Hi Bunyip,
Your statement appears to be based on the assumption that it was actually possible for the clients to convert to cash. That in turn, appears to be based on the assumption that the banks and agencies/companies involved had enough staff to physically cope with the number of requests to convert to cash.
If that is the case, then perhaps your statement is realistic.
However what if the two assumptions are not correct?
Cheers
Maccka
Macca
If they'd all tried to convert to cash at the same time when the market was in free fall, then yes, the banks may have struggled to cope with the workload.
But they should have been out long before then. The market took eight months to lose the first 25% of it's value. By comparison, in October 1987 it fell 25% in one day.
In terms of the speed of the fall, this slump was mild compared to 1987, allowing investors plenty of time to take defensive action.
Amidst all this talk and argument about who was responsible for notifying clients when they were in margin call, one pertinent fact that's rarely mentioned is that investors with margin loans, whether they're Storm investors or anyone else, should be out of the market long before they get anywhere near margin call.
Once your investment has fallen far enough to trigger a margin call, you've already lost most of your money.
I don't think any less of Stormers for the mistakes they made. I've made mistakes myself that have cost me money, probably most of us have.
I won't claim the banks are squeaky clean - I've stated on here more than once that I dislike banks and they should pay compensation if they can be proven to have done anything illegal.
What I take issue with is the people who try to say it was the banks that wiped them out. That's just nonsense in most cases - the banks may have contributed, but the primary reason for Stormers losing their wealth was that they were heavily geared into margin loans at a time when the stockmarket slumped, and they sat through more than 12 months of one of the most severe market slumps in history without taking defensive action to minimise the damage to their wealth.
They made a huge mistake, and now they want Australian taxpayers to pay them for that mistake. It's just not on. They made the mistake, not us. The loss belongs to them, not to us, the Australian taxpayers.
It's not heartless, it's just being realistic.