Chapter 8

When I got back from Asia, I had a surprise. My investment manager was apparently desperate to talk to me, he had been bugging dad for several weeks. Now I was back, Dad suggested I contact him immediately.

Athens Investments and Speculation was a local stockbroker, I had started using him when Dad had set up my investment company three years ago.

Since then, things have changed a lot. Dad had also arranged for me to have an attorney and accountant to oversee my business, since he didn’t have the time or experience in those fields.

Andy Campbell was my attorney. He had been a bit contemptuous at first, having to represent a boy under ten. But once he saw how fast my investment company was increasing it’s fund size, he became very professional.

He suggested that instead of an investment company, as I was under the age of eighteen. I would do better tax wise, to do my business dealing under a trust corporation, rather than a limited company.

The accountant made sure all my dealings were correct down to the penny. She then made sure enough money was put aside for taxes.

The accountant also introduced me to charitable contributions. Explaining that the more money I gave away to charity, the more money I made. It sounded crazy to me, but once she showed me the figures I agreed with her.

I didn’t know exactly how much my portfolio fund was worth anymore. It had grown so much, with many deductions for charities and taxes; it had gone beyond my ability to keep track of it.

Another change was I found the more money I made, the harder it became to invest my money. It wasn’t that finding the companies was any harder. But there were only so many shares you could buy, before your buying affected the market price. There were also times when there were only so many shares available, so you could only purchase what was in the market.

So I called Andy. He arranged the meeting between Andrew Stillman, my stockbroker, and the rest of my team. Andy apparently knew what Andrew wanted to discuss, so had arranged a time that my accountant and he would be available for the meeting.

We sat down in the office of AIS (Athens Investments and Speculation), and waited for Andrew to make his pitch.

“Thanks for coming in Jack. I haven’t got the time to play games here, so I will just tell you straight. I am in trouble, apart from your portfolio; all of my other investors have been taking a loss over the last six months. I have tried everything I know, but unless I get some help I am going to be liable for hundreds of thousands of dollars of losses.”

That was the start of the conversation. It turns out that Andrew had been unfortunate in some of his dealings, major corporations suddenly taking a nose dive in share value. But what had really been his downfall, wasn’t his investments, it was his contracts with the investors. Had he made a good profit, his own payday was good, but if he made a loss, he was liable for a portion of that loss. Don’t get me wrong, the investors would have lost more due to the capital being lost. But it was a dangerous business practice for a stockbroker to go with that type of contract.

Now Andrew needed major help from another investor, or his business would be bankrupt at the end of the fiscal year.

I wasn’t prepared to back his mistakes. All I would be doing was shoring up his business with no guarantee that he could make a profit in the future.

Andrew left my team and I to talk. He went to get the company books for my accountant to look over, getting the precise picture of what figures we were talking about.

There was only three months till the end of the fiscal year, so there was no time to lose if I wanted to sort out this mess.

When Andrew came back we had an offer for him. For half the business I would risk taking on half of his liabilities. I would hope to recoup his investment portfolio by the end of the fiscal year, cancelling out any payment required.

If I was successful then there would then be a general wholesale change in the way the company performed. That could only happen if we were back in the black.

Contracts were written up and signed, detailing what would happen for the next three months. A second contract would come into effect if I managed to sort out the losses.

Now the first thing that changed was Andrew was to make no further investments without my agreement. Basically for the next three months, it was going to be like when we did the Owens experiment. I would tell him the companies to invest in, and with his license he would do the buying and selling.

As I had found with my own portfolio, having more money didn’t always make it easier to make money. I needed a lot more companies to invest in, which took a lot more of my time investigating business trends on the computer. Andrew did help me in this area, since he now had a lot more free time on his hands. So Andrew in effect did what my dad’s job had been, he was my associate, doing the deeper research I required while I made the decisions.

But it worked. Within two months the investment fund was nearly back to what it had been before it had all gone wrong. Which was great, it meant by the end of the fiscal year, neither Andrew nor I would have any debts to pay off. But it might not make the business recover. Investors wanted profits, if they hadn’t made any money, which was likely, they would go to another company who would provide a better return.

In the third month we were able to make a profit. After paying out our commission, we had provided the investors with a reasonable profit.