Following the 1980s' economic liberalisation, most banks engaged in this activity, employing highly paid purported experts. Subsequently many incurred massive losses, one long established British bank even being wiped out. Some losing dealers, now pejoratively labelled rogue traders, were imprisoned, although the now famous bank-destroying one thereafter made a very good living on the international speaking circuit.
In accord with the anything's-possible, sky's-the-limit spirit of the eighties, a foreign exchange trading company set up in my Wellington headquarters building, speculating on clients' behalf.
The principals had the harebrained theory, such ideas abounding at the time, that young Maori girls had a special flair for this and employed a swag of them, coincidentally all pretty, who we would lure up to our office for day's-end drinks. Pointlessly, however, for off they'd go to beaver through the night, trading in the foreign money markets.
That company met its inevitable tearful end as it's a closed shop game in which profits are matched by corresponding losses. In fairness it's also a vital financial system activity, indeed it's how John Key made his wealth. As with all large-scale speculative activity, it provides an all-important constant market, enabling forward price guarantees for exporters and others, and smoothing out price fluctuations. But it's a high-risk activity, and certainly not for mums and dads to speculate in, more so given economists' notorious inaccuracy on forward currency movement predictions.
The word "investment" is one of the most abused in the English language, being applied to an astonishing range of bad propositions. Our cities are cluttered with poseur commission agents, struggling to pay the phone bill but with business cards calling themselves investment bankers. One favourite is the Bradford Exchange, an American outfit which periodically advertises spectacularly bad taste creations as "collectibles", the inference being possessing investment merit - a preposterous claim, in my opinion, with their objects.
So too the flogging of easily created sporting memorabilia, although the market appears to be waning as few were flogged by the commentators during the last Ashes series.
On the other hand, genuine sporting memorabilia fetch huge sums. Muhammad Ali's gloves which he wore against Sonny Liston recently sold for a million dollars and, a week later, $400,000 for those he used in the first Frazier bout. Likewise with items belonging to past famous figures, as constantly reported in the newspapers. These are still essentially speculations as evidenced by the art world when artists fade in favour and the value of their work dives.
American bookshops have large sections devoted to the attainment of instant wealth, often bearing the contradictory word "secret" in their title. Most pertain to the share market or residential property, yet for all of the hype, where are the rich residential investors? Earlier this year I labelled the flaw-ridden house-speculating proposal of something called The Dunn Fund as The Dumb Fund. The promoter pulled it off the market. He's bided his time and is now relaunching it.
Mindful of the famous adage "there's a sucker born every minute", nothing will change. Incidentally, this was not said by the great showman P.T Barnum as widely believed, but about him by a disgruntled rival. Despite the odd fake mermaid, Barnum brought great pleasure to the public and was a decent man, which cannot be said of many modern day "investment" promoters.
