"IIt was starting to look like the St Valentine's Day Massacre, but a month late," moaned one managing director at a major US investment bank. What was he whingeing about? He is a multi-millionaire with a house in the best part of Kensington, a country rock-pile in Oxfordshire and a villa outside St Tropez. This is not the type whose wife has her Waitrose card refused at the check-out. But he is not as rich as he was six months ago. The bloodbath in investment banking shares has taken its toll. Like most successful, almost self-made Euromarketeers in their late 30s, the majority of his personal net worth is tied up in his firm's shares and options. He has prospered beyond his wildest dreams, principally because the shares have risen by more than 10 times and he has always reinvested the dividend streams in yet more stock. Most dull, but prudent, investment managers would have chided him for having too many of his eggs in one basket. The answer to that would have been: "Where else might you have reasonably achieved capital gains of 50% per annum?" Also, many of the wealthiest and shrewdest Euromarketeers we know have sensibly hedged against a market fall by buying a series of put options.
March 23, 2001
