A BIT OF BACKGROUND FIRST…Picture in your mind, a shy and timid (really?) Peter Watson climbing up the steps of Bank station blinking in the morning light and staring momentarily at the glory that is the Royal Exchange and the Bank of England (they are quite a sight and I’ve always loved this part of London). This was quite a few years ago now and I was making my way to what was then called Cazenove & Co (a stockbroker which is now owned by JP Morgan) on 12 Tokenhouse Yard. As I later learned, you were only allowed to use this entrance if you were a partner or a client (or were accompanying a client) as mere minions such as myself had to use the “tradesman’s entrance” on the other side of a tiny passage! However, as this was my first day, I was allowed to use the front door. Hurrah!
With each step I took down Tokenhouse Yard, the feeling of dread increased. I was going to be a trainee stockbroker at one of the best known stockbrokers in the country – and I didn’t know ANYTHING about the stock market!!! I was taken on in order to advise Japanese institutional clients (pension funds, insurance firms and other financial institutions) but had zero knowledge of how markets worked. Indeed, the team in the Japan department (nice guys, but they weren’t going to be my team – I was going to work on the main dealing floor with the UK and European brokers) very kindly invited me to their Christmas do ahead of me joining. I recall that, during this sit-down dinner (or rather I should say “supper”, as I later learned 😂!) the guy who would become my immediate boss said something like “I remember when I started, I didn’t even know the difference between a stock and a bond!”, laughs all round. I laughed nervously, whilst simultaneously thinking “I don’t even know what either of those are!”. Fortunately, help was at hand, as I was to find out.
HOW DID I GET MY KNOWLEDGE? When I joined Caz (that’s what we all called it), I spent the first few weeks having meetings with all of the research analysts in the research department. A few of us had joined at roughly the same time, so we all joined each other’s meetings. The research department was divided into all the different sectors of the economy (and some subsectors) and we had meetings with each analyst where they told us how the industry was structured, the main companies to watch and what the drivers of the sector were. We also had sessions with the economists (who told us useful things like why everyone keeps going on about interest rates), the economic strategist (whose job it was to recommend which sectors to buy and sell, rather than the individual stocks) and then, finally, all the marketmakers, sales-traders and dealers. The dealing floor was a boisterous place with never-ending banter being punctuated by massive deals and client orders. It was an exciting place to be! However, I also learned a huge amount directly from top management of some of the biggest companies in the world who used to brief us on their plans and strategies. In addition to this, I learned an enormous amount from my clients, who I would debate with on a daily basis – and they would ask me a lot of questions which I had to find the answer to by asking the analysts and traders! Over the course of my career I covered UK, European and Japanese stock markets and every time I moved company, the process of learning was pretty much the same (although the learning curve got less steep the more experience I got). In essence, my knowledge has come from the heat of battle – I was constantly in competition with my colleagues and all the other major brokers like Goldman Sachs, Morgan Stanley, Nomura etc. regarding the quality of information I provided. It was a lot of fun, though!
HOW CAN YOU IMPROVE YOUR KNOWLEDGE? Clearly, I learned a lot in a very short space of time because I had to – I would have been sacked very quickly had this not been the case. I was learning and talking all day every day about markets, company news and investment ideas. This is not
