Trader Jack -The Story of Jack Miner (The Story of Jack Miner Series) (15 page)

'Why?'

'Russia had huge debts. People were poverty stricken and the government needed the money. The country off-loaded large quantities of its metals on the market and prices collapsed. Mining companies were doing badly. Yeltsin was drunk most of the time and there was a lot of corruption. To cut a long story short, a few shrewd Russians backed by Western banks and other firms, bought the mines very cheaply.'

'And then prices recovered,' I said.

'Yes. Within a few years Yeltsin had created billionaires, let alone millionaires,' said Ivor with a hollow laugh. 'They call those Russians, oligarchs.'

'The guys who are buying football clubs, that sort of thing,' I said.

'That's right. Below the oligarchs are other rich Russians who have been doing all sorts of deals. Some are criminals operating in gangs. They're the Russian mafia.'

'Have you come across any of these people?'

'Yes. I was a consultant on some of their gold and diamond exploration ventures. They pay well, but I would never invest in their projects. They made me feel uneasy.'

'I know the feeling,' I said.

'You've come across them?' asked Ivor.

I shook my head. Stan was keeping his word. He had kept my awful secret.

'Do you know any of these people?' I asked looking in the direction of the bar where the Russians were laughing and drinking.'

'The tall blond guy, with girls hanging on to him, is Yevgeny Faramazov. I've seen him at mining conferences. I've never met him personally, but I've heard that he invests a lot of money in mines in Russia, Africa and South America. I'm not sure whether he's a goody or baddy.'

There was no way I was going to tell Ivor what I thought. Here, there, everywhere, how was I to escape them. Just keep my head down, I guess. Hope that Stan was right and they would forget what I looked like. I was very glad that I was returning to London, the next day. I would be far away from Krepolovitch. The Edinburgh festival was continuing for another three weeks. Hopefully, he would remain there and then go back to Russia.

11 -
THE INCUBATOR

I walked out of Green Park Station into the sun and fresh breeze. It was the beginning of September and after much rain in the past week, the park was lush. A sign showed that one of the paths led to Buckingham Palace, but I turned around and climbed the stairs and was on Piccadilly, a West End thoroughfare. On my right, overlooking the park, was the Ritz Hotel. I wanted to walk in and take a peek. Mum used to daydream that she would take me for tea there one day. Unfortunately, no time. I was on my way to have lunch with Ronald Ruffish, head of Hastings & Ruffish, the London division of Hastings & Murray. We would be meeting at Brown's Hotel in Albemarle Street, across the road from the Ritz.

The weeks since the Scottish holiday had gone fast. My GCSE results were out and had amazed me. I got As for English, history, maths and IT, Bs for physics and chemistry and Cs for French and Spanish. The only blot was a D for religious studies, but that didn't bother me as I had found the subject boring and didn't revise much.

I phoned my old friends in Bridlington and found that most of them had done OK. Jack Miner was the surprise. Results far better than expected. James Horsely, the headmaster wanted me to do my AS levels, but there was no way I was going back to Bridlington. A London school was a possibility. Stan, Leila and Martha tried to persuade me to continue, but I decided to phone Jim Hastings in Edinburgh and he arranged a meeting with Mr Ruffish. They were serious about offering me a job.

I flopped down in one of the leather armchairs of Brown's, a posh, discreet 19th century Georgian hotel and glanced at the brochure. Rudyard Kipling wrote "Jungle Book" while he stayed there and Winston Churchill was a visitor. If only Mum and Dad could have seen me. Yorkshire boy, in my fancy dark blue suit, opposite some rich, maybe famous people, who were chatting on a huge pink sofa.

I felt relaxed. If Ruffish didn't like me, or I decided not to take the job, I could still finish school and go to university. There was nothing to lose. Ruffish walked into the hotel. I recognised him from his picture in the Hastings & Murray information pack. He stooped slightly, but I think he was only mid-fifties. I could see that he was wearing a toupee. I had expected Ruffish to be in an expensive suit. That is what city guys were supposed to wear. Instead he had a brown suede jacket over an open neck shirt. I stood up and he walked towards me with a slight limp. His skin was sallow and he had tired, kindly, sunken brown eyes.

'Ron Ruffish,' he said, shaking my hand. 'Sorry I'm late. Let's have something to eat.'

We went into a large half empty dining room and sat down at a table in the corner.

After ordering some soft drinks, and talking a bit about school, Ruffish got to the point quickly.

'Rob Hastings told me that you turned ten thousand into a hundred in only three months!'

'It wasn't all my money, Mr Ruffish,' I said. 'A friend followed my trades and gave me a cut of his profits.'

'That's against market regulations! You have to be a registered advisor.'

'No, no! I didn't ask him for anything, Mr Ruffish. He gave it to me after he made a killing in gold shares.'

'Do you think he'll back you again?'

'Dunno. I told him that I bought bank shares.'

'Completely different businesses. Why did you choose them?'

'They looked as if they were going up.' 'That's all? You didn't study the gold market? What about banking?'

'I just read a few books about investing, decided that prices were heading higher and bought.'

'So you follow a system. Technical analysis? Momentum?'

'Nothing fancy. I just look at what happened in the past and what's happening now. If I think the shares are beginning to rise, I buy.'

He studied my face closely, but it was difficult to gauge what he was thinking. I guessed that he was sceptical. A waiter came up and I ordered steak and chips and he Dover sole, vegetables and a salad.

'Ivor Ensworth speaks highly of you. Do you have another reference?'

'I met him through Stanley Slimcop.'

'That's a name from the past! When I first came to the City about forty years ago, I applied for a job at Safron and Slimcop. It was one of the biggest brokers in London. They were about to take me on board when . . .'

'The firm went bust.'

'Yes, that's right. Then he recovered. They call him the Silver Fox. Well I never! Is he the one who's backing you?' I didn't answer.

'I like discretion. Our business is confidential. That's a very strict rule.'

Our food arrived. The steak was OK and the chips were almost as good as the fat tasty ones that we used to sell at "Our Plaice". Ruffish chatted about the good times in the City. Those were the bull markets when shares kept rising and he was paid big bonuses and made lots of money. Then he spoke about the bear markets when shares kept falling. Thousands of City people, including him, lost their jobs.

'When the bad days seemed to continue forever and everyone was gloomy, the market would always bottom out,' said Ruffish. 'The newspapers were another sign. When the front page carried stories about financial crises, the worst was always over.'

'Just like the bank crisis a few weeks ago?' I said.

He seemed impressed that I had followed the news. But he didn't know the real reason.

'Never fails. When there's extreme pessimism, close your eyes and buy. You had the right idea and bought bank shares. I like that,' he said.

'Luck helps,' I said modestly.

'I was tired of relying on a bull market to earn my living,' said Ruffish continuing with his own story. 'So about three years ago, I decided to open a hedge fund business. The good thing about hedge funds is that they can make money when the market rises and falls.'

'How do you do that?'

'I'll explain later.'

'So when did you start managing hedge funds?' I asked.

'About two years ago. I approached Hastings & Murray and they backed me. They own the business, but I've got a stake in it,' said Ruffish. 'Hastings & Ruffish only manage around two hundred million, but we're growing fast.'

'Mr Hastings said that you might have a job for me.'

'Maybe. By the way, what did your father do?'

'He had a fish and chip shop. I helped him.'

'You went to school and served in a fish and chip shop?'

'Sometimes I woke up early and went to the fish market with him. He haggled over prices. They liked him and gave him good deals. I didn't like cleaning fish. I preferred serving behind the counter.'

'Did you ever mind the shop on your own?'

'When Dad was sick, I went to the market to buy fish. Sometimes my friends gave me a hand. We had a good trade on Fridays and weekends, but our prices were too low.'

'Was the business doing badly?'

'Expenses were high, Mr Ruffish. We went down. My Dad died in June.'

'Call me Ruff,' he said sympathetically, 'Must have been hard for your family.'

'Mum died a few years before my Dad. I don't have brothers and sisters.'

There was silence for a moment. I felt uncomfortable. His questions were bringing back memories. I turned away from him and he called the waiter and asked for the bill.

'You grew up quickly didn't you,' said Ruffish thoughtfully. 'Fish and chips! You've been buying and selling since you were a little boy. I think Rob's right. You're a natural trader. Want to join us or go back to school?'

'I'll have a go.'

*   *   *

Ruffish's office was in Charles Street, just off Berkeley Square. This was Mayfair, hedge fund land, home of some of the sharpest traders in the world. He had told me that hedge fund managers chose prestigious and expensive Mayfair to impress the rich and famous. The Ritz, Brown's, Claridges and other top hotels are close by and their clients can shop in Bond Street and Savile Row and be in walking distance from West End theatres and Soho restaurants. Some hedge funds also have offices in Knightsbridge near Harrods. Investment banks are in the ancient City of London and Canary Wharf, Docklands, on the east side of the River Thames. They are the prime brokers of hedge funds and earn billions in commissions from buying and selling their shares, bonds, currencies and commodities. The brokers also earn interest by lending the hedge funds huge amounts of money to do more deals that in turn bring them even more commissions. Some business!

I rang the bell and on the sound of the buzzer, the latch opened. I entered a musty, dimly lit hallway. At the end of it, was one of those ancient lifts with black, crossed iron gratings. You had to clutch the brass handle to open the door. Inside the tiny space, I pulled the door closed and pressed the button for the fifth floor. The rickety lift went up slowly, making me wonder how often they had tested the cable. It felt as if it could fall at any moment. No way would I use that lift again.

I got out at the fifth floor and saw the 'Hastings & Ruffish' plate. A young brunette, in a low cut light blue summer dress, opened the door.

'I have an appointment with Mr Ruffish,' I said.

The office was completely different from the rest of the building. The walls had been knocked down, leaving a large room. In some ways it was like the Chinese restaurant in Hampstead. Everything was white. The walls were white. Fund managers and other staff were in their own working spaces that were bordered by white round bookcases. People sat on white chairs. White Apple laptops with large flat screens were on their white desks. Next to them were terminals showing prices, charts and news.

In the far distant corner there was a glass enclosure. Through the glass I saw Ruffish looking at his screen. I knocked on his glass door. He stood up, shook my hand and we both sat down on a large white leather sofa.

'Want some coffee, Jack?'

I nodded my head: 'Is this place an office or a hospital?'

'Sometimes an office. Other times a hospital. Depends how we're doing,' replied Ruffish chuckling, despite my cheek. 'Two coffees please Bess.'

She returned with two cups and he introduced us. Bess nodded and walked out.

'Let me explain what you'll be doing, Jack,' said Ruffish. 'We're going to incubate your own hedge fund.'

'Incubate my hedge fund?'

'Just like a chick, Jack. We look after independent fund managers in a warm friendly environment. We help them grow and lay golden eggs for themselves and us,' said Ruffish. 'They put in their own money and we also invest in the fund.'

'How much money must I invest in my incubator?'

'We talk in dollars here and the fund's going to start with $500,000. From what you've told me, you must put in half the money that you have in the stock market. That's about $100,000.'

'I might as well invest everything,' I said, converting my pounds to dollars. 'I've got about $200,000.'

Ruffish looked pleased with the response.

'OK we'll double the amount we're putting in. Your fund will start with $1 million. Hastings & Ruffish will invest $800,000 and you $200,000.'

'Am I going to manage this fund all on my own?'

'Eventually yes. But at first one of the fund managers will supervise you.'

'Do I sell my shares before we start?'

'Only if you think that the time is right. You're going to manage a macro hedge fund.'

'What's that?'

'You can use your trading system to buy or sell shares, currencies, commodities, bonds. Anything that you believe will make money on the way up or down.'

'How do I make money when the market is going down?'

'You sell short. You borrow shares and sell them. If their prices fall, you buy them back at a profit. If they go up you lose. You can also sell futures and options.'

He noticed my puzzled expression.

'Don't worry. I'll get one of the fund managers to explain how to do it. Our hedge funds charge a two per cent annual management fee and a twenty per cent performance fee. The only investors at this stage will be the firm and yourself. You must take investment exams before you are allowed to manage money for outside investors. We're going to pay you a small salary of $4,000 a month and you'll receive an annual bonus of five per cent on any profit. Are you happy with that?'