It was after he entered Narwee Boys High that another important turning point came for the introverted youngster. At the age of 12 his brother Peter taught him to play chess. It was to change his life.
“I was pretty unhappy the whole time I was at high school, but chess made me feel a bit better.” Richard says, “Suddenly I really started not to believe the negative things I felt about myself”.
For Richard, the game that started out as hobby soon became a passion and he quickly rose to the rank of Junior State Champion. A whole new life opened up as he travelled the country attending chess tournaments, making new friends and finding a previously unknown confidence in his ability. Years later he would represent Bermuda and Monaco in the Chess Olympics.
After high school Richard decided to study economics at the University of New South Wales, and by topping an exam he won a generous scholarship from the Australian central bank. He graduated with first class honours in economics and econometrics but decided against doing a PhD, and chose instead to accept a job offer from the leading Australian investment bank of the time, Bankers Trust Australia.
Still shy and lacking confidence, the 23 year old began working in the derivatives business for the then CEO who reportedly told colleagues he doubted the youngster would ever succeed and that “if he makes a buck for the bank, I’ll walk backwards to Bourke”. That’s nearly 800 kilometres from Sydney.
Richard ended up becoming the bank’s biggest single money earner.
In his 1999 book, One of a Kind: The Story of Bankers Trust Australia 1969-1999, writer Gideon Haigh described Richard as “one of the most fascinating characters” to pass through the investment bank:
“As he began taking more views and more risks, Farleigh’s earnings and reputation grew. He evolved some first principles of trading. Markets tended to overreact in the short term and under-react in the long term. Investors tended to work off price rather than fundamentals.
He was militantly against chance. He was also out of sympathy with other trading schools reliant on data mining and regression analysis. His modus operandi was forward-looking - if a, then b, suggesting c - and his mentality that of a purist:
‘I hated it if you put a position on and it just happened to work, because I felt that left you with nothing for next time. I didn’t like charts, either. That was hocus-pocus. I was a fundamental trader. That’s much harder than being a technical trader.’ ”
In the book, Richard’s former boss, Bruce Hogan, recalls:
“Richard always had a very clear view of how the market would unfold. And, when it didn’t go according to expectations, his disciplines getting out were intense. Even when Richard made losses, I was always impressed with the rigour of his post-mortems. Was it a bad decision? Or was it actually still a good risk-return decision where something of a lower probability happened?”
By 1993 Richard was in his early 30s and earning a seven figure sum as the star trader, when he was headhunted for a powerful and secretive international hedge fund based in Bermuda. On this idyllic island tax haven he was able to refine the crucial trading style which he had been developing at Bankers. He described his three years here as “trader’s heaven”.
He did well enough to retire to Monaco at only 34 with his then wife Sharon and baby son Thomas. From this tiny tax haven filled with wealthy individuals from around the globe, he began to look for other opportunities to make money outside the strict constraints of the trading floor. So he turned his hand from currencies and interest rates to UK tech stocks and in the following years he backed over 50 early stage companies.
By the time the ‘tech wreck’ began in 2000, Farleigh had been investing in technology for five years. While he was hit by inevitable and difficult losses, his earlier profits provided him with a crucial buffer, and with the recovery of the market, some of his companies now read like a who’s who of new market listings in UK technology.
While he was pursuing this investment activity, another, totally different opportunity presented itself in the form of Home House. This architectural masterpiece, which had once housed the French Embassy during the Revolution, was on a list of the world’s 100 endangered buildings. The idea was to restore the building and to make a fantastic private members’ club.
“It would be nice to be an Australian saving one of the Pommys’ endangered buildings”, he said with a touch of the larrikin.
And it worked. The club soon became the most sought after venue in London, with a celebrity-filled membership list including Madonna and a host of numerous high profile functions including a big ‘Brit Awards’ after-party. Even though Richard and his partners sold out of the club in 2004 he still maintains strong ties and visits frequently.
He continues as an active investor in early stage technology companies.
Richard now has another two children, Jasmine and Lucas, with his partner Camilla, and they divide their time between Monaco and London.
Janine Perrett
Sydney, May 2005
On father’s shoulders - before the children were taken into care by the authorities
A day in the life
In the first Gulf War, US forces overwhelmingly attacked Iraqi forces in Kuwait. It was an awesome display of military power, and almost the whole world was surprised and amazed at how powerful the US military had become. They had moved to a new level: missiles with cameras attached that could be steered through the front doors of buildings, and strange looking black planes called ‘stealth bombers’ that were invisible to radar. Iraq’s feeble response looked hollow following Saddam Hussein’s earlier “mother of all battles” threats, but if he could have mustered enough anti-American sentiment in other Arab nations, he may have pulled an armed rabbit out of the hat.
Financial markets around the globe were preoccupied with the battle. The oil market was naturally the most affected; the spot price per barrel was driven from the high teens to over 40 dollars, as traders contemplated a huge disruption in supply. The stock market worried about the recession that would result if the oil price stayed so high for too long. Interest rates were pushed sharply higher by the potential inflationary effect of the rising oil price.
Traders in the markets all scrambled to learn as much as they could about oil and the Middle East as quickly as possible. It was a change from the boring old employment numbers and inflation figures which everyone normally had to scrutinise. If Saddam set alight oil wells, as he threatened, would they really burn for a hundred years, or could they be extinguished by having big domes put over the top? And what would happen if he spilled a massive load of oil into the sea and set it on fire? Anyone who might know the answers suddenly got their fifteen minutes of fame. Oil experts were brought into the trading rooms and treated like celebrities as their information was needed to make a rational view of any of the markets.
From a trading room in Sydney, my perspective was just as confused as anyone else’s. Even though my job was to take risks with money, there was no way I had any competitive edge to allow me to think the markets had got something wrong. For the previous year or so I had been betting strongly on falls in interest rates. I believed that the economy would be weaker than generally expected and that inflation would be driven lower. For me this war was an interruption to a slow economic trend. War was too risky
