A Conversation with Robin Shaw

The first time I met Robin was in 1982, just after S&W Berisfords, the parent company of J H Rayner, had bought British Sugar. Robin hosted sugar traders to a buffet lunch to celebrate the purchase, and I remember briefly chatting with him. I also remember that they had put enormous sugar beets on the lunch tables. It was the first time that I had ever seen sugar beet.

“Ephraim Margulies was the head trader at J H Rayner,” Robin told me. “But he was more interested in cocoa than sugar. Everyone called him ‘Old Man Marg’. He was a hard taskmaster. When he took over British Sugar, the then chairman was heard to say: “The next time he comes round here, we will switch off the lifts so that the bugger has a heart attack climbing the stairs”.

“I remember once,” Robin continued, “Our little sugar team were bullish, and we went to see Marg to ask him to extend our trading limit. He said, “So you think this market’s got a bottom, do you?” “And we all said, “Yes, that’s it. It’s at the bottom.” And he replied, “The only bottoms I’ve ever seen had holes in them.” He was completely right. The market then collapsed. He was very, very clever.”

“I had joined Rayner in 1980,” he said. “It was a bitter experience which drove me to drink. I drank to celebrate success and to drown the pain of failure. I returned to Sucden after five years, but Sucden had changed out of all recognition. And so had I. I had become an alcoholic. It was a hard-drinking atmosphere in London at that time. I don’t know how we all survived. I only did, thanks to Alcoholics Anonymous.

“But why did you leave Sucden in the first place?” I asked. “You had been there for eight successful years.”

“It was a pure misunderstanding,” he replied. “Maurice Varsano had started trading coffee and moved me to the new coffee desk. He viewed it as a promotion. I viewed it as a demotion. I wanted to stay in sugar and left to go to JH Rayner in London.”

“And you went back to Sucden in 1985?” I suggested.

“Yes,” he replied. “Maurice had died, and his son Serge had taken over. It was all about Cuba and Russia. Serge had a genuine relationship with Mr. Krivenko from Prodintorg in Russia and Mr. Lezcano in Cuba. They liked each other, and they trusted each other.

“Serge was never a speculator. He didn’t like speculating, so he let us do it almost as a hobby. Sucden made money by doing big deals. We gave the Russians what they wanted: the safety of knowing they would get enough sugar to supply their domestic demand. We gave Cuba finance that kept them stumbling on.”

” Colt Bagley, previously head trader at Cargill and Philipp Brothers, started physical brokerage in 1990,” he said. “He came to Paris, and we had lunch. One of the head traders asked him who he had the best relationships with as a trader.

“He said, “What do you mean? We didn’t have relationships. If we were cheaper, we sold. If we were more expensive, we didn’t.”

“No, no,” she replied. “That’s not how it works. Trading works through friendship. We genuinely became friends with the Russians.”

“I left Sucden in 1992,” Robin continued. “I set up Czarnikow Rionda with Danny Gutman. We resurrected the name. It’s a sombre story. We quickly made a lot of money. We thought we were clever, and then we were foolish.

“We lent money to Brazilian mills against future supply, but they didn’t supply. We bought put options from a Chinese company, but they failed to honour the contracts when the market collapsed. Czarnikow Rionda went into bankruptcy in 2000, and I downgraded to becoming an analyst.”

“But didn’t you trade for yourself at one stage as an independent?” I asked.

“I sold my house in London and speculated with the proceeds. I learnt a useful lesson: I am a bad speculator. Robert Kuok once said that good speculators are born, not made. It is a question of character. To be a good speculator, you must be quick to change your mind. You must not be married to your opinions. Vain people don’t make good speculators, and I’m rather vain. I think I’m right, and the market’s wrong. Humble people make good speculators. Maurice Varsano always used to say that sugar is a school of humility.

Marex approached me, and I joined as a trader,” he continued. “I proved for a second time that I was a bad speculator. But they kept me on as an analyst. Once I’d sold my house in London, I was practically destitute. I made much more money from houses than I ever did out of sugar.”

It made me think of my grandfather on my mother’s side. One of my earliest memories was catching a bus with my mother every Wednesday to Hastings, where her father and mother lived in a one-bedroom flat above a newsagent.

My mother’s parents were constantly moving, and she attended sixteen schools before she was sixteen. She lived in cities as diverse as Buenos Aires and Buffalo in New York and used to tell me stories about living in vast houses with maids, cooks, and chauffeurs one day and the next day having to share a bed with her sisters when they moved the next day. Her parents were married in Manaus, Brazil, and he (and his father) made and lost fortunes in the rubber trade.

My great-grandfather was a sea captain. San Francisco awarded him the freedom of the city when he turned his ship’s hoses on the fires that sprung up after the great earthquake in 1906. Her father finally lost all his money when the Argentinian leader Peron threw the British out of the country and nationalised the British-owned railways after the Second World War. My grandfather had put all his money into the railways and a British project to build the Buenos Aires underground system.

That’s all I know – and, unfortunately, all I will know – about him. Even so, I still considered him a role model. When I left university, I had a choice between two careers: banking and commodity trading. I chose the latter because I thought it would be more exciting: I liked the idea of alternating between rags and riches, but I would have hated the reality of it. It seems that this was what Robin had done throughout his career.

“When I started at Cargill,” I told him, “they put me on the futures desk in Minneapolis, managing big positions. Everyone talked about beating the market, but I quickly learned it wasn’t about beating the market. It was about beating my emotions.”

“Right,” he said. “And with one addition: a good speculator regards the market as his friend, something he loves. I used to regard the market as my enemy. I wanted to prove that it was wrong and that I was right. It was the wrong approach.”

“What advice would you give somebody wanting to become a speculator?” I asked.

“Find out quickly if you have the right character,” he replied. “And if you don’t, get out quick. There is nothing sadder than seeing intelligent, hardworking people losing money and being swept aside by some brash young idiot who makes money. So don’t fight that you may not be a good speculator. Learn about yourself.”

I always felt that the job satisfaction of being a trader was terrible. If you get the market right, you either get out too early or too late, or you don’t have a large enough position. And if you get it wrong, then you lose money. Robin agreed.

“It’s just awful,” he told me. “When my son left university, he was looking around, unable to decide about a career. I said, “Why don’t you do my job?”  And he said you must be crazy. You come home green every night.”

“What’s the difference between being an analyst and a trader?” I asked.

“You don’t have to pay for your mistakes if you’re an analyst. You merely have to say you got it wrong, that you’re very sorry about last week’s report, and then move on. The two emotions, greed and fear, that drive markets apply much less to analysts. You are not as emotional as an analyst. You look at the market in a more cold-blooded way and weigh it up more rationally.”

Listening to Robin, I realised he and I have a similar trajectory. I started as a trader and became a broker and then an analyst.

“It’s a bit like teaching,” Robin said. “Those who can’t do, teach. And those that can’t teach, teach teachers.”

“Now that you are an analyst and not a trader,” I asked Robin, “Would you recommend your son today to go into commodity business as an analyst?”

“I think it helps to have been a trader if you want to be an analyst,” he replied. “It is almost better if you’ve been a bad speculator because you can probably understand better what works. It would condemn him to ten years of misery, losing money as a speculator before entering that calm haven of analysis.”

“But do you think you must have traded sugar to be a good analyst?” I insisted.

“It certainly helps,” he replied. “The only thing that matters is what will push the price up and down. And if you’ve been a trader, you instinctively know it’s the money. You follow the money. An analyst tends to get involved in intellectual conjectures and likes to prove a point or looks at it from an economic point of view.”

“How did you get into commodities in the first place?” I asked him.

“I studied Russian and French at Oxford,” he replied, ” I was a Trotskyist by the time I left. I wanted to get to know the working class and got a job in a factory in Leeds, where I learnt that the working class didn’t like me, and I didn’t like them. I decided to get a proper job, and my father helped me get one in the City in vegetable oil brokerage. My father was a diplomat.

“I wanted to use my language skills and applied for a job with Sucden in Paris. At the time, the sugar trade houses never traded with each other – they concentrated on brokering government-to-government deals between exporters and importers. Vegetable oils were more about trading – and the various trade houses traded with each other. I had the bright idea that this could be applied to sugar. I went to Paris for an interview and got the job.

My daughter, Charlotte, recently interviewed Robin for her ECRUU podcast and asked him to describe a typical workday as an analyst.

“I don’t want to,” he told her. “I’d get the sack.”

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Click here to listen to Charlotte’s ECRUU podcast with Robin