Bill Stacy?

[nulla nulla]

Barney

To me it's not about whether Bill is profitable or not. He very well could be, don't know, don't care really (but would be interesting to see some live trades).

My concern is twofold,

1/the massive position size

2/massive contest risk

Lets look at the example several pages earlier where he purportedly trade 27 x 1000 share contracts = 27,000 shares of underlying, with a delta of approx 0.5 giving a total number of 13,500 deltas.

The bid ask spread is typically about 5 - 8 cents... lets say 5 cents to be generous.

That is 27,000 x $0.05 = $1,350

This means that if the share did not move and he exited, it would have resulted in a $1,350 loss PLUS commission.

It also means that the underlying has to move > 10 cents just to break even (remember our 0.5 delta)

That's a massive impost to overcome in a daytrading system.

Now compare that to Shares or CFDs where to gain the same 13500 deltas, we only need 13500 shares with a spread of typically 1 cent.

That's $135 plus commission contest risk.

The options are 10 TIMES more expensive to trade in terms of contest risk.

Daytrading sytems, if positively expectant :, are not greatly so, because you never get huge outliers.

They rely on trade frequency to make money.

Maybe Bill is a good enough trader to overcome 10x contest risk, maybe not, but are the people he teaches?

I would bet London to a brick and Mombasa to a melon that very very few can overcome this.

S you see it's not about Bill being profitable, it's about Bill teaching about the most inefficient day trading modality currently available... and charging money for it.

Thank you wayneL.

This has to be one of your best posts ever. Clearly setting out the structure, associated costs and risks of day trading options.

IMO not an arena for the beginner or those with a preference for low risk. One of the reasons I am happy to stick to trading shares.

 

[Trembling Hand]

Maybe an interesting precedent,

ASIC found that statements made by Mr Wilson, who is from Hervey Bay, and the two companies in marketing the software were misleading and deceptive. These statements included:
“Writing covered calls is the same as ‘Share Rental’ or renting out real estate”;
“Options trading is easy”; and
“Returns of 5-10 per cent per month and 60-120 per cent per year can consistently be achieved through use of Lifestyle Options – Share Rental”

http://www.asic.gov.au/asic/asic.nsf/byheadline/11-161AD+ASIC+accepts+‘Aussie+Rob’+EU?openDocument

 

[TeleSonic]

That scenario will play out over the next 12 months I imagine. Lots more to be written about Lifestyle Trader, the people who ran it, and ICS / Alpha who have taken it on. The misleading advertising will be the least of their concerns I'm tipping.....

Bill isn't licensed and hadn't been for months according to him. He shouldn't be selling DVD's, teaching, mentoring, or assisting with "mechanics". The definition of financial product advice is so broad that even his posts here could be construed as unlicensed advice. Has he influenced someone to take a position in a financial instrument? You can argue about the success of his intentions, but the intention is there non the less.

He's also been a bit mischievious in answering questions about his AR status. If he was to be straight down the line he would have said he isn't licensed at all. Some of his statements have been quiet ambiguous, almost as if to leave the door open to supporting his existing clients, or making the odd DVD sale.

"I'm listed as general"

"I can't give personal advice without a questionnaire"

"I am licensed when I speak"

Bill isn't licensed that's the bottom line. As a consumer you don't have any of the protection or mechanisms in place to assist you should you have a complaint. You'll be stuck with the Office of Fair Trading or worse still having to take your own civil action.

 

[TeleSonic]

From another "licensed" entity selling a covered call strategy...

Also referred to as 'Share Renting', the Covered Call strategy has become one of the most popular strategies for share investors.

Managed effectively, the smart investor can 'enhance' their returns no matter what direction the markets are trading. In fact, if you own shares and are not adopting the Covered Call strategy, then you are effectively missing out on 'rent' you could be receiving for shares that you own.

ASIC obviously can't even police entities they license, let alone those they don't...

 

[wayneL]

I like Daryl Guppy's approach:

E.G.

Guppytraders.com (ACN 089 941 560) Pty Ltd is not a licensed investment advisor. Tutorials in Applied Technical Analysis, which is generally available to the public, falls under the ASIC Media Advice provisions. The analysis notes are based on our experience of applying technical analysis to the market and are designed to be used as a tutorial showing how technical analysis can be applied to a chart example based on recent trading data. The newsletter is a tool to assist you in your personal judgment. It is not designed to replace your Licensed Financial Consultant or your Stockbroker. It is been prepared without regard to any particular person's investment objectives, financial situation and particular needs because readers come from diverse backgrounds, with diverse objectives and financial situations. This information is of a general nature only so readers should seek advice from their broker or other investment advisors as appropriate before taking any action. The decision to trade and the method of trading is for the reader alone to decide. The author and publisher expressly disclaim all and any liability to any person, whether the purchase of this publication or not, in respect of anything and of the consequences of any thing done or omitted to be done by any such person in reliance, whether whole or partial, upon the whole or any part of the contents of this publication. Neither Guppytraders.com Pty Limited nor its officers, employees and agents, will be liable for any loss or damage incurred by any person directly or indirectly as a result of reliance on the information contained in this publication. This is not a newsletter of stock tips. Case study trades are notional but analysed in real time on a weekly basis.

Doesn't claim to be licensed and structures his business accordingly.

<ETA> Although looks as though he is now, or uses licensed guys.

 

[TeleSonic]

I like Daryl Guppy's approach:

E.G.


Doesn't claim to be licensed and structures his business accordingly.

<ETA> Although looks as though he is now, or uses licensed guys.

Never looked at his site until today. I am surprised that he isn't licensed however when you consider the definition of financial product advice;

(1) For the purposes of this Chapter, financial product advice means a recommendation or a statement of opinion, or a report of either of those things, that:

(a) is intended to influence a person or persons in making a decision in relation to a particular financial product or class of financial products, or an interest in a particular financial product or class of financial products; or

(b) could reasonably be regarded as being intended to have such an influence.

And then this from his product page;

The regular TRADING section introduces the essentials you need to know about trading. It includes the ABC of the ASX which shows how trading opportunities are identified and evaluated. This section explores trading styles, prediction and probability.

I think it's drawing a long bow to state that they are exempt based on the media exemption. That's usually reserved for print / radio / TV where the provision of financial services is not their main business activity, and it is available freely to the public. I.E financial commentators on TV, or even advertising on this website. This is a situation where they are teaching people how to identify trading opportunities on the ASX, and charging for it as their main business activity.

I'm not making a judgement on the quality of his service or products, just commenting on their licensing situation.

 

[wayneL]

I have no idea to what extent the ASIC rules cover "education" and what you've written seems pretty clear.

But as I heard it explained, so long as none of the examples were current ie at least a week old it was OK. IOW a person could not construe the example as a recommendation to buy or sell.

What is the situation if a person writes a book on Tech analysis or whatever?

 

[TeleSonic]

I think the corporations act is very clear. The definitions are very broad and deliberately written so. It becomes grey in its interpretation, enabling ASIC to use its discretion.

I've made a complaint to ASIC before regarding an unlicensed software vendor. The software gave buy and sell signals on FX, and was being sold for $3,000. The response I got from asic is below;

Dear Mr Hamilton Thank you for your email.
Share trading software is not classed as a financial product. I have attached some website links which have some more information for you to have a look at. The website addresses are: http://www.fido.gov.au/fido/fido.ns...+currency+and+financial+products?openDocument and also http://www.fido.gov.au/fido/fido.nsf/byheadline/The+six+rules+of+day+trading+systems

Due to the unique nature of each enquiry ASIC is not able to provide interpretations or recommendations specific to some enquiries or circumstances. If you require further information please seek independent advice through an ASIC registered agent, your accountant or solicitor.

Yours sincerely

Susan Morgan
Customer Service Consultant, Enquiries
Stakeholder Services
1300 300 630

There you go, software is fine!! Blew me away.... My response was;

Thanks Susan

I'm really quite confused as to what constitutes financial product advice. You say that share trading software is not a financial product (and therefore doesn't require the distributor to hold an AFSL), however in my due dillegence I have found reference to a company ASIC prosecuted in 2008 (Oxford Investments Pty Ltd) for providing unlicensed financial product advice via an Excel Spreadsheet.

If the software (or training / instruction / signals) influences the recepient to trade is that not a statement or opinion or recommendation under the defenition of financial product advice contained in ASIC guidelines? I am looking at another FX signal provider and they do have an AFSL number, and have told me that I should only work with someone who has an AFSL number.

Obviously I put more weight in your comments and if the ASIC rules have changed since you prosecuted Oxford Investments Pty Ltd then it opens the possibility of working with an unlicensed FX educator / signal provider.

I've included the article I found online for your reference. Can you point me to the parts of the ASIC legislation that outlines who does and who doesn't require a license?

Thanks

Brett

Now the truth of the matter is I wasn't interested in either service, but I was interested to see them chase up an unlicensed vendor. I received another reply to this email but it was identical to the first one. Disappointing...

 

[TeleSonic]

What is the situation if a person writes a book on Tech analysis or whatever?

Yeah good point. Someone writes a book explaining how CFD's work, the benefits of using them over physical equities, and some basic trading strategies including entries and exits. I would certainly regard that as having the potential to influence someone to trade.

But I imagine this is where ASIC exercise their discretion. There may even be a specific section of the corporations act that deals with books & authors, however I haven't been able to find it. What about if I wrote an e-book once a week? What about one a day? At what point is a communication a "book", as opposed to a "statement of opinion"? Is there even a difference?

 

[McLovin]

I had a quick look at the Oxford judgement. There is nothing in there to indicate the prosecution was for providing software.

It was to do with the courses, and several misleading statements about how much money Steven Moore claimed to be making by trading.

http://www.austlii.edu.au/cgi-bin/s...0&synonyms=0&query=title(oxford investments )

ETA: I would love to know the theory behind being able to code in C++ making you exempt from requiring an AFSL.

 

[wayneL]

Yeah good point. Someone writes a book explaining how CFD's work, the benefits of using them over physical equities, and some basic trading strategies including entries and exits. I would certainly regard that as having the potential to influence someone to trade.

But I imagine this is where ASIC exercise their discretion. There may even be a specific section of the corporations act that deals with books & authors, however I haven't been able to find it. What about if I wrote an e-book once a week? What about one a day? At what point is a communication a "book", as opposed to a "statement of opinion"? Is there even a difference?

Then we'd have the problem of jurisdiction.

What if the author lived in NZ or Canada or USA or..... Nigeria? ::

What if the website shuckster lived and hosted in some other jurisdiction and marketed it to Aussies?

 

[TeleSonic]

I had a quick look at the Oxford judgement. There is nothing in there to indicate the prosecution was for providing software.

It was to do with the courses, and several misleading statements about how much money Steven Moore claimed to be making by trading.

http://www.austlii.edu.au/cgi-bin/s...0&synonyms=0&query=title(oxford investments )

I haven't seen that before, I only had the ASIC media release. It didn't go into as much detail as this judgement. I'm pretty sure that there would have been no course or misleading statements without the software. Are you suggesting that if he'd only provided the software without instruction he would have escaped prosecution for carrying on a financial services business without an AFSL? It's an interesting point to consider. Perhaps software on it's own is fine, it's only when teaching others how to use it that you satisfy the definition of financial product advice?

ETA: I would love to know the theory behind being able to code in C++ making you exempt from requiring an AFSL.

There's a 1300 number for Susan Morgan if you want to have a chat with her!

 

[TeleSonic]

Then we'd have the problem of jurisdiction.

What if the author lived in NZ or Canada or USA or..... Nigeria? ::

What if the website shuckster lived and hosted in some other jurisdiction and marketed it to Aussies?

I think there are many Aussies who have or are running offshore to avoid ASIC regulation in many areas, including financial services. I imagine it is up to the authorities in the applicable jurisdiction to apply the law of the land, and in most cases that is much less onerous than what we face here. If it was serious enough you'd hope ASIC would alert the appropriate foreign entity, and there would be some co-operation.

At the end of the day, it is impossible to protect people from themselves. There is always someone naive or greedy enough to fall for anything that comes across their desktop or lands in their inbox.

 

[TeleSonic]

http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/99-268.pdf/$file/99-268.pdf

ASIC accepts EU from Paritech not to distribute OmniTrader until it obtains AFSL.

Now it's an old judgement (1999), but it mentions Policy Statement 118 regarding investment advice and dealing through computer software and the internet. No corresponding regulatory guide exists now however...

Hey I love screen time, so I'll just keep searching for an answer!

 

[McLovin]

Are you suggesting that if he'd only provided the software without instruction he would have escaped prosecution for carrying on a financial services business without an AFSL?

I'm only going on what I see.

Now it's an old judgement (1999), but it mentions Policy Statement 118 regarding investment advice and dealing through computer software and the internet. No corresponding regulatory guide exists now however...

It's very old. The Corporations Act came into existence in 2001.

 

[TeleSonic]

I believe the answer was in the Oxford judgement you provided all along McLovin.

It is not to the point that the defendants did not advise a client as to particular transactions, as for example whether to buy, sell or hold a particular security. It is sufficient that their system would "influence" such a decision, in the sense of making available information, and a system of analysing that information, which would be seen by a recipient as relevant to the making of a decision.

This is Judge Herrey's interpretation of the act. This judgement was handed down in 2008, so it is recent and relevant.

 

[TeleSonic]

I believe the answer was in the Oxford judgement you provided all along McLovin.

It is not to the point that the defendants did not advise a client as to particular transactions, as for example whether to buy, sell or hold a particular security. It is sufficient that their system would "influence" such a decision, in the sense of making available information, and a system of analysing that information, which would be seen by a recipient as relevant to the making of a decision.


And from the ASIC media release;

Electronic delivery of financial products is a rapidly growing and convenient method of providing consumers with information on, and access to, goods and services.

The Federal Court’s decision demonstrates however, the breadth of the definition of financial advice, and the broad range of activities which this definition will cover, including the development and application of software designed to help an investor make an investment decision.

This is Judge Herrey's interpretation of the act. This judgement was handed down in 2008, so it is recent and relevant.

 

[McLovin]

I've only skimmed through the judgement but this paragraph may indicate that simply providing a software package is not in itself financial advice...

22 In the present case there has been, first, an expression of opinion that, in specified circumstances arising from a particular kind of market analysis, trading in a particular way is likely to be profitable. Secondly, there is the provision of technical aids that assist in identifying those circumstances from day to day. The combined effect is the provision of financial product advice within the meaning of the statute.

Bolding mine.

It still is difficult to see how ASIC arrived at the answer they gave you. Surely any marketing material used by the software vendor would satisfy the first requirement, with the actual software satisfying the second.

 

[TeleSonic]

I don't think the left hand knows that the right hand is doing at ASIC McLovin. They suffered some big budget cuts a couple of years ago, and they are very fragmented with different offices, teams, depts, etc.

At that first level my complaint went to i'm guessing they just acknowledge the complaint, provide some very generic commentary, and point you to some resources. I think it would need to be very serious, or be one of many like complaints, before the desk jocky escalates it to someone who knows what they're doing.

 

[wayneL]

So our friend Bill has logged in since nailing down the mathematics of the diabolical contest risk he teaches people to take on, but has nothing to say. Not even to call us all names. :

Chalk up another one for ASF in exposing poor financial education.

Bill played hard, but still got the wooden spoon... mathematics wins every time.