Financial journalists had a front row seat to the brash show
Just days after hearing Wall Street gurus lecture me about why the bull stockmarket would last, the headlines in Le Monde said it all: Lundi Noir, La Crise sur la Marches.
I was in the Dordogne region in the south of France on vacation, after a tour of Wall Street in which, to a person, economists at the respective investment banks warned of problems and the equity strategists shook their heads, saying the five-year bull market would keeping running.
The economists were right but they lost their jobs.
About 3.5 seconds after reading about Black Monday I decided to stay on holiday and get married, not return to my job writing the Chanticleer column for another paper. It was a good call. The markets bounced and fell again but the fallout in corporate Australia would last for years, bringing an end to a debt-fuelled binge which has not seen its like since.
There would be debt binges but no repeat of the cast of characters who ruled Australia in the 1980s.
Just days before, my stay at the Plaza Hotel in New York bought mixed news that the late Robert Holmes a Court had acquired the Australian Financial Review.
The expense account had a run but, at the same time, my mind ventured into what it would be like working for a man who had his fingers in just about every corporate pie in the country.
The Plaza was also the home to the famous 1985 accord between the United States, Germany, Japan, Britain and other countries which agreed to co-ordinated action to lower the value of the US dollar.
It didn’t work, and by October 1987, as the US economy suffered, accordingly the five-year bull market continued while manufacturing jobs were shed.
Something gave. In the end it was electronic trading that copped the blame for the dramatic collapse that cut stock prices by 31 per cent in the five days to October 19.
The fact the S&P 500 was trading on price earnings multiples of 23 times against an average of 14 times was barely mentioned.
Holmes a Court’s empire unravelled in the years to follow, as did those of the likes of John Elliott, Christopher Skase, John Spalvins, Alan Bond, Laurie Connell, Bruce Judge, Larry Adler and George Herscu.
As a financial journalist this was a magnificent era.
Just two years earlier then high-flying investment banker Graeme Samuels negotiated the peace deal between Holmes a Court and Elliott which brought to an end the $2.7bn battle for Australia’s biggest company, BHP. BHP is now worth over $130bn.
The two owned a combined 48 per cent of the company and while Holmes a Court was a maverick, Elliott was federal president of the Liberal Party and mooted as a future prime minister.
The long lunches at his Jam Factory office in Melbourne with top quality red, meat pies, chips and cigarettes still loom large, as do the hours on the phone with Holmes a Court and Ron Brierley trying to work out whether they would “buy, sell or hold.”
New Ardent leisure chair Gary Weiss is one of the few corporate survivors of that era still chasing value along, with the likes of legends Frank Lowy and Rupert Murdoch.
But Lend Lease chair David Crawford, Rabobank chair Bill Gurry, Samuel, and his juniors like former AMP chair Simon McKeon and outgoing Bendigo chair Robert Johanson along with then NAB banker Don Argus, are to varying degrees, still prominent.
As are lawyers past and present including John Atanaskovic, David Gonski and John Green.
The question everyone asked then is still asked today, and that is, will we learn our lessons from the crash? And for most the answer is in the negative.
The Plaza Hotel in New York