 70c, they later hit $9.83. Thatís $2.5m missed. I also once held 50,000 Zinifex at 200c. Sold them at 240c. They hit $21.60. Thatís another million. Then there was the tech boom. That involved selling 200,000 Davnet at 40c, they went to $6, and selling 300,000 Voicenet at 38c that later hit $3.80. Add them up and thatís another $2.35m missed. These are just some of the ones that got away from me. No doubt you have your own story.

But the most tortuous element of all the above trades, trades that got sold through my impatience, is that all I had to do to make 5.85 million dollars was to do absolutely nothing at all., trades that got sold through my impatience, is that all I had to do to make $5.85 million was to do absolutely nothing at all. Instead I fiddled my way out of it. An activity that any commission driven broker is paid to do, creating activity for activityís sake, for a commission, when the best course of action was to simply invest, not tinker.

But forget the $5.85 million, my best stock market opportunity came when I was working at Barton Capital and we got a visit from the investor relations guy of some crappy resources stock. It was February 2004. He was a friend, used to work with him at ABN AMRO, so when he asked if he could come in and sell his wares to the broking desk I made an exception and said ďYesĒ.

Days later the traders were all over it, the volume was rising, the price had ripped up from 1.2c to 3.3c and on momentum alone I had personally bought a million shares at 1.6c. Within a month they were 2.6c. Now Iím no fool and as any stock broker will tell you, when you find yourself standing at the desk punching the air in delight it can only mean one thing, ďSell!Ē So I did. It was a holiday in Bali for goodness sake.

Now what was that crappy little resources stock called again? Oh yes. That was it. Paladin. I once held a million Paladin at 1.6c. They went to $10.80. Thatís another $10.8 million left on the table.

There used to be a bit of a stock broker thing that you needed "X" to retire, but it had to be a lot. Win a million on Tatts Lotto and it doesnít actually change things. You need more. A million isnít a million to a retiree, it represents around $50,000 a year of risk free income, so you need more. So we settled on an X of $5m, a number at which we would throw the job in immediately and plan the rest of our lives. 

Paladin would have delivered twice as much.

Of course I sold almost all these trades because I had something else to do with the money, because 'fiddling' was my job. But with Paladin I had only risked $16,000, I didnít need that $16,000, and not needing it is the most essential element of long term patient investment. And all I had had to do was absolutely nothing.

They say itís better to regret the things youíve done rather than the things you havenít and I assume theyíre right. You only get one shot. To have had your chance at transformation, even if you didnít know it, is a thrilling part of Ďplayingí the stock market, realising that you were once in the box seat is an everlasting reminder that at any moment you could be again, and what better challenge could there be than knowing that right now, at this very moment, in the pages of the internet, perhaps even in the pages of Marcus Today, the next Paladin is right in front of you, if only you could see it.

So whilst a compliance hamstrung advice industry is forced to deliver a monotone sermon about average returns, diversification, spreading risk, safe income, portfolio optimization, capital protection, asset allocation, expected returns, efficient markets, rational markets, normal distributions, variance, standard deviation, correlated asset classes and all that other mother jazz, letís spare a moment for that little bit in all of us, in the advisers as well, that doesnít want a normal distribution, that doesnít want the average, that doesnít want expected returns and that doesnít want one standard deviation from the norm.

All of us, whether we are allowed to express it or not are always in the stock market in the hope that today could be the day we snag the stock that will return the most unexpected, abnormal, massive return, a return that will make a difference to the rest of our lives.

What we all quietly want is the next Paladin, the transformation, the glory of what is possible, and barring the luck of the casino, the lottery, being born rich or marrying rich, outside of building our own business the stock market is the one place that it is on offer to the intellectual. It is, and remains, the most fascinating financial pursuit of all, and letís face it, if the last organ to pack it in is the brain, most of us will be doing it long after the other fires have burnt out.


A couple of responses to this article from MEmbers:

Hi Marcus - Loved your story BUT I hope that you have had some really successful ones that you hung onto as well as those that 'got-away'. I started investing by buying a stock called "Minefields" (the company secretary was a Mr McTrusty!). With a name like that you couldn't say I hadn't
been warned could you? Who in their right mind would buy into a minefield. Result: It blew up of course AND I'm still trying to catch a decent fish like the one you are pictured holding. Perhaps I need some different 'bait'. Regards Trevor.

Dear Marcus - I was absolutely intrigued by your piece in Saturdays West Australian "Finding that WINNER is the thrill we all chase". As a mining tragic and investor who has been in the market since the late 1960's, I felt you had looked into my soul, and was surprised my photo or a characture of myself was not included in the article. 

I believe each share certificate is like an eternal racehorse, sometimes in the lead, sometimes at the back of the field - but for a while anyway, always still running and with a chance. It gets me up and to the computer each morning, which the dog likes.

Like yourself I bought a million Paladin (and countless others LYC etc) at 1.6 cents to 3 cents and rode them all the way to $10. At various points I sold parcels at 18 cents, $3.50, $7.00, and watched them sail through $10 to sell again at $5.00. But I kept some on the principle you should have an interest in all facets of the energy industry. I still have those shares at the current 10 cents.

Recently while looking for some old certificates I came across a package of worthless script, memories of some other tragedies in my past -  Vultan Minerals, General Gold, Metana Minerals and more recently Sons of Gwalia (which I rode like a bucking steed between $2.00 to $4.00 possibly four or five times, doubling my investment on each occasion, until they crashed completely and I was left with a further $50,000 deficit representing yet more experience).

Unfortunately as your article suggested "I have the disease", will always have a punt on something that costs but a few cents, but has a great story attached - and generally I forgo my fair reward for the risk by baling out too early.

Thanks for lighting up my weekend with memories of the horses that I have encouraged to bolt without me over the years.

Regards Mike


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