Making mistakes!

Notes from the other side...advice to the young continued...

The theory is that to make mistakes is great for learning. But when you are young who are you going to make them with? And who’s going to pay?’

My second job in metals was with the now defunct firm, Brandeis Goldschmidt, who were both physical merchants and ring dealing members of the London Metal Exchange. The two halves of their office were within sniping distance.

At the time I joined, the company had recently been bought by the French state-owned aluminium producer, Pechiney, and I’d been employed by a fellow called Albert Kreuziger, one of the architects of a much talked about aluminium cartel.

Travelling up in the lift a couple of times, he told me how he collected pre-Columbian ethnographic art (American artefacts from before Christopher Columbus). It made him sound like an interesting boss: but I never got to know him, as he left a month later.

After six years as a broker, I’d hankered after the big time as a physical metal merchant, and Brandeis was my chance to have a crack at it. I was taken on with another lad. On the first day, one of the directors came over to our desks and said, ‘May the best man win!’ It was the first time I’d appreciated I was in a race. After the requisite six months probation it appeared I was the winner, although the joy was not unbound when my rival left and became a Vice President at Cittibank.

Be that as it may, my time at Brandeis gave me valuable metal trading lessons. With Kreuziger gone, whatever plans he had for me went too. But his departure wasn’t sufficient grounds for the company to let me go, so I was shunted off to the ferro alloys department to be the unwanted assistant for a Jewish Scotsman by the name of Ivor Markson.

He had, by the time I met him, many miles on the clock; having served under several previous owners, one of which was Warburg’s merchant bank. With the hint of retirement on the horizon, and markets as flat as a fried latka, Ivor’s way of trading was conservative and careful. This was no time for big swinging - and past eras such as the nickel shortage in the late1960s, were talked of as fond distant memories, unlikely ever to return.

In my case I was only too keen to learn, but quite slow to do so, being mathematically unsound and lacking a teacher of any kind who would want to take time away from their own trading. As young metal people will note today – there isn’t a university course in the subject.

One day over lunch, Ivor left me in charge of the desk with instructions that if a certain order came in I was to hedge the currency, as it was Brandeis’s policy never to be exposed to currency and metal prices at once. So while Ivor was out having his light lunch, the order duly came in and, with my half-grasped instructions, I proceeded to ring the bank and fatefully hedged ten times as much currency as required. When Ivor returned it was to the news that the currency had gone against us and wiped out the ferro alloy department’s entire trading profit for the year.

It was a chilling mistake that haunted me for the next 38 years; albeit that that it led me perhaps to being a better metal merchant – a stickler for detail checking calculations for ever after.

But what should my younger self have done? Firstly, never act on an instruction you don’t totally understand and, secondly, if you don’t comprehend, just confess and ask! (Something I was too timid to do.)

Although you might suspect my relationship with Ivor would have suffered in these shameful and ignominious circumstances, strangely they did not. I lasted beyond my probationary period til the end of the year and learnt a huge amount just from being in an environment where everyone on the trading floor was an experienced trader of one kind of another – nickel, vanadium, copper, aluminium, minor metals and all the ferro alloys.

On my last day, Ivor took his unwanted assistant to lunch and apologized that he had not been as good a boss as he might. However, when I look back, I think that in his way he was one of the best. He took that terrible loss as if it was his own and blamed himself. It was no sooner done than forgotten, never mentioned again, and over the months I was able to work hard to make amends.

This took the form of a strange problem involving a U.S. antimony consumer with a contract for antimony oxide ores and sulphide ores imported from China and Thailand written at a formula price. With metal prices dropping like a stone but divorced from the ores prices which rarely moved, the sale was by now high above the market and the end user was trying to renege. So, I spent hours examining the contract from every angle and analyzed that there was nothing we could do if the consumer wanted to walk away. But one day (over lunch) I conceived the idea that if the customer tried to re-export and return these toxic goods to us, we would have to report the presence of them, in the port of Houston, to the US Environmental Protection Agency. Within hours of my telex on this subject the customer was on a plane to London and ready to talk. The intractable issue taught me the value always to keep probing because you never know exactly where the weakness in your opponent lies. I had boxed clever and felt via this result I’d evened out my disaster with something compensatory.

In this sense, when I left Brandeis, I felt as if I had finally become a real trader, someone able to find solutions.

In later years, running our family business, I kept my first disastrous experience in mind and tried to spend as much time as Ivor would have liked (but did not get the chance) teaching the younger traders where some of the pitfalls lie and making them as aware as possible that, in the metal trade, we are only a decimal point away from disaster.

My only further piece of advice is, if you are going to make some mistakes, make them with someone as understanding as my late lamented Ivor.

By Anthony Lipmann

Published in The Crucible, 2022