A great game for stockbrokers is to look back at the top and bottom of the market with faultless wisdom and identify events that were in hindsight flashing "Top!" or "Bottom!" but were invisible to us at the time.
In 1987, my first wife and I were working at the same broking house. We were '80s stockbrokers earning a small fortune between us and the broker we worked for announced that it was offering all its staff a subsidised mortgage rate on three times your salary.
We bought a double-thatched cottage dating from the 16th century in Henham, a quaint English village up the M1, for #230,000, 5 per cent down with a 95 per cent mortgage at 8 per cent a year subsidised to 6 per cent, and in doing so moved out of London where we had grown up. It was the top. Two years later we were paying 17 per cent, the property market had bombed and we were divorced. (The house is now selling for #630,000).
On the divorce front by the way (and a lesson to us all), one of my mate's wives explained moving out to the country by taking me into her pantry. There was a map of London on a cork board and a few hundred little blue pins stuck in wherever one of their friends lived. At the point of maximum density was one yellow pin.
"That's where we live," she said, "and that's why we chose to live here. You on the other hand, did this." She took the yellow pin out of the board, opened the top window and tossed it out with all her might. "No wonder you're divorced," she said.
It's a great lesson for any of you thinking of a sea change retirement in some far-off land, because what really matters is not where you live but whether your mates are there to meet you for a drink, have a game of golf and a chat. Without that you only have each other. God forbid!
Moving on with the tops and bottoms. In the tech boom in 2000, I remember a morning meeting when one of the partners stopped an analyst midflight and said to us: "I have just looked at the commission numbers for the month. Some of you have had
record months. I'd just like to say that in all my years of stockbroking, it has never, ever looked any better than this."
The day before I had done $11,000 of commission in one day and it hadn't gone past me that if I could keep that up I would be doing $2.75 million a year and taking home $1.23 million. It was the very top and the start of the tech wreck.
I used to work for, and own shares in, Tolhurst Noall, a listed stockbroker. In 2007, after 150 years of stockbroking, it decided to spend millions of dollars on investment banking businesses, changed to Tolhurst Limited and started calling itself a "leading independent investment bank". It was the top for the market and the top for them.
By early 2009 this leading independent investment bank had fallen from 54? to under 1?, sold its best assets at a bargain price and sent the value of my shares and those of many other employees close to oblivion.
Other signs of the top of the market included the broker Wilson HTM listing at 200? just before the GFC, in June 2007 and brokers Bell Financial Group and Austock listing at 200? in December 2007. Just over a year after listing, Wilson HTM hit 18?, Bell Financial Group was 37? and Austock, 15?. Who says brokers can't time the market? And fund managers can do it, too. Platinum Asset Management listed in May 2007, hit 911? and was 260? a year later.
So what about the market now? Austock has been plucked from oblivion by the broker, Intersuisse, and is now called Octa Phillip. Bell Financial is back to within a whisker of its all-time low. Baillieu's says its the toughest market since the 1960s and, if you needed any more convincing that we are close to the bottom, Wilson HTM is thinking of delisting with an $8-million loss on the cards for this year. A broker delisting. Surely a sign.
When our lack of confidence at the bottom matches our overconfidence at the top, that's when you buy.
Marcus Padley is a stockbroker with Patersons Securities and the author of the stockmarket newsletter, Marcus Today. His views do not necessarily reflect the views of Patersons.
Frequently Asked Questions about this Article…
What does the article say about struggling brokers and why might that signal a market bottom?
The article argues that when brokers themselves are struggling — cutting staff, facing big losses, or even contemplating delisting — it can be a contrarian sign the market is near a bottom. Examples cited include brokers hitting very low share prices after recent listings, a broker facing an $8 million loss and thinking about delisting, and commentators calling it the toughest market since the 1960s. The idea is simple: extreme pessimism in an industry that thrives on market activity can indicate prices are oversold.
How can investor sentiment extremes (overconfidence and lack of confidence) help everyday investors spot market tops and bottoms?
The author highlights that overconfidence — like the exuberance in the tech boom when brokers celebrated record commissions — tends to mark market tops. Conversely, deep pessimism, such as brokers collapsing or listings plunging, is often evident at bottoms. The practical takeaway: when widespread overconfidence turns into widespread fear, it can present buying opportunities for patient, contrarian investors.
Are broker listings and delistings reliable indicators to time the market?
The article uses broker listings and delistings as notable signals rather than foolproof timing tools. Several brokers listed near market peaks and saw their share prices plunge a year later, and a contemplated delisting with a large loss is presented as a strong sign of distress. Still, the piece implies these are one of several warning or contrarian signals — useful to watch but not the only basis for investment decisions.
What historical examples from the article illustrate the danger of buying at market tops?
The article recalls several personal and market examples: during the tech boom the author earned huge commissions right before the tech wreck; in 1987 the author bought a house on generous mortgage terms shortly before rates and property prices turned; and Tolhurst Noall rebranded into investment banking at a market peak and then collapsed, wiping out shareholder value. These examples show how easy it is to mistake a hot market for a sustainable trend.
What happened to specific brokers mentioned in the article (Tolhurst Noall, Wilson HTM, Bell, Austock/Octa Phillip, Platinum)?
The article describes several outcomes: Tolhurst Noall shifted into investment banking at a peak and saw its value fall sharply thereafter; some brokers that listed near the top suffered large share price declines within a year; Austock was later acquired by another broker (Intersuisse) and renamed Octa Phillip; Bell Financial Group and Wilson HTM fell to much lower levels after listing near the peak; and Platinum Asset Management rose quickly after listing and then fell back significantly a year later. These examples are used to illustrate how broker fortunes can mirror market cycles.
How should everyday investors use the article’s advice about brokers and market cycles in their own portfolios?
The article’s core advice is contrarian: pay attention to extremes in sentiment among brokers and fund managers. If the broker industry shows extreme weakness and investors are broadly fearful, that could be a buying opportunity. But the piece implies using this signal alongside other analysis — don’t rely solely on broker distress. Keep diversification, risk tolerance, and long-term goals front of mind.
Who wrote the article and what perspective does the author bring on stockbroking and market tops/bottoms?
The article is written by Marcus Padley, a stockbroker with Patersons Securities and author of the newsletter Marcus Today. He shares first–hand anecdotes from his broking career and uses those experiences to illustrate how market euphoria and despair often mark tops and bottoms. The article notes his views don’t necessarily reflect those of Patersons Securities.
Why does the author use personal stories about commissions, mortgages and friendships to explain market behavior?
The author uses personal anecdotes to make the lessons about market psychology concrete and relatable. Stories about record commissions in the tech boom, a mortgage buy at the 1987 peak, and social choices around moving country demonstrate how human behaviour — overconfidence, herd mentality and later regret — drives markets. The message: emotional extremes among market participants often coincide with the best opportunities to buy or signals to be cautious.
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