Confessions of a spread-better

The cataclysmic events which have befallen the spread-betting market over the past few days should come as no surprise to anyone acquainted with this perverse and desperate field of human activity. Spread-betting has the same relationship to conventional betting as "bare-backing" to safe sex, or hard drugs to alcoholic stimulants. It is more exciting but also, as the spread-betting firm City Index is now finding out, more dangerous. My advice is not to go near it under any circumstances - and I speak from two decades of sorrowful experience.

I can still remember, with perfect vividness, the day I first encountered spread-betting. It was April 1984, and the eve of the Grand National. I was serving out my notice at the end of a short-lived and inglorious career as a merchant banker.

The call came through late afternoon. The voice at the other end of the line - now the managing director of a famous fund-management institution, with tens of billions of pounds of pension fund money at his disposal - explained the bet. He was making a market in the number of finishers in the Grand National. He was offering 10-12. In other words, if I thought there would be fewer than 10 finishers, then I could "sell" at 10, and if there were only four finishers I would make six times my stake. I sold heavily at 10. The following day I watched the big race on the TV. There were 23 finishers. They seemed never to stop coming. The number, which remains a record to this day, is imprinted on my memory. I lost 13 times my money.

This Grand National experience put me off spreadbetting for several years. But in November 1989 the temptation to move back into the market proved irresistible when another friend, who claimed to have political connections or at any rate to have visited the House of Commons once, said that Sir Anthony Meyer's leadership challenge against Margaret Thatcher was going to do significantly better than expected. We pondered this intelligence over several bottles of claret at a Fleet Street wine bar before concluding that the best way to turn it into hard cash was to take a spread-bet on the stockmarkets. "The markets will take this blow to Thatcher hard," said my friend. "The FTSE will be shaken. We should sell."

So I rang IG Index, the spread-betting firm, and made what was for us a very sizeable down bet on the Footsie. IG was then owned by Stuart Wheeler, later to make a £100 million fortune when he floated his firm on the stock market. I calculate that over the years I have lost rather less than the cost of a small house, but rather more than the cost of a large car, by betting with IG. Last year I met Wheeler at a dinner party and told him this. He is a nice man and seemed genuinely concerned.

The following lunchtime my friend and I met back at the same wine bar for a situation report. We had got things half right. Sir Anthony had indeed garnered a slightly larger number of votes than anticipated. But we had misgauged the stock market reaction. Rather than regarding the prospect of losing Thatcher as a national disaster, it seemed desperate to get the old bag out. The screens were a sea of blue.

We looked each other in the eye. "It obviously hasn't sunk in yet. The markets aren't awake to the seriousness of the situation," said my friend, and we agreed to meet again the following day.

We did meet the following day. Whether because of Thatcher's setback, or for some other reason, by now the FTSE had reached a record high. Signing that cheque - well over a month's income at the time - brought tears to the eyes.

By now spread-betting was well established. Every year I lead a cricket tour to the south of Ireland, and we started making spread-bets on the number of runs each batsman would score. One year, as a variant of this, we bet on the number of "units" of alcohol a certain heavydrinking member of our team would consume during the three-day jaunt. A unit is either half a pint of beer or a single tot of whisky.

By the end of the first evening this individual - now an out-of-work restaurant critic - had soared through the 40-unit barrier and was heading north. By luncheon on the second full day he was through 100 and seemed fine. Only on the third afternoon did we realise we had been foolish. Our man retired unsteadily to the pavilion and collapsed. It proved impossible to wake him up, and I grew alarmed. It was easy to imagine the coroner's scathing verdict when the spread-betting activities came to light - even manslaughter charges being brought. Our man eventually made a full recovery, but I vowed never to make spread bets involving alcohol again.

Of course, we broke this vow almost at once. We were sitting in a tiny, remote Irish pub. At the bar was an old boy nursing a pint of Guinness which he obviously intended to make last the whole evening. Somebody asked me for a price on seconds till the next sip. I made it 120-140, but swiftly realised my mistake when I was bought up at £5 a second.

Never has anyone been the oblivious object of so much electric, concentrated attention as that old boy in the bar. He was utterly motionless, staring straight in front of him. I could hear the clock ticking, and each tick was costing me a fiver. After three-and-a-half-minutes my heart lifted as I watched the old man pick up his pint and lift it towards his lips. But at the last moment he changed his mind and put it down again.

My heartfelt advice is clear. Never have anything to do with spread-betting on any account whatsoever.