MY BIGGEST mistake was made in the autumn of 1969, when I was working in the investment research department of Kleinwort Benson. One Friday afternoon, the man who sat opposite me asked if I had heard of a company called Poseidon. I confessed I had not.
A bit of research showed it was an Australian nickel company trading at about 20 shillings. It was marked in the Financial Times under rule 163E, which meant that although it didn't have an official quote in London, it could still be dealt with, because it was quoted on a foreign exchange.
By the following Monday the story of Poseidon had become front-page news. The company had made the richest-ever nickel discovery, and over the next couple of months, the share price rocketed to pounds 120.
The assembled research department at Kleinwort Benson started thinking about how it could play this nickel boom. We looked at a map of the mining concessions and found a company called New Metal, which had some adjacent land.
As speculation rose regarding these nickel discoveries, so did the price of New Metal. By Christmas Eve everybody was caught up in it, and I decided to buy some shares at 24 shillings and ninepence.
On that day, brokers who were lining up to deal with the jobbers shed tears of frustration as share prices rose while they waited.
It was all very exciting. I had bought shares before, but always in rather more secure companies. This was my first out and out speculation, and I hoped that New Metal was going to go the way of Poseidon. At the time I was a young and not very well-paid analyst. I invested about only pounds 200, but it was a lot to me in those days, as I only earned about pounds 1,300 a year.
I couldn't really afford to hold those shares, because it meant taking out an overdraft. And since I was newly married, I didn't dare tell my wife. By the New Year my enthusiasm had already waned. As someone pointed out, the market value put on New Metal and other nickel mining stocks was far above those of many substantial British industrial companies.
The two classic contradictory maxims in the stock market are 'never sell on a strike' and 'always sell on a strike'. The first relates to labour strikes, and the second to discoveries of oil or metal deposits, because there is always a long period of disappointment after the actual find has been made.
While the share prices drifted down, I kept hoping they would suddenly shoot up again, but by January I realised I had made a serious mistake. I had bought something I knew nothing about with money I couldn't afford. I felt sick.
In retrospect, I should have sold the day after Boxing Day. The shares were worthless, and I wound up selling them at a loss. Within two years the price of New Metal was down to one new penny.
The lesson to be learnt from all this is that you should always resist being caught up in speculative bubbles. And never invest more money than you can afford to lose.
Almost everybody in the department bought shares in one or more of the Australian nickel companies, and they all got their fingers burnt.
Fortunately it was a lesson I learnt early in my career, and I have never held as bad an investment since. I tend to be an early buyer and an early seller. And I do not slavishly follow trends.