Cobra in the Bath

by Miles Morland

  It was a miserable time, but out of the misery came some good. I wanted somewhere to take Tasha and Georgia at weekends. I had moved out of the house on Ham Common and was living in a small flat in Chelsea with one bedroom and a fold-out sofa for the children in the sitting room. One weekend I found myself with nothing to do. I have always loved Romanesque and early Gothic cathedrals, believing them to be the finest works of art of Western man, and I had never seen the great cathedrals of East Anglia, so I set off to spend a weekend visiting Ely, Norwich and Peterborough cathedrals. In between Norwich and Ely I took a detour along the north Norfolk coast. I had never been there before. The marshes and the creeks and the little sailing villages with their flint and brick houses took me back to Tollesbury and the Blackwater estuary in Essex. I had been happy there. The wild, elemental Norfolk coast was balm to my bruised soul.

  Next weekend I was back in Norfolk with Tasha and Georgia. I had spoken to estate agents and we looked at houses. Then we saw Shipley House, a red-brick Queen Anne-style house with a small garden in Westgate Street in Blakeney, one of the prettiest of the north Norfolk villages. Shipley House was two tiny fishermen’s cottages which had been joined together and had a posh brick front added.

  I fell for it instantly. I looked at the girls, tired and restless after a day’s house-hunting. They had perked up.

  ‘This one’s a yes, Daddy,’ they both said. I bought it.

  I would retreat to the house at weekends like a wounded animal. As soon as I got near Blakeney I would turn off the car radio, wind down the window and smell the air coming in from the sea and the marshes. I felt my spirits lighten. And the girls liked it. Initially I had no furniture, just a bed in my bedroom, a folding card table and one chair, supplemented by a garden table with two benches.

  Tasha asked if she could spend her twelfth birthday there. I was delighted. I rented a minibus and drove up with Tasha and five of her friends from Putney High School, all girls. I told them to bring sleeping bags as they would be sleeping on the floor. I had a sixteen-foot Wayfarer sailing dinghy designed for three people. All seven of us went out in the dinghy with girls falling over the side, girls dragging in the water behind and girls rocking the boat from side to side. Before we went out I mentioned to Perry, the son of Stratton Long, the ships’ chandler from whom I had bought the Wayfarer, that I had six girls sleeping on the floor in Shipley that night. When we got back I found six mattresses stacked in the sitting room. Perry had been around the village and collected them for us. At the time I hardly knew him. I realised then that Blakeney, and Norfolk, were special.

  Guislaine had become interested in therapy, triggered by the visits we had made to Dr Cobb, and gained some insights into our marriage which may have put things in a different perspective. We began to see more of each other. The weather between us changed, the clouds blew away and we remembered why we loved each other. Almost three years after our break-up we remarried.

  I was still working hard at First Boston but the weather there had also changed. CSFB, our much larger affiliate, was in the same building. It was staffed by brilliant people and run by a Napoleonic German, Hans-Joerg Rudloff, who thought that the way to get the best out of your employees was to create as much tension as possible between them. I liked being independent of CSFB. I had become a partner of First Boston in New York and reported there, not to Rudloff.

  But First Boston was in trouble. It kept on making gigantic financial bets and getting them wrong. Credit Suisse usually bailed it out, but by 1989 it was obvious that the days of independence were over and that the whole of First Boston was going to be taken over by Credit Suisse. I had no wish to work for Credit Suisse so in June 1989 chucked up my job. My partners at First Boston thought I must have secret plans to go and work for one of its competitors because otherwise why would I walk away from a partnership at a great Wall Street firm? One of my partners offered to put me in touch with a psychiatrist.

  The truth was I had no idea what I was going to do with the rest of my life. My sole ambition was to be free and not to work for anyone else ever again. Guislaine, who had remarried a well paid banker, now found herself attached to an unemployed man who seemed in no hurry to get a job. Luckily my salary, though a fraction of what bankers later came to be paid, had allowed us to pay off our mortgage and put aside money for the children’s education. We had enough money saved to survive for a couple of years, but after that I was going to need to find a way of earning a living. Guislaine must have worried about what I was going to do, how I was going to support the family and what my not working meant for us as a couple. She was as much affected by my resignation as I was, but she never gave me anything but support and encouragement.

  How well I remember the intoxicating feeling of freedom that came with giving up my job. It was like how coming home from school for the holidays had been. The first thing I wanted to do after twenty-two years chained to a desk shouting down a phone was travel, move around, explore, have adventures . . . But Guislaine hates the idea of travelling and moving around; she likes being places, not getting to them.

  ‘Why don’t we go on a walk?’ she said.

  ‘Yes, that could be fun. But we’d need to start and finish somewhere. We couldn’t just walk aimlessly about. Walks need a beginning and an end.’

  After a few false starts we hit on the perfect walk: Mediterranean to Atlantic, sea to sea. We would walk across France. We would start by dipping our feet in the Mediterranean then shoulder our packs and strike out for the Atlantic, some 500 kilometres away. I stretched a bit of string on the map across the waist between France and Spain to find the shortest way but this took us over the Pyrenees. No, thank you. We wanted to amble gently through fields and along placid streams. We had no interest in climbing Europe’s second-largest mountain range. I moved the bit of string a little to the north, where the Pyrenees would be no more than a blur on the horizon, and there, we had our route. We would start at Gruissan-Plage, near Narbonne, on the Mediterranean, and we would hit the Atlantic at, well, just about anywhere the wind blew us but probably somewhere north of Biarritz.

  We were equally excited and equally appalled by the magnitude of the undertaking. We were going to walk with backpacks the whole way, no cheating and no cadging lifts, but were hopelessly unfit; we had not walked much further than from a restaurant to a waiting taxi in recent years. Neither of us remembered ever having had a backpack, while Guislaine, being half-French, did not believe in outdoor exercise and had never even owned a pair of tennis shoes. This would be a huge physical challenge for her. I at least had been fit in my rowing days.

  We had only remarried a year or two before. Would this adventure blow our revived marriage apart? Or bring us closer together?

  I walked out of First Boston at the end of June 1989 and a week later Guislaine and I landed in Toulouse. We got a train and then a taxi to Gruissan-Plage, where we dipped our feet in the Mediterranean. Twenty-seven days and 550 kilometres later we ran down the last great dune before the Atlantic at Capbreton, cast our packs on the sand and stood hugging in the Atlantic surf, tears streaming down our faces, as happy as we had ever been.

  I later wrote a book about our walk and what had led up to it. Most authors hate their publishers; I loved mine. Instead of positioning the book as a cutesy travel book they promoted it as a lifestyle book: ‘frustrated middle-aged bloke gives up job and buys backpack’. The world is filled with blokes who’d love to give up their job and buy a backpack. Thanks to this brilliant marketing many of these frustrated people bought the book, or their wives bought it and gave it to them. The Man Who Broke Out of the Bank got to number five on the Sunday Times best-seller list and came out in the US and a number of other countries in translation. I treasure the Japanese edition, which has a drawing of Guislaine and me walking along a French country lane on the cover. We are both coal-black.

  The Walk showed me that now I was free my options were infinite. I had spent twenty-two years half-asleep working for
other people. Now I resolved that, unless driven to it by bankruptcy, I would not work for anyone else ever again. I was free. I could do anything I wanted. The question was what.

  *Kuhn, Loeb and J. P. Morgan were once the two dominant firms on Wall Street. In the first half of the twentieth century KL had transformed America. Two partners, Otto Kahn and Jacob Schiff, had been the main financiers of the US railroad system and another, Paul Warburg, created the Federal Reserve. When I worked there it was living off its reputation, and later it suffered the ignominy of a forced merger with what its partners saw as the upstart firm of Lehman Brothers.

  18

  The Garden Shed

  I now needed to earn some money or I would find myself having to knock at the door of Morgan Stanley or Merrill Lynch and ask for a job. I thought about becoming a writer. The Man Who Broke Out of the Bank helped to plug the hole in our bank balance so we could survive a little longer, and I did odd pieces of journalism, which brought in a tiny amount of extra money. I was astonished to find out how badly journalists are paid. People who have worked in the financial world are always astonished to find out what people who work in other areas are paid.

  I thought of other things to do. I have always been obsessed by stock markets. Once you get to understand a little about them they can become absorbing, like an infuriatingly complex game whose rules change as soon as you think you’ve learned them. They are about big emotions – fear, greed and panic – and have little to do with numbers. My other obsession is being bloody-minded. I hate being told what to do, which could explain why boarding school was such a failure, and I love doing the opposite of what other people think is a sensible idea. Maybe one day I shall write a book called The Expert Is Always Wrong. Because experts are experts in what worked yesterday, they are challenged and proved wrong by something new which comes along and upsets the world in which they got their doctorate. This is why none of them foresaw the end of communism or the advent of the Arab Spring.

  When I was at First Boston I had become involved in what later came to be called emerging markets. In the 1980s few non-anglophone countries had functioning stock markets; places like Spain, Austria, Portugal, Greece and Finland had markets with one or two stocks that traded very occasionally. Such markets had become moribund during years of nationalisation and socialist orthodoxy, but as privatisation became the way of the future, they would be needed again. It was apparent that pioneer investors, people like George Soros and Jim Rogers, who did their research and invested early in these fledgling markets, later did extremely well when the markets were discovered by other investors. I was intrigued. What was the next set of markets waiting to be discovered? I needed to do some research.

  Shortly after the Walk Guislaine and I sold our grown-up house on a London square and moved to the ‘This one’s a yes’ house in Blakeney that the children and I had bought a few years earlier. By now it was more or less fully furnished. Living there full time was going to be very different to using it as a weekend house.

  Guislaine and I loved Blakeney with its wild big sky, its giant flocks of winter geese and duck, sea lavender, the marsh and the creeks, and beyond, a long dune which separates a fifteen-mile beach of sand and shingle from the marshes. In summer the sand shimmers like a beach in the Bahamas and in winter the North Sea crashes brown and angry on the shingle. Year round a colony of several hundred grey and white seals with whiskered Labrador faces stations itself on the sands of Blakeney Point.

  Blakeney had grown rich in the thirteenth and fourteenth centuries on the wool trade with Holland, but then the harbour silted up, the trade died out, the railway never came, and Blakeney, along with its neighbours Cley and Morston, was left unspoiled. It has been going gently downhill for 600 years, although today it has enough dinghy-sailors, marsh-walkers, and bird-watchers to keep it ticking along. Once a day the tide floods in along the creek and everyone rushes down to launch their dinghies; two hours later they are close-tacking back up the creek hoping to get home before the falling tide strands them on the mud. Just like Tollesbury so many years ago.

  Despite the lack of a job I needed somewhere to work in case I found something to do. We put up a shed in the garden. This became my office. I spent most of 1990 getting in touch by mail – no email then – with stock markets all around the world, everywhere from Iceland to Fiji to Ghana. For the seeker of the next markets to emerge it soon became apparent that most had already been discovered. The Far East and South East Asia were top of everyone’s list; Latin America had been well explored; India and Pakistan were coming on to investors’ screens; and above all Russia and the countries of Eastern Europe that had shaken off communism were acting as a magnet to pioneering investors. My old firms CSFB and Morgan Stanley were thundering into Russia and Eastern Europe. Where Napoleon and Hitler had failed, Hans-Joerg Rudloff and his CSFB troops hoped to succeed. These were not places for an unemployed bloke in a Norfolk garden shed to compete with the heavy squad from Wall Street and the City.

  However, my research threw up an interesting fact. Two parts of the world were being shunned by everyone. No one wanted to invest in Africa or the Middle East. Africa was perceived as an economic black hole and the Middle East as a hotbed of Islamic terrorists. No one from outside had any interest in investing there. This insight did not hit suddenly but gradually crept up on me as I found out more and more about fledgling markets around the world.

  In 1990 Africa and the Middle East were true virgin territory. Bingo, Miles, I thought. These are the places for you. I mentioned the idea to one or two people and was greeted with derision: there were no functioning stock markets; there was nothing worth investing in; what a waste of time. Go to Thailand, Brazil, Argentina. So, carried along on a tide of derision, I set off for Africa and the Middle East.

  I knew the Middle East from my childhood but had never been to Africa. I contacted companies, stock market officials, finance ministers and privatisation overseers. But just turning up and saying, ‘Hi, I’m Miles,’ was not going to impress the local Big Men, and if Africa and the Middle East have one thing in common it is that they are places where you need to be a Big Man or you are nothing. I was not a Big Man so I needed to be a company. Thus Blakeney Management Ltd was born. I appointed myself chairman and designated the garden shed its international headquarters. It had no other employees, but no one in Africa or the Middle East knew that; in 1990 they couldn’t google me or Blakeney Management because Google did not exist. At this point I was not sure how I was going to make a living out of discovering African stock markets, particularly as the experts told me there weren’t any that functioned.

  Visiting African markets in those first years was intoxicating. In 1990 the Cairo Stock Exchange, for instance, was a grand circular marble hall with ornate pillars in which sat three old men wearing fezzes, sipping Arabic coffee and dreaming of 1955. They were wondering whether there was going to be a trade that week. The answer was almost certainly not. Hundreds of companies were listed, but most were now owned in their entirety by the government as a result of Nasser’s nationalisations, so there were no shares in public hands to trade. Of the few which did trade I had read that only one, Suez Cement, was open to foreigners.

  I asked one of the three be-fezzed brokers if I could buy some shares in Suez Cement. He looked at me as if I had just lowered my trousers and asked my interpreter to repeat the question; it seemed I was the first foreign investor he had ever met. He summoned the other two brokers. For five minutes the three elderly men shouted at each other and gesticulated at me. The youngest of the three, a man possibly in his early nineties, then wrapped his arm around my interpreter and whispered urgently into his ear. Following this he bowed to me and gave me a big smile. ‘You are welcome, mister, most welcome.’ ‘Good. Can I buy some shares in Suez Cement?’ I asked the interpreter. ‘Of course, no problem. He say always you can buy these shares.’ ‘Thank you, excellent. Well, let’s buy a hundred to start with just to see if this is going to work
.’

  The interpreter conveyed the request to the broker, who spoke quickly to the interpreter and then flashed me another smile and a couple more ‘most welcomes’.

  ‘Is not possible today,’ said the interpreter. ‘You, foreigner.’

  ‘Yes, yes, I know I foreigner. But Suez Cement is open to foreigners.’

  ‘Of course, no problem, mister. But not possible.’

  ‘Why?’

  Another hurried consultation. Fezzes wagged dangerously.

  ‘Technical problem.’

  At that time the only functioning markets in Africa were Johannesburg and Harare but neither was accessible to foreign investors. Harare was open only to Zimbabwe residents until late 1993, and Johannesburg had put itself off limits because no one would invest in a country that practised apartheid.

  I trotted off to Accra, Casablanca, Nairobi, Amman, Abidjan, Bahrain, Oman, Tunis and any other place that purported to have a stock market. In most places the people I met could not work out what I was up to. They assumed I was attempting to seize control of local companies because why else would I be asking these questions about them? The idea of a foreign investor just buying some shares in the hope that they might go up in value was completely unknown to them. But when I turned up again a month or two later people were intrigued to see the nosey foreigner back and began to open up; I forged a number of friendships, which continue to this day, with smart young people who, like me, were starting their own firms to do things on the stock market.

  I needed to make a living and, wondering if anyone would pay me for the knowledge I was building up, went to see some of the emerging-market investors I knew from my days working for Wall Street firms. The first serious investor I approached was the legendary Barton Biggs, founder of Morgan Stanley Asset Management and a fanatical investor in emerging markets. I knew Barton from my time at Morgan Stanley. We had lunch in a Morgan Stanley dining room on Sixth Avenue at noon. You had to be quick with Barton because at 12.45 p.m. he went to the gym.