The people who sold Storm Financials investment strategy, from the advisers right through to the CEO who couldn’t remember whether he was the CEO, must be delighted to see how the heat is being directed away from them and towards the banks instead.
I won’t be at all surprised if those Storm gurus get off with just a slap over the wrist or maybe even scot free, despite being the primary architects of the financial tragedy that befell so many Storm clients.
Rather than easing up on the Storm henchmen, what’s needed is a concerted and ongoing effort to keep the heat on them if they’re ever to face justice for leading investors into a reckless and highly risky investment strategy.
Yet almost three years after the collapse of Storm and the financial wipeout of their clients, rather than seeing Storm under sustained pressure and criticism, there are articles and comments in circulation that support Storm’s strategy instead of exposing its shortcomings.
One example of comments supportive of Storms strategy appears on the SICAG website in an article about Margin Lending written by Luke Vogel.
Vogel takes a swipe at the media for claiming that Storm investors were greedy because they were choosing high risk/high return investments. He points out that the Storm model promised ‘average market returns’ – nothing more, nothing less.
He appears to imply that Storm had a conservative investment strategy by virtue of the fact that it recommended investment in Index Funds that track the performance of the overall stockmarket, rather than trying to outperform the market.
While this does appear on the surface to be a relatively conservative investment strategy, what needs to be understood is that it was coupled with other aspects of the Storm model that were far from conservative.
Listed below are some of these non-conservative aspects of the Storm model.....Luke Vogel conveniently doesn’t mention them in his article.
* Double gearing, where assets such as real estate are used as collateral for a loan to invest in the stockmarket, then these stockmarket assets (all bought with borrowed money) are used as collateral for further loans for further market investment. Borrowings supported by borrowings.
Not by any measure can such a strategy to be considered as conservative or low risk. It was an accident waiting to happen.
* 100% of investment funds sunk into the stockmarket, which in itself can be a volatile and risky investment vehicle even when using index funds.
We’ve all heard the old adage ‘Don’t put all your eggs in the same basket’. Storms investment model ignored this age old wisdom by heavily investing its clients into the stockmarket, without proper regard to their age or their financial situation or their capacity to service their loans.
* Recommending that clients sink their super and retirement savings into the stockmarket.
Hardly a safe or conservative investment strategy.
* Margin Loans....great for magnifying your gains when the market is rising, but equally good at magnifying losses when the market falls. And markets always fall much faster than they rise. Not well suited to financing ‘buy and hold’ investments in something as volatile as the stockmarket. Again, hardly a safe or conservative strategy.
Luke Vogel was an adviser with Storm Financial and was later on the committee of SICAG. He would be fully conversant with all the points I’ve mentioned above, but given his background as a Storm employee, I guess it’s understandable why he doesn’t mention these aspects of the Storm model.
His comments can hardly be considered impartial....they paint Storm in a far better light than they deserve to be painted. It’s these sort of comments that take the heat off Storm, and may well help to produce an end result whereby Storm Financial and its cohorts escape being brought to justice for destroying so many clients through dodgy, high risk strategies and incompetent management of their clients investments.
The people who sold Storm Financials investment strategy, from the advisers right through to the CEO who couldn’t remember whether he was the CEO, must be delighted to see how the heat is being directed away from them and towards the banks instead.
I won’t be at all surprised if those Storm gurus get off with just a slap over the wrist or maybe even scot free, despite being the primary architects of the financial tragedy that befell so many Storm clients.
Rather than easing up on the Storm henchmen, what’s needed is a concerted and ongoing effort to keep the heat on them if they’re ever to face justice for leading investors into a reckless and highly risky investment strategy.
Yet almost three years after the collapse of Storm and the financial wipeout of their clients, rather than seeing Storm under sustained pressure and criticism, there are articles and comments in circulation that support Storm’s strategy instead of exposing its shortcomings."
Hi! It is somewhat pointless for the former clients of Storm to focus on a defunct company no matter how bad it was or what it did. That’s ASIC’s job and they are in the process of doing just that.
As for articles and comments in circulation supporting Storm, I can only say that Cassimatis must have written them. No one else to my knowledge has done so of late. Storm’s financial model has now been condemned by everyone; the financial adviser Worrells called in to testify, the FPA, the PJC in its report and so on and so on. Which idiot are you referring to when you claim this?
I concede that Storm still has a few supporters out there, but they are clearly delusional if they still believe that Storm’s financial model was sound.
A couple of years ago on the SICAG forum I challenged Manny and his wife to a debate on their Storm financial model which I had found on close examination to be hopelessly flawed, Luke Vogel then told me that these two super financial savvy people would
"chew me up for breakfast". It was disturbing to hear this from him because it suggested to me that he still admired these two miscreants. I was expelled from SICAG shortly thereafter for upsetting people. I tend to do that apparently!
That’s when I formulated my own Group called SOB (Storming on Banks) or as one wag put it, “sick of bull****ters!” This is an independent Group which is only open to the victims of Storm and the Banks. Anyone that worked for Storm is not permitted to join because it could create a situation where a member is confronted with a Storm employee or adviser that has done the wrong thing by that person. Objectivity and the freedom to say exactly what one thinks without fear or favour is paramount in SOB.
I have now been called back into the SICAG fold but I still post mostly on SOB.
Incidentally, you don’t have to sell me your notion that Storm’s financial model was crap! As I have already said, I completely agree with your assessment. More to the point, so does anyone with a modicum of commonsense now accept that it was crap.
The funny thing though is this! Everyone including the Banks, Storm and its team, ASIC and the people operating in the financial sector before Storm collapsed thought the Storm financial model was the
“new coming!” Now, nearly 3 years later it’s all ‘shock and horror’. How quickly people forget! But then the holocaust probably sounded like a good idea to the Germans at the time.
What I am trying to say is that it’s easy to try and be wise in hindsight. We can all do that! We went to Storm for financial advice as many did. We were entitled to get sensible financial advice because we paid good money for it. If you want to blame anyone, don’t blame the people that were duped. Rather, blame the banks who conspired with Storm, and blame a Regulator who didn’t ensure that Storm abided by its compliance obligations. Add the Government to your list for constructing poorly worded legislation that allowed these clowns to take advantage of elderly people who placed their trust in institutions that were completely dishonest, totally unethical and downright deceitful.
If people today cannot trust in so-called professional financial advisers, who should they trust in? God perhaps because at the end of the day, he’s probably the only one left that you can trust to do the right thing!
It was total bull**** from beginning to end. To try and make any sense of it without knowing the full facts is just that as well.