First Blood

Piling In: My First Investment

In September 1987, a month before ‘Black Monday’, the greatest ever one day stock market crash, I piled in. Like Keanu Reeves in Point Break: “Young dumb and full of cum”. Fresh from a whole week of ‘work experience’ at West Australian stockbroker, Hartley Poynton, I was ready to deploy a generous gift from my grandfather Louis Goldman of $5000.

Learning From Grandad

‘Lou’ was a ‘punter’. Most weekdays, after an early breakfast, Grandad would catch the ferry across the Swan River from South Perth to the capital of West Australian commerce; St George’s Terrace. Faded fedora on his bald head and sandwich in his paper bag, Grandad or 'Lou' would go and see his stockbroker and visit the connected viewing gallery at the Perth Stock Exchange.

Grandad spoke softly and sparingly. Many hours we sat, Grandad patiently explaining his share and property investments, while we looked across the Swan River at a skyline built with wealth created from extracting natural resources.

Catt Family: 1980

The 1980s: A Time of Boom and Bust

The 1980's in Western Australia were a freewheeling time of colourful business personalities like Alan Bond or ‘Bondy’. 'Sandgropers' as West Australians are known, owing to the state’s endless white sandy beaches, were feeling bullish. ‘Bondy’ had sponsored the local boat 'Australia 2' taking the America's Cup from the Americans for the first time in 132 years.

Bond Corporation subsequently sunk beneath the waves leaving investors, including Grandpa, marooned - but at least we had The Cup.

‘Bondy’ (far right) with family. 1983

Being a visitor to the Perth Stock Exchange during a bull market could be a visceral experience. You could feel the greed and fear as the ‘chalkies’ frenetically marked the prices of the volatile mining companies up and down amidst the cacophony of brokers’ cat calls.

Perth, the capital city of West Australia (WA) is above all a town created by mining wealth. Australia’s largest state is home to as much gold, iron ore and lithium as anywhere on the planet. The most profitable business of BHP, the world’s largest mining company, is digging up WA iron ore and shipping it mainly to China. BHP’s iconic head office building, built in the image of a mine head frame, dominates the Perth skyline.

Family dinner conversation in the Catt family could include school, football and the latest share tip. Perhaps a rumoured gold or nickel ‘discovery’. When newly married, Mum and Dad recall buying BHP shares on a brokers tip, instead of carpets for their new home. They spent a few years on concrete floors after the BHP share price subsequently halved. Bust followed boom followed bust.

BHP’s head office, Perth

FOMO

1987 was an exuberant year for the world’s stock markets, with both the Dow Jones Industrial Average and the Australian Stock Exchange rallying 40% up until October.

In 1986, at the age of 15 years, I had jagged some work experience at local Perth stockbroker, Hartley Poynton. I was impressed at the energy of the brokers on the desk, in their expensive suits, brandishing a phone to either ear as they took their client’s instructions to buy and sell shares as the bull market advanced.

Down on the trading floor of the Perth Stock Exchange my chaperones from Hartley Poynton advised me not to take any notice of the noisy bloke from Jackson Securities. Hartley Poynton were blue bloods, Jacksons were hustlers. The noisy bloke at Jacksons, who was known as 'Twiggy', would three decades later become ‘Sir’ Andrew Forrest having made his fortune in West Australian iron ore and been knighted by Queen Elizabeth for his philanthropic efforts.

By mid 1987, barely sixteen years old, armed with my week’s work experience as a stockbroker I had become an ‘insider’ and could hardly fail. I had read all the broker research I could find, which helpfully had mostly ‘buy’ recommendations. With the excitement of the Stock Exchange trading pit echoing in my ears, I was ready to start making money. The biggest risk was not being fully invested. Destiny was calling.

Grandpa gave me $5000 strictly for savings and investments for my 16th birthday in July of 1987. My Grandparents were so frugal - they had never even thrown away a single aluminium foil milk bottle cap in fifty years of daily deliveries. $5000 was more than Gran and Grandpa would spend in a year!

Global markets were up about 40% by October 1987. Great riches beckoned. My instincts were to buy the riskiest shares, with the greatest upside. Sarich Technology had made many of Hartley Poynton’s directors wealthy for the potential of its Orbital Engine technology to revolutionise the global transport industry. Then trading around $4 a share, I made a sizeable investment in Sarich, as well as a collection of other junior emerging companies.

Miss Australia, Michelle Downes visits Ralph Sarich’s Workshop in 1972 and helps demonstrate how easy it is to lift Mr Sarich’s new invention, the 41kg Orbital Engine. Credit: unknown

Black Monday Strikes

Australian and Asian stock exchanges were the first to open on Black Monday, October 19th, 1987. The Dow Jones Industrial Average recorded its greatest ever daily fall with a loss of 22.6% following Hong Kong and Australia sharply lower. Global markets fell 40% over the next several weeks. Sarich Technology, the best performing share of my brand new portfolio, fell from $4 to $1 per share.

First Blood

I have since made and lost many fortunes. Each time misery follows ecstasy. After over three decades of evaluating risks, opportunities, fear, greed and one’s own emotions, it is time to share some of the learnings.

Being a junior company investor is sometimes glorious, but often like tiptoeing naked through a mine field flanked by snipers. Dodgy promoters, fleeting liquidity, crazy risks. Unpredictable.

This newsletter is the opposite of Buffett. More Alex Honnold, ‘free solo’ investing, no ropes, no fear finance.

Catt Calls is a conversation with you about my wanderings on 'Wall Street'.

Audacious, fun and irreverent - I promise it will always be authentic.

MIAOWWWWW 🐾