of telling clients what he really thought. (A good analyst, he is no longer at P & D. The analyst who was so keen on Polly Peck still works there.)
Ads for unit trusts mention that ‘the value of investments can go down as well as up’. They ought to carry the warning that seventy per cent of professionally-managed funds underperform the indices they are trying to beat. Unit trusts are bad for your wealth.
I have yet to see a study that proved that professional fund manager ‘A’, or his company, consistently turns in superior performances in all market conditions. Any fund manager with a couple of years at the top of his table is sensible to use the opportunity to move to a higher paid job, because it is improbable that his luck will last. The chances are that he will move, not through a cynical understanding of what little value his abilities have, but through a genuine belief that he is worth more than he is paid. And brokers, of course, encourage this vanity; if they can get a client into a bigger institution it means more commission for them.
The fund manager himself spends his whole working life being fawned upon by brokers, and ends up with the genuine belief that he is witty, companionable, and highly analytical, and the mildest wimps become quite intolerably arrogant. Any given stockbroking salesman actively dislikes nine out of ten fund managers, frequently his best client most of all.
Alick used to put it this way: ‘Would you invite your clients home for dinner?’ And the answer, in his case, was only two of them from a list of twenty or so. I don’t think I am damaging his business prospects in revealing this; the other eighteen will all believe they are one of the two.
It is a funny relationship. Fund managers look down upon brokers because they believe themselves to be brighter. Brokers look down on fund managers for being so dumb as to be fund managers and therefore paid considerably less.
Until the Gulf War at least, Alick’s biggest and best client was a no-flies-on-me East Ender at the Kuwait Investment Office, called Bernie. The K.I.O. had massive funds (slightly less post-Saddam), and for such a fund to make meaningful investments, they had to be big. At Christmas, Alick sent Bernie a book, Blood in the Streets by Lord Rees-Mogg. It has turned out to be rather prescient, predicting crashes, and the current slump. Bernie rang back and said, ‘I don’t want a fucking book, send us some wine.’ Alick sent him some wine.
Because of the size of the orders, and the ferocity of Bernie, Alick would run around like a headless chicken each time he got one, in a panic that it wasn’t executed properly by the dealers. I lost count of the number of times that Alick was threatened with being struck off Bernie’s small list of preferred brokers. I think this salesman-client relationship worked because Bernie, the barrow boy, got a kick out of pushing Alick, the Old Etonian, around.
Fund managers get paid bonuses in relation to performance against a yardstick such as the FTSE 100 index, whereas brokers get a bonus related to the amount of commission they make, which is unrelated to any index, only the level of activity. We brokers can develop selective memories if we have the misfortune for example, to recommend a Polly Peck or a Maxwell shortly before it collapses. For us to advise such an investment carries no personal risk whatsoever, whereas for a fund manager to follow the advice could set his career back quite severely. Giving advice is risk free, taking it is fraught with danger.
I assume that all this is pretty fundamental stuff to anyone who works in the City, but maybe not. I was constantly surprised at brokers who were genuinely indignant when fund managers didn’t give them business despite ‘brilliant’ recommendations. If they really knew which stocks were going to go up they wouldn’t altruistically pass this information on. They would all be retired millionaires.
For the record, in my time, apart from getting the oil price right in the Gulf War, I have earnestly recommended Polly Peck (my employers Phillips and Drew were particularly keen on it at the time), Maxwell and other disaster areas, all at their peak. I also bought an expensive house in 1989, thinking it was near the bottom of the market, and made a decision to back the Japanese and their money in 1986. This last had served me well, but time was running out.
On hearing the sad fate of my car, Alick asked his usual ‘Was it a black man, Dolly?’ As somebody who occasionally smuggled in a copy of the Guardian in a brown paper bag to read on the loo, it irritated me to have to reply in the affirmative.
Fortunately half a dozen people in the bond department had been fired recently so the company car man was able to offer me an immediate replacement. He was very understanding about my having left the keys in the ignition. ‘Would have done it myself, mate.’ His pay was obviously not linked to insurance premiums for his cars.
He offered me the loan of a Vauxhall Astra GTE, one year old, lots of valves, 8,500 miles. It had seen better days, with special features like jagged holes for the various stolen radio components, scrape marks from parking misjudgements or errant supermarket trolleys, a forlorn stump for an ex wing mirror and doors that could only be opened from the outside. The ashtrays were full, so the floor had been used instead.
It was a typical company car.
Chapter 6
I assembled my ski team and two cars at home in Camberwell.
Dramatis Personae. Skiing holiday. (Final.)
1 Me. Brilliant skier.
2 Wife. Rotten skier.
3 Niall. Ski soulmate of old. Brilliant skier.
4 Alick. Friend and boss; in which order, unsure. Claim to be a brilliant skier as yet unaudited.
5 Chip. Young American disco soulmate of wife. Unknown quantity.
6 Verona. Beginner. Extremely glamorous if tired-looking youngest ever director of Breese, Spotch and Betts. Terrifying advertising exec.
7 Sienna. Beginner. Sister to the above. Willowy tennis pro, too British and not butch enough for Wimbledon.
By 1 a.m. we were South of Reims. Driving through the night was gruelling, but the autoroutes were almost deserted. We had a deal whereby if one car was stopped by the police for speeding, the on-the-spot fine would be divided across all passengers in both cars, which enabled us to drive at 120mph. March is not too bad a time of year for French speed cops; the real danger time is around Christmas when they need a bit of pocket money for presents for their mistresses.
I needn’t have worried because Verona refused to let anyone drive her Maserati at anything other than a very unItalian eighty-five mph, which was just as well because the Astra needed an oil change every petrol stop. I suspect it had never been serviced by its Merrill Lynch salesman, or, not to be sexist, saleswoman.
Arrived at the Cowshed at six in the morning, knackered. Outside it was minus five degrees Celsius.
Step One: I spent ten minutes while everyone shivered introducing the key into the lock, which was obviously frozen. I suggested using duty-free Scotch to thaw it. Niall objected on the grounds of economy and sacrilege. The girls started to cry. As team leader, I took command, and we compromised on gin. Inside it was minus ten degrees Celsius.
Step Two: Referred to Major Parton’s (Dad’s) Cowshed operating instructions. We had owned this property for ten years in which time it had expanded into a monster of Byzantine complexity as a result of my father’s DIY fantasies confused with his concept of military precision.
Step Three: Chip moved all the gas heaters into one bedroom. The girls all went to bed as did Chip. Niall volunteered to help me, but realising that we were dealing with Parton technology I sent him to bed too.
Step Four: Turned on the water system, which had been carefully drained to avoid the problem of frozen pipes. Opted for option E. ‘Kitchen with all three bathrooms; for larger and/or richer parties.’ We fitted into the latter category. ‘Open stopcock A, close stopcock G (in hole in panelling between lavatory and basin in far bathroom, ensure stopcocks C, D, and E, are open, close system draining taps (behind a hole in the back of the kitchen unit behind sliding door).’
Water now flowed in most basins, although not all, implying the odd ice blockage