I was doing salary reviews for 2017. Everyone was happy and we were casually assuming a similar level of growth in 2018. Normal stuff.
But this is a cyclical business and I know that when the sharemarket turns down things will become harder for all of us. There will be less demand for advice, less enthusiasm for investment generally, and that will translate into less trade, fewer new clients, fewer funds under management and, if it happens, some not so fabulous salary reviews next year.
I remember going into a morning meeting in April 2000 at Bell Securities. It was the middle of the tech boom, although, as it turned out, it was actually the top. There were signs. There always are. Just before the global financial crisis the signs included three stockbrokers listing on the ASX at 200?? (they all ended up below 50??) and another putting its name on a football stadium. Surely the top!
In the tech boom, the sign was Andrew Bell in that morning meeting in April 2000. He announced that we had had the best day of commission ever. I had personally written $11,000 of commission the day before. One of our number had employed an assistant just to process his orders and was introducing him to us that morning.
Andrew told us to look around because, in the style of Top Gun, "It doesn't get to look any better than this".
In that morning meeting he unknowingly (knowingly?) called the top of the tech boom. It was as good as it ever got and, quite honestly, I'm not sure it has ever been that good/easy/lucrative in this industry ever again. Perhaps some of the bitcoin beneficiaries might disagree.
That morning meeting taught me a catchphrase that I have used many times since: "normal is great". It's only when things go bad that you appreciate how good normal was. At the moment we think that this bull market is normal, but it's not, it's great.
I'm not being bearish, I'm being appreciative that 2017 was a good year for all of us.
In the end, the one thing that will upset the financial markets is the herd. When the herd turns it turns, and it can do so without planning or logic. It could happen for the most subtle of reasons, or the most obvious, so let us not sit complacently, we all have to recognise we are in the hands of an animal that is not driven by logic or science. All we can do is watch for it and react to it.
So my game plan going into next year is to take Kerr Nielson's advice and "run the market to the last minute", it is our professional responsibility. Sell early and you can miss an infinite upside. Sell when the top has started and you can control how much downside you take. "But what if it crashes?" I hear you ask. The market very rarely gaps down without warning. We just have to hope we are attuned to the signs and do something about the sell-off before it turns into mainstream panic.
It's a bit trite, but your best bet is to stay invested, keep taking risk and not worry about predicting the top until it starts.
Meanwhile, I look forward to a correction to buy stocks at lower prices. Predicting the bottom is the same as predicting the top. Turn your screens on every day and wait for the rally to start. You'll need a watch list of stocks you want to buy, and you might as well start that now. It is the same as the list of stocks you wish you had bought already but didn't.
Marcus Padley is the author of the daily sharemarket newsletter Marcus Today. For a free trial of the Marcus Today newsletter, please go to marcustoday.com.au