Spotlighting The 'bunny Theory'
The Age
Tuesday October 28, 1997
A bright pink baby's dummy is taped to Robert Wilson's computer terminal at Melbourne's second-oldest stock brokerage.
Over time, the dummy moves from broker to broker, up and down the otherwise strictly professional trading room at William Noall.
Whenever someone "spits the dummy", they are awarded the dummy, keeping it until the next high-pressure release.
Mr Wilson, the brokerage's deeply concentrating equivalent of an insurer, could be forgiven for feeling the strain a little lately.
He trades options, contracts that allow investors to hedge against falls in share values or to speculate on rises and falls.
And with the financial markets in Australia, Asia, Europe and the US shaken by share price falls, he's been a busy man. A day among the swivel chairs, ringing phones and tireless computers of the brokerage focuses the mind on timing, risk management and speculation.
"If you read the weekend's papers, you would think it was the end of the world (for the financial markets)," Mr Wilson said.
"But a lot of the major stocks . . . are still higher in price than they were in July."
By contracting to sell shares at a set price in the future, an investor can profit if prices fall in the meantime. Financially painful news for some can be joyous news for others, providing they've tailored their strategy accurately.
"An option can return a good profit or retire worthless," Mr Wilson said.
Investors will hide with the bears, run with the bulls or hibernate, depending upon their outlook at any time. Why is anyone's guess.
Michael Porteous, a young broker involved in William Noall's Internet service, talks of the "bunny theory" and nervous backward glances.
"You pull out a shotgun and everyone runs," he said.
"There has been a lot of hype about the stockmarket crash 10 years ago and unfortunately the Asian volatility has coincided with it. It's a shame because . . . the Australian economy has good fundamentals."
Stuart Anderson, one of the firm's directors, is nearby, reassuring a client that "the story's still good" on a company pioneering a flu vaccine.
A co-director, Peter Chapman, believes overseas markets may have been "strategically shorted" and is equally confident that the local market is sound and will rebound.
"I had a doctor come in this morning and he wanted to put his toe in the water. He had never been in the market before.
"I said to him, 'How much do you want to buy', and he said, '$400,000 worth'. That's his toe in the water."
© 1997 The Age