chapter
1
From Zurich to disaster
Day 1, 9.30am – Zurich
Uli isn’t the smartest of my former students. But he manages
$5 billion of other people’s money and I mentor him on how to
invest.
Uli’s a polite guy. When I’ve nished our quarterly meetings
he normally hands me a present for my nephew Alex. Today,
though, Uli is uncharacteristically distracted. Excited, and a little
nervous, he tells me he won’t be able to drive me down to Zurich
station.
‘I’ve got a new client coming this afternoon,’ Uli says in his
sing-song Swiss-German accent. ‘He’s got €50 million to invest.’
‘Great!’ I’m genuinely happy for Uli. Plus I’m already calculating
how much I can put up my fees.
‘Great!’ agrees Uli, but he holds his smile too long and I know
that something’s wrong. I’ve been advising Uli for ten years, ever
since he was a graduate on a course I led at Goodman Rozel. I
can tell when he’s worried. He calls his secretary and shakes my
hand. ‘I’ve bought something for Alex but you’ll need to collect
it from the shop.’ He hands me a receipt for Christof’s Toys and
I read an address in the old town. I leave him, stumbling past
piles of annual accounts and broker reports which spill across
the oor.
Clients like Uli give me an insider’s access. I know what will
happen to certain companies weeks before the stock market
even sniffs a rumour. Part of my job is helping nancial experts
One-way ticket6
communicate to ‘normal’ people. I write their presentations,
prepare their speeches to shareholders and coach them on how
to deal with the more aggressive nancial journalists. My clients
trust me with inside information and I’ve never abused that trust.
It’s a well-rewarded job, and I was just thinking how much I still
enjoyed learning new things, when the bomb exploded.
Day 1, 11.00am – Zurich Airport
I saw ames and smoke, and the ambulances driving past the
crowds. CNN cut to protesters running away from tanks. I read
the subtitles ashing across the TV screen – state of emergency,
many civilians feared dead – and dunked a square of creamy
chocolate into my coffee. A groan went round the business
lounge at Zurich Airport as they announced all ights were
grounded. A fat man next to me muttered a multi-lingual stream
of expletives. ‘Damn terrorists. Why should we suffer because
they’ve blown up some airport?’
I mumbled something in reply but I was already thinking about
how to get a train back to London. As was everyone else in the
lounge.
I took a taxi to the old town and walked towards Bahnhofstrasse.
Underneath all these private banks lie the great vaults. Miles and
miles of gold and silver, diamonds and platinum. I walked over
cellars stuffed with loot from Latin American drug lords and
stolen development funds snatched by African warlords. Who
knew who owned it all?
Day 1, 11.30am – Paradeplatz, Zurich
I managed to book a seat on the 12.30pm train to Paris. Not
ideal, of course, but at least it would get me closer to home. I was
desperate to get back: I was delivering a course in New York in
three days’ time and needed to prepare. With an hour to spare
I headed over to pick up the model train. I was hit by a warm
gust of Havana cigar smoke. The man I presumed to be Christof
7From Zurich to disaster
scrunched a jeweller’s magnifying optic into his right eye to look
at Uli’s receipt. Short and stocky like most men of Zurich, he
reminded me a little of Uli.
‘The Mountain Express Train.’ Christof handed me the latest
addition to Alex’s ever-growing model rail collection. ‘It’s already
gift-wrapped.’ The train felt reassuringly heavy in my hands.
Zurich was a model village of order and calm. I took in the town
hall clock, the steeples of the churches, the trams gliding over the
glistening rails. But in the train queue I had that weird feeling
when someone you don’t remember recognises you. Who was
the young man who looked me in the eye as two porters fussed
over his luggage and ushered him into First Class?
I’ve taught a lot of people over the years. Investment bankers
in Malaysia, bond traders in Mexico City, people I now suspect
are money-launderers in Marbella. Thousands of students, from
interns to managing directors, have had the unalloyed joy of
watching me in action. Being a trainer is a bit like being a prefect
at school: all the younger kids know your name and remember
what you look like but there are loads of people you can’t recall.
But as we pulled out of Zurich station I was puzzled. I was sure
I’d seen the man before and, what’s more, I’m sure he knew
me. Where was it? It was irritating, like having a favourite song
playing in your mind and not being able to recall the title or the
singer.
The hefty chap who had mumbled to me at the airport was now
slumped next to my seat. I sank into a roll of his esh hanging
over my side of the armrest. He huffed himself towards the
window, clearing me three extra centimetres of body room for
the remaining seven hours of the journey.
The guard checked the man’s passport against his ticket. ‘I hope
you enjoy the journey, Mr Conrad.’
‘How can I? We are sure to be late.’
I did my best to avoid eye-contact. In my briefcase was a small
pile of reports I’d taken from Uli’s swamped ofces. They were
One-way ticket8
the usual stuff – imsy broker notes solely designed to drive
commissions from clients – but my eyes were drawn to a more
substantial analyst report. Cal-Pan was a Hong Kong-registered
company. It ran a number of huge infrastructure projects, most
of which relied on government funding. Strange, but I couldn’t
remember putting the report in my case.
The analyst believed that the shares were a strong buy. But she
wouldn’t be the rst stock-picker to get things badly wrong . . .
Analyse this – Henry Blodget
The job of an equity analyst is to tell clients if a share should be
bought or sold. Henry Blodget became a symbol for all that was
rotten about the trade.
Blodget first came to fame (and that’s not too strong a word for
what happened) when he predicted a massive rise in the price
of a smart new e-retailer called Amazon. The stock rose 128 per
cent and soon Blodget was the number-one-rated internet expert
in the world. Blodget’s stock picks made tons of money for his
investors and his every pronouncement was hungrily devoured by
his acolytes.
A high-profile job at Merrill Lynch came with a massive salary and
an obligation to recommend many internet shares as Strong Buys.
(See Chapter 3 for more on buy and sell recommendations.) At the
same time, however, Blodget was calling their shares crap, junk
and pieces of shit in his personal emails.
Easy money blinded everyone to the massive conflicts of interest.
Everyone, that is, except for Eliot Spitzer, attorney general and
governor of New York. Blodget was charged with securities fraud
by the SEC (Securities and Exchange Commission) and paid a $2
million fine and had to return a further $2 million of his ill-gotten
gains. He agreed to a ban from working in the securities industry.
Blodget lost $700,000 of his own money on internet donkeys he’d
selected for his personal portfolio. He is now a huge fan of passive
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