Derek Handley - Heart to Start

I had just over a million dollars riding on a handful of shares, frothing at the brim with debt. Both the investments and I were resting on a knife-edge. My target: to make $100,000 for myself and a lot more for my partners. Why $100,000? Because it sounded round and even with a ring of freedom, and it was enough to start my own business to do things how I wanted to do them. I was 22.

Sweating it out in a small Melbourne apartment in October 2000, we were visiting my girlfriend Mayas cousins and there I was, pretending to enjoy a holiday knowing that our financial future was hanging by a thread before wed barely begun. As the share prices started slipping I knew something was up, I just didnt know what.

I could have sold the ones that I had risked the most on, Fletcher Challenge Forests, for more than 90 cents a share just a few weeks earlier while rumours were flying of a lucrative takeover of the company. I would have done well, repaid all my debts and student loans and been left with $60,000 or $70,000. For somebody who had just started his first job at an after-tax salary of about $20,000 a year, that should have seemed all right.

But no. $100,000 that was the figure. At a buck a share Id sell and maybe I thought they were worth that. I had borrowed heavily, paying around 13 per cent interest, and every day that dragged on ate into my potential profits. I held on.

On 3 October the share price was not at its peak, but was still a respectable 80 cents. Just three days later it had tumbled to 72 cents, as people in the know seemed to think the takeover wouldnt happen. I still held on.

Then day after day, as the mystery of when the company was going to say something about its future became too much to bear for investors, the shares started to fall off a cliff. Without a lot of time to think, I started unloading chunks at 60 cents, 58 cents, 56 cents to hedge my losses to a break-even position until I was left with just over half my original holding. Hoping for a turnaround with the remainder, I still held on.

At this point I was still in control if Id quit right then I wouldnt have had a dollar to my name but that would have been the worst of it.

The next week we returned to Auckland. On 10 October the directors of the Fletcher Challenge Group announced the details for the breakup of the conglomerate and any hope went up in smoke. The energy division, in which I had the fewest shares, had the best outcome, being taken over by Shell for a huge premium over the price the shares last traded at; the building division was to be separated from the group and made independent because it was the strongest business; and after all the months of speculation of being taken over by one of the many parties swirling around like vultures, the directors stunned the market by confirming that nobody wanted to buy Fletcher Forests Limited. In what I thought was just a panic, the shares immediately plunged to 50 cents and the seven figures in my investment portfolio sharply turned into six. Still I held on.