Free to Trade by Michael Ridpath Read Free Book Online Page A

different. It's a junk bond issue. It's for the Tahiti, a new hotel in Las Vegas. It's a risky deal, since almost the whole cost of the construction of the casino has been financed with debt. But it yields 14 per cent.'
    'Now, that is a lot. I hope we can live with the risk. This is where you earn your crust.'
    I sincerely hoped so. Junk bonds, or 'high yield bonds' as they are sometimes more politely called, can be very profitable. They can also be very dangerous. The name 'high yield' comes from the high interest coupon that these bonds pay. The name 'junk' comes from the high risk that they represent. They are usually issued by companies burdened with high levels of debt. If everything goes well, then everyone is happy; the investors in the junk bonds get their high coupon, and the owners of the company make a fortune out of an often small initial investment. If everything does not go well, then the company is unable to earn enough cash to meet its interest bills and it goes bankrupt, leaving its junk bondholders and its owners with paper fit only for the waste-basket. The secret to investing successfully is picking those companies that will survive. This was where my experience as a credit analyst came in. Hamilton wanted to begin buying junk bonds, and he had specifically hired someone with credit skills to help him do it. I was looking forward to my first opportunity to display those skills, although I knew nothing about casinos, and was more than a little suspicious of Bloomfield Weiss's new deal.
    'Well, let me know how it goes,' Hamilton said. With that, he stood up and went back to his own desk.
    Debbie muttered something that sounded very much like 'Bastard!'.
    'What was that?' I asked.
    She looked up just for a second, her face still clenched with the effort of keeping control.
    'Nothing,' she said and bent over her calculator. The anger radiated from her desk.
    I looked at my watch. It was a quarter to twelve.
    'Look, it's almost lunchtime. Why don't we go out and get a sandwich?' I said.
    'It's too early,' said Debbie.
    'Come on,' I said firmly.
    Debbie sighed and threw her pen down on to her desk. 'OK, let's go.'
    We ignored the usual Italian sandwich shop over the road and instead walked to Birley's in Moorgate. Clutching our absurdly expensive turkey-and-avocado sandwiches, we walked on to Finsbury Circus.
    It was a gorgeous day. The sun was out and a gentle breeze ruffled the dresses of the secretaries who were making their way to the lawn in the middle of the Circus for a lunchtime's sunbathing. We found an empty patch of grass with a view over to the bowling-green. Young men in bright blue striped shirts and red braces were playing. The gentle murmur of relaxed conversation hovered over the lounging office workers scattered over the lawn, pale limbs and faces turned towards the July sun.
    We chewed our sandwiches in silence, watching the people go by.
    'Well?' I said.
    'Well, what?' said Debbie.
    'Do you want to tell me about it?'
    Debbie didn't answer. She leaned back on her elbows and raised her face to the sky, her eyes closed. Finally, she opened them and squinted sideways at me.
    'I think I should give all this up,' she said. 'Hamilton's right, I'm not suited to it.'
    'Bullshit,' I said. 'You are picking it up very quickly. You're a natural.'
    'A natural dilettante, according to Hamilton. I have the wrong attitude. Traders with my attitude are dangerous. They're careless. They lose money. Unless I improve my attitude, I have no future. And you know what? I don't care. I am damned if I am going to become an anally retentive Scottish robot, just so I can earn De Jong's clients an extra half a per cent. It's all right for you. He loves you. All that dedication and hard work. The sun shines out of your arse. But that's just not me. I'm sorry.'
    She looked away from me as she blinked away a tear.
    'Look around you,' I said, inclining my head towards the crowd of prone bodies. 'Do you think all these people