I think everyone who has ever traded in the stock market remembers the ones that got away. I, for instance, once held 250,000 Oil Search at 50c. Sold them at 60c, went to 950c. I also once held 50,000 Zinifex at 200c. Sold them at 240c. They hit $21.60. That’s before we get to the 200,000 Davnet at 40c. They went to $6. And the 300,000 Voicenet at 38c. They hit $3.80.
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Hindsight truly is a wonderful thing in the stock market because its empirical, absolute, gloriously accurate, and painful. When you look back, you can say "I had my chances", "I held that stock", "it could have been". I could have made a million here, and a million there, and most tortuous of all, all you had to do was absolutely nothing but hold.
But 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 “yes”. 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 I’m no fool, and as any stockbroker will tell you, when you find yourself standing at the desk punching the air in delight, it can only mean one thing, “sell!" So I did. It was a holiday in Bali for goodness sake (I do have four kids).
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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.
There used to be a bit of a stockbroker thing that you needed five million to retire. Win a million on Tatts Lotto and it doesn’t actually change things. A million isn’t a million to a retiree. It represents $50,000 a year of risk-free income, so you need more. But five million? That’s $250,000 a year. Live well, and your capital still grows. Paladin would have been twice that, it had only cost me $16,000, and all I had had to do was absolutely nothing.
They say it’s better to regret the things you’ve done, rather than the things you haven’t, and they’re right. You only get one shot at life, but a lot of shots at the stock market. You are constantly presented with the opportunity to grasp financial transformation, even if you didn’t know it. It is a thrilling part of ‘playing’ 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 this newspaper, that website, this commentary, that research, 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 optimisation, capital protection, asset allocation, expected returns, efficient markets, rational markets, normal distributions, variance, standard deviation, correlated asset classes, and all that other mother jazz, let’s spare a moment for that little bit in all of us, in the advisers as well, that doesn’t want a normal distribution, that doesn’t want the average, that doesn’t want expected returns, and that doesn’t 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 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 let’s face it, if the last organ to pack up is our brains, most of us will be doing it until we’re on our deathbeds, and who knows, maybe longer. Do they have the internet in heaven?
More about the author – Marcus Padley
Marcus Padley is a highly-recognised stockbroker and business media personality. He founded
Marcus Today Stock Market Newsletter in 1998. The business has built a community of like-minded investors who want to survive and thrive in the stock market. We achieve that through a combination of daily stock market education, ideas and activities.
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