Storm Financial Group

[Harleyquin]

Good post IJUSTKNEWIT. Frank has the courage of his convictions and a talent for writing that the rest of us can only dream off.

As a Stormie, I read Frank's posts and he is able to say exactly what most of us are thinking, I certainly can't speak for all Stormies, as has been mentioned before "we're a diverse lot".

One thing we possibly all have in common is the inability to trust our banking system in this country and for good reason. Piggy Banks is certainly a good description.

It's taught some of us something else too, live for today and let tomorrow take care of itself. Financial or forward Planning...forget it. It's no longer worth the risk.

 

[Julia]

Why am I not surprised??? Lining his own pocket at the expense of anyone who's dumb or unlucky enough to become fodder for his villianous schemes is clearly a well-honed skill, not to mention an ingrained personality trait perhaps? How lucky for him to find his soul-mate in Jules...

DocK, if by great good luck he goes to jail, it will take him about a minute and a half to get a scam going in there. People of his perceived 'class' enjoy a much elevated status in jail and he will have the common burglars et al eating out of his hand.

The problem is if you get dodgy service from anyone offering their services you're entitled to complain ... Unless it's a financial advisory 'service' .

Don't be silly, HQ. You have complained loud and long and your complaints have brought about the enquiry into Storm and into the industry in general.

Some of you are hounding Frank and yet I find all of his posts to be some of the only ones with any real substance.

Of course you do. They say what you want to hear. Look up confirmation bias some time.

Hi Julia you've just accused Frank of "repetitive mantra" and yet you are also guilty of repeating yourself on more than one occasion on this thread. I'm also guilty in this department.

And so on we will go. As long as Frank continues his copy and past of "we should have been able to trust the advice of professionals", and fails to acknowledge any need for assessing that advice in terms of risk and cost effectiveness, he will continue to provoke the same negative response.

Other Storm investors have been good enough to offer a clear, objective account of how they became involved with Storm and the reasons for how they assessed the risk. These posters have received appreciation for their candour and good wishes for the outcome.

You say that "this is a forum where ideas about investment are shared and discussed". True it is, however there are numerous threads on ASF, devoted entirely to investment advice, strategy etc. This thread, is I presume, dealing with all aspects of Storm Financial, not just the investment aspects.

Um, HQ, if you are not talking about the 'investment aspects' of Storm, there's really nothing to say, is there? Wasn't the whole point investing?

As you've said on several occasions, you hadn't even heard of Storm Financial before it collapsed. Therefore you can only approach this discussion post Storm and from a financially astute perspective.

Here you go again about my being 'financially astute'. I am no more financially astute than the average person who has taken the time to do a bit of reading and ask a few questions. I have no training in financial matters.
So please stop suggesting I have some sort of special talents when it comes to risk assessment and capital preservation.
There is absolutely nothing stopping you achieving the same level of understanding, unexceptional as it is, except your own mindset.

Stormies only knew Storm before it collapsed and generally speaking from a non financial background. This gives you the advantage of hindsight which is something we don't have the privilege of. You also understand how storm operated, we didn't, we've only found this out since storm's collapse.

Nonsense. I've only this last week learned about how the LVR was presented, i.e. omitting the home loan. I have never ever come across anything like the Storm strategy with all its intricate manoeuvres designed to make the Storm principals wealthy. So ignorant of such strategies am I, that initially I just couldn't believe anyone would be suggesting that retirees should mortgage their home and then further gear into the market.

And if you didn't understand how the whole plan worked, why didn't you ask until you did understand?

Julia think of something that doesn't interest you or your no good at...that's how I feel when it comes to financial matters. I'm one of those people whose eyes glaze over.

I have no natural interest in financial stuff at all. I have to force myself to do the reading I do. It gives me no pleasure. But I have a strong interest in protecting the asset base I've worked so hard to achieve, so I do what I have to.

I might not like exercising in all weathers either, but because I want to look after my health, I make myself do it. Same thing.

It's taught some of us something else too, live for today and let tomorrow take care of itself. Financial or forward Planning...forget it. It's no longer worth the risk.

HQ, I'm sure you're a nice and decent person so I won't point out all that's wrong with the above. Just consider that most people who plan carefully and take advice from people who offer sensible guidance do not share your sentiments, and achieve the results they need to.

 

[Solly]

There are some such as 'Monario' that don’t post here because they know that whatever they say will be met with derision by a small minority.

How true Mr Ainslie !!
Jez47

Jez47,

Going by the number of daily views of this tread I believe that there are many other ex-clients and other notable 'high value' participants of this saga, who read these posts.

It would be of great benefit if others would post their views and experiences to add some diversity to this thread.

I personally know of one ex-client who is an avid reader of this forum but is not confident in posting anything about their involvement in the Storm event, as they fear that they don't possess the appropriate written skills and are concerned about ridicule.

I hope that they do change their minds about posting, after all, thanks to Joe, this is just a public forum where we have been given the opportunity to express our views. It shouldn't be a place were there is perceived bullying or feeling of being threatened. As long as there are no defamatory statements or libelous behaviours which injure the reputation of the individual, hopefully there can be some new fruitful debates and discussions on this Storm topic.

So, if there are any readers out there who have been considering posting and adding opinion please do, I am positive your views will be most welcome.

S

 

[jez47]

you cannot justify the stupidity, gullibility and incompetence you displayed in your dealings with Storm.

Solly,
Like every Stormie my story is unique to my life experiences. I do not believe that all Stormies can be lumped together when it comes to why we were conned by Storm. It would take too long, require baring of soul and other 'secrets' and risk derision.
I will go back to being observer only.
Thanks
Jez47

 

[DocK]

Solly,
Like every Stormie my story is unique to my life experiences. I do not believe that all Stormies can be lumped together when it comes to why we were conned by Storm. It would take too long, require baring of soul and other 'secrets' and risk derision.
I will go back to being observer only.
Thanks
Jez47

I hear you jez47 - sadly, I too suspect that there are many potential posters who could add interest, perspective and worthwhile content to the thread who observe only, due to a disinclination to have to fend off comments such as the one you quoted. If we could move past the whole "justification debate", and all mind our manners, the thread might make for more interesting reading imo.

 

[Judd]

.... One thing we possibly all have in common is the inability to trust our banking system in this country and for good reason. Piggy Banks is certainly a good description.

Hmm, Piggy Bank. Interesting term but as the major banks' after tax return on assets to June 2011 was 0.9% (yep, that is no typo) then the term Piggy Bank doesn't quite fit. It could (just) if you looked at the return on equity (14%), ie the amount of funds the banks' shareholders (such as moi and a few others) have at risk.

http://www.apra.gov.au/adi/Publications/Pages/adi-quarterly-performance-statistics.aspx

The very strange thing is that none of this utter shambles would have worked without you, Harlyquin, and Frank, and Monario and all the others. You were essential. Why it worked is very difficult for me to understand. The great man himself said that 75% of those who attended a seminar walked away; sadly the rest did not. And given that the blurb (if true) on the web-site indicated that 70% to 80% of clients were by word-of-mouth referrals....

Hopefully, the parties involved will come to a solution via the mediation process as suggested by the Court (I think that is what was suggested but I stand to be corrected.) It has gone on way too long for former Storm clients and I would hazard a guess that some are very close to complete collapse. That is not good.

 

[Julia]

I hear you jez47 - sadly, I too suspect that there are many potential posters who could add interest, perspective and worthwhile content to the thread who observe only, due to a disinclination to have to fend off comments such as the one you quoted.

Probably right. But I think you might agree, DocK, that no derision has been directed toward you or others who have been good enough to share their situation honestly, including the regret for ever having become involved. You've also acknowledged the risk you took and the reason why.

Those of us who are onlookers are frequently accused of not understanding how it all happened. True enough. But we cannot understand until people explain the details.
e.g. until Doobsy described how the whole 'strategy' was supposed to work about a week ago, including the borrowing to pay interest in advance etc, and then you explained about how the LVR was never referred to with the inclusion of the home loan debt, I had no idea of both these aspects.

The more information any of you provide, the more it's possible for the rest of us to perceive the massive snow job Storm did with incredibly intricate manoeuvres that probably appeared to the naive investor to be clever rather than necessarily risky.

 

[DocK]

Probably right. But I think you might agree, DocK, that no derision has been directed toward you or others who have been good enough to share their situation honestly, including the regret for ever having become involved. You've also acknowledged the risk you took and the reason why.

Those of us who are onlookers are frequently accused of not understanding how it all happened. True enough. But we cannot understand until people explain the details.
e.g. until Doobsy described how the whole 'strategy' was supposed to work about a week ago, including the borrowing to pay interest in advance etc, and then you explained about how the LVR was never referred to with the inclusion of the home loan debt, I had no idea of both these aspects.

The more information any of you provide, the more it's possible for the rest of us to perceive the massive snow job Storm did with incredibly intricate manoeuvres that probably appeared to the naive investor to be clever rather than necessarily risky.

I'm struggling to reply in a way that won't offend the majority of posters on this thread, but fear I will do so anyway. Here goes.

My point is that I suspect many have not posted because they do not wish to have to respond to the inevitable questions of "why did you/what were your motives/did you not think you had enough already/were you just greedy/why would you risk your home/what did you think would happen to your loan?" etc, etc. I'm not saying posters do not have the right to ask those questions, and I can understand why some find it difficult or impossible to understand what motivated ex-storm clients - I'm just saying that from an ex-storm client's perspective the spectre of running the gauntlet of such posts would be enough to deter a lot from posting in the first place. I don't think any ex-storm client should have to explain themself or show regret in order to avoid derision. It's simply unnecessary; surely it's obvious to most by now that the majority of ex-storm clients feel beaten down enough already without having to withstand an inquisition if they stick their head up on an internet forum?

I'm going to make myself unpopular with just about everyone by declaring myself an absolute fence-sitter on this thread. It often appears to be a thread consisting of ex-stormies and others - and although I'm an ex-stormie I can see merit in the posts from both sides most often. I think when I invested with Storm I was definitely less financially astute than most of the others, but maybe a bit more financially aware than some of the ex-stormies. I can see why some of the others find themselves unable to understand mortgaging one's home, but can also undertand why the ex-stormies did just that. I can certainly understand why the ex-stormies feel the banks have a case to answer, but can also understand why some others just can't understand the reasoning behind our bitterness towards our bankers.

Although I personally am happy to acknowledge that I was a bit of a twit, I can also understand why some ex-stormies are sticking to their guns and still endorse the model. No doubt we both think the other is mad, but I'm happy to respect anyone's right to their opinion no matter how dumb I might think it is. That doesn't mean a good healthy debate can't be had on this thread - and that's what I'd love to see happen, if it could take place without the aggro. I know for a fact that there is plenty I could learn from a lot of the posters on ASF, but I'm unlikely to do so if the discussion can't move past the "motivation issue" that keeps being regurgitated. I suspect this is why some haven't posted - especially if they anticipate that any disagreement is likely to be met with a scathing rebuke or a personal attack or a request to justify their motivation in joining Storm in the first place.

I do find some posts from both "sides" to be extreme at times, and often find myself bemused by posts from both ex-stormies and not, but maybe I'm able to understand the mindset and sympathise with even the ex-stormies I often disagree with because of our shared experience.

I guess what I'm trying to say in a longwinded way is "could we try to keep it nice, people?" Reading this thread is a bit like having a ringside seat at a prizefight when Frank and Bunyip go at each other, and while it is no doubt entertaining for some and distressing for others, it seems destined to continue for round after round with neither willing to concede.

 

[Judd]

DocK.

Nice. :1luvu:

 

[Frank Ainslie]

Frank, You are to be admired for coming to a public forum and putting your heart and sole online as such. You use your real name for all to see and tell your experiences for all to read . I think that perhaps that a few on here have more of an issue with your former wealth rather than your losses with Storm. Tall poppy syndrome ? Perhaps those posters are really Neville Nobodys ? that are jealous of your former riches , things they could only dream of achieving. It's easy to sit back and be smart in the cyber world but much harder to make a go of it in the real world. All the best ,as I put on my flak jacket and await the incoming shrapnel.

Thanks IJUSTKNEWIT,

I have never had any qualms about giving my real name because I have nothing to hide. Anything I say about myself on this forum can be verified by going to my web sites. My story is there for all to see. This places me at somewhat of a disadvantage because I have to take what others tell me at face value because few use their real names on this forum. That's their choice and I have no beef with that! It does mean though that some people can say almost anything and there is no way to check that what they say is true. It also means that they can change their story or spice it up to support their argument. “Never!” Some might say.

Let’s take the following for instance. Julia in her posting 2483 on 20th July 2009 stated, "Quite understand how you feel. Some years ago I was "done" by a crooked solicitor. Lost quite a lot of money."

Yet in her recent posting 6430 she states "I've never had bad advice from a lawyer, but don't doubt that it happens." I'm 70 so I have an excuse for having the occasional memory lapse! I presume that she is somewhat younger. Furthermore, it’s hardly something one would forget easily? I’m not calling her a liar at this stage but it’s somewhat odd, don’t you think?

She and others have been at pains to point out our faults. Perhaps it’s time they admitted they are not perfect either. We do not live in a world where everything is black and white. The grey in between is a point where most of us operate. I think if they take a good long look at themselves, they will find that they also occupy the same space in the same place.

As for the shrapnel, I’ve just tossed a hand grenade. Let’s see just where it lands!

The expression "How dare you!" is my bet!

 

[Julia]

Let’s take the following for instance. Julia in her posting 2483 on 20th July 2009 stated, "Quite understand how you feel. Some years ago I was "done" by a crooked solicitor. Lost quite a lot of money."

Yet in her recent posting 6430 she states "I've never had bad advice from a lawyer, but don't doubt that it happens." I'm 70 so I have an excuse for having the occasional memory lapse! I presume that she is somewhat younger. Furthermore, it’s hardly something one would forget easily? I’m not calling her a liar at this stage but it’s somewhat odd, don’t you think?

Unlike you, I feel no need to be defensive. I'm somewhat amazed that you would go trawling through my posts in search of an anomaly, apparently all the way back to July 2009 (!) but if you can be bothered, then it's fine with me.

I did not seek legal advice from the lawyer referred to in my post where I said I was "done". He, in conjunction with a registered valuer, was running a private mortgage scheme. It had nothing to do with his legal practice.

They produced all the documentation supporting each project, including registered valuation of the properties concerned. The LVR was low.

As it eventually turned out, the valuation was grossly inflated.

Worrels were appointed receivers, and their fees ensured that any residual value from the properties was absorbed, virtually nothing being paid out to investors.

It eventually turned out that they'd been operating somewhat of a ponzi scheme which inevitably fell in a heap. The lawyer and the valuer were eventually prosecuted and deregistered plus some other penalty which I cannot now remember, given it's nearly 20 years ago.

The money I put into it was spare cash, absolutely not putting at risk my home or other investments. Yes, I was still annoyed about it because I don't like losing money. I did not, as a result, decide all lawyers and all valuers were shonks.

I was quite happy to share this experience and still am, so I thank you, Frank, for reinforcing my point that there are amoral people everywhere.

On the legal advice aspect, I've had little occasion to consult lawyers for their opinions but when I have, I've met with courtesy and competence. I'd like to think this is typical of the profession, but I don't know.

She and others have been at pains to point out our faults. Perhaps it’s time they admitted they are not perfect either.

Oh for heaven's sake, where have I ever suggested I'm anything approaching perfect??? I have repeatedly negated Harleyquin's insistence that I'm some sort of magically asute financial wizard.

You keep criticising people for offending you, but you make personal attacks on people such as you just have on me. For what reason? A while ago you insisted I was offering financial advice to Harleyquin, something I have absolutely never done, nor to anyone else.

I have never called you stupid or greedy. I do find your postings somewhat disingenuous in that you say one thing but your behaviour indicates something totally different.

That, however, is your right. I suggest your credibility would be enhanced if you cease making personal attacks.

As for the shrapnel, I’ve just tossed a hand grenade. Let’s see just where it lands!

The expression "How dare you!" is my bet!

Sorry to disappoint you. I've been polite enough to respond to your post.
If you're unhappy with this response, by all means feel free to express this if you feel the forum will tolerate it.

DocK: you certainly haven't offended me with your quite lengthy post. It shows an enviable level of objectivity.

Given Frank's clear determination to continue with the personal attacks, however, I'm not optimistic for your scenario of everyone keeping it 'nice', much as I'm in favour of the idea.

 

[Julia]

Just a thought, and I won't be surprised if no one responds:

I wonder how many Storm investors, religiously posting in this thread, or for that matter those reading it and not posting, have spent any time perusing the rest of the forum with its huge amount of investment wisdom?

Might be a more productive use of time than trying to find continued fodder to have a go at someone.

 

[Frank Ainslie]

Just a thought, and I won't be surprised if no one responds:

I wonder how many Storm investors, religiously posting in this thread, or for that matter those reading it and not posting, have spent any time perusing the rest of the forum with its huge amount of investment wisdom?

Might be a more productive use of time than trying to find continued fodder to have a go at someone.

Julia,

The only decent investment advice offered on this forum in my time has been given by Doobsy! I lend store by what he says because he obviously knows what he is talking about and has demonstrated such. He has also come to grips with the issues relating to Storm because he has experience of the industry and understands how it works. The rest of you may have some financial nous but you are no experts.

As for trawling through past posts to find some dirt on you, actually I did not! This particular item was brought to my attention off forum by a member of this forum! Something about “people in glass houses” I believe! That person thought you were being hypocritical. No matter!

The question still remains, "Did you write this or not?" If so, why shouldn't we ask for an explanation? After all, how many times have you and Bunyip asked us to explain ourselves? It therefore seems reasonable to me that you would be willing to explain an apparent contradiction in your thinking back in 2009 as opposed to now! I don't quite understand the explanation you have offered. What's that you are always saying? That's right! "Your explanation makes no sense at all!" You either said it or you didn't!

Julia, Believe me, I understand fully how you feel when people take you out of context, deliberately misunderstanding your intentions, misquoting you and questioning your motives! Shame! But then, you see, I have been subjected to this for some time now. Let's be quite honest! You and others have been preaching to us from the start. You are obviously on another level whereas we are just mere mortals.

I’ve been thinking seriously lately of asking the members of my SOB forum to become members of this forum also with the sole intention of calling you 'a liar' and Bunyip 'greedy' every time you both post anything to give you a taste of how we feel every time we are called 'greedy' or 'foolish' by the both of you. It wouldn't get us anywhere, of course, but we could at least get the same satisfaction out of the exercise that you and Bunyip seem to enjoy.

It’s time you understood that you are not the only one that has feelings on this forum although you seem to think you have a monopoly on such. Many of the elderly that invested in Storm have lost everything, even hope. Therefore, the last thing they want is someone pontificating to them or belittling them because they had the misfortune to place their trust in crooks. That’s probably why many don’t post on this forum. That has to change!

To those Stormies out there that have been reluctant to post on this forum for fear of ridicule, I say to you, “Get stuck into these bullies!” Rather than turn the other cheek, bend over and give them the full monty! Don’t let their perverted outlooks deter you from saying what you have to say. We outnumber them anyway! It’s time we made our numbers count!

Hiding in the shadows is for people that have done something wrong! You have not! Others have! If some on this forum want to belittle you, answer them in kind. You won't be alone. We'll give them a blast as well. It's the only language they seem to understand!

 

[Solly]

Opt Out notices

Re: Sherwood & Mcardle Storm class action and
Tracey Richards (Levitt Robinson) – MBL class action

On 14 December 2011 the Federal Court approved Opt Out Notices ("the Notices") being issued in the Sherwood proceeding and the Richards proceeding.

Source: https://storm.asic.gov.au/storm/storm.nsf/byheadline/Opt out notices?opendocument

 

[Julia]

The only decent investment advice offered on this forum in my time has been given by Doobsy!

Not to diminish Doobsy's contribution, the forum consists of hundreds, probably now thousands of threads on investment and trading, and contains contributions from people who have true expertise.

A couple of interesting examples right now are a discussion of why the All Ords went nowhere for 7 years, and the value or otherwise of short selling.

The question still remains, "Did you write this or not?" If so, why shouldn't we ask for an explanation?

Did I write what?
If you are referring to my remarks about the falsified investment scheme 20 some years ago, yes of course I made that post. Have I said I didn't? I have even been polite enough to describe again what happened so that those who want to know (probably very few) do not have to trawl back to the original post.

I have further commented on my minimal experience of consulting lawyers when I've needed legal advice, this having been perfectly fine.

Fire away with all the insults you like. It doesn't upset me. If it makes you feel good about yourself, go for it.
Just don't expect me to continue to be tolerant enough to respond to manufactured accusations.

And for anyone who is also under the mistaken impression that this forum is just about Storm, I hope you'll take the time to read some of the other very interesting threads available. One of our members, Sir Osisfliver, a financial planner as it happens, has prepared an excellent thread for people with minimal understanding of investing and markets in the "Beginners' Lounge". Tech/A has a similarly excellent thread introducing technical analysis. Plus many threads on the global financial worries, something we all need to be very aware of right now.

 

[doobsy]

Maybe I approach this thread differently but I see it as:

1. A discussion point about how the storm model worked
2. An education process so that other "spruikers" don't rip off the next generation
3. A chance to get feedback from ex clients explaining what value they saw and why they felt it was a good idea.

Now that last one causes the most trouble. For the forum to understand Storm we need feedback from clients. We need to know more about what they went through from the first seminar to the final sign off of the SOA to the phone calls as markets crashed.

This feedback should not then automatically be ridiculed as people being silly. I keep saying Storm had the slickest sales pitch out there and I want others to know more so they can avoid the next version of Storm. No matter how the hearings proceed and what blame is laid, to me Storm and EC still account for 90% of the damage done.

I encourage the ex clients to be honest with the forum - what, why, how. What personal / emotional buttons were pushed to make it ok to accept the advice. Was it the thought of missing out? The peer pressure? These are the things the forum needs to know to better understand.

I am over the who's fault is it. I think all parties must accept some responsibility, Storm and the Banks clearly the bulk of it. I hope our system reimburses those who deserve it and explains to those who don't why they don't deserve it. I personally don't want to see a situation where risk is no longer respected because the Govt just steps in and reimburses those who make enough noise. I am sure that if I spill coffee on myself I can probably find a lawyer that can find 'some' legal precedent that will allow me to sue myself if I want to.

I enjoy this forum and all of it's participants and hope that we continue to flesh out the saga as it continues.

 

[bunyip]

Today, January 10th, is the first anniversary of the flash flooding that devastated parts of southern Queensland this time last year.
As a resident of an area that was right in the thick of it, I was an eye witness to the horrors that unfolded as homes and business were destroyed and lives were lost.

Three teenagers lost both their parents as the flood tore apart their home. The surviving son, big brother to his two younger sisters, was burnt to death in a house fire last year. Many families lost one or two members, their homes and all their possessions, and then had their insurance companies refuse to pay up due to some stupid technicality about what constitutes a flood and what doesn’t.
I could give you many heart-rending stories of what I saw – suffice to say that it was traumatic for those affected, and many people remain traumatized a year later.

You Stormers have had a tough time, no question about it. You’re more than justified in feeling that life has dealt you a rough hand.
But on this day I ask you to spare a thought for the flood victims who’ve lost even more than you. Not only have they lost money like you have, but many lost their entire businesses and livelihoods, their homes and possessions, their pets, their cars, and worst of all, friends and family.
Some families have not even been able to give their loved ones a decent burial - the bodies have never been found.

Sometimes we need to take a step back from our troubles and realize that there are people worse off than ourselves.

 

[DocK]

Today, January 10th, is the first anniversary of the flash flooding that devastated parts of southern Queensland this time last year.
As a resident of an area that was right in the thick of it, I was an eye witness to the horrors that unfolded as homes and business were destroyed and lives were lost.

Three teenagers lost both their parents as the flood tore apart their home. The surviving son, big brother to his two younger sisters, was burnt to death in a house fire last year. Many families lost one or two members, their homes and all their possessions, and then had their insurance companies refuse to pay up due to some stupid technicality about what constitutes a flood and what doesn’t.
I could give you many heart-rending stories of what I saw – suffice to say that it was traumatic for those affected, and many people remain traumatized a year later.

You Stormers have had a tough time, no question about it. You’re more than justified in feeling that life has dealt you a rough hand.
But on this day I ask you to spare a thought for the flood victims who’ve lost even more than you. Not only have they lost money like you have, but many lost their entire businesses and livelihoods, their homes and possessions, their pets, their cars, and worst of all, friends and family.
Some families have not even been able to give their loved ones a decent burial - the bodies have never been found.

Sometimes we need to take a step back from our troubles and realize that there are people worse off than ourselves.

Agree absolutely. I was watching a tv show on channel 9 a couple of nights ago with the family and commented to my husband that we still had so much to be grateful for, and that we should count our blessings that we're so much luckier/better off than some. There's certainly more to life than money.

 

[Julia]

Today, January 10th, is the first anniversary of the flash flooding that devastated parts of southern Queensland this time last year.
As a resident of an area that was right in the thick of it, I was an eye witness to the horrors that unfolded as homes and business were destroyed and lives were lost.

Three teenagers lost both their parents as the flood tore apart their home. The surviving son, big brother to his two younger sisters, was burnt to death in a house fire last year. Many families lost one or two members, their homes and all their possessions, and then had their insurance companies refuse to pay up due to some stupid technicality about what constitutes a flood and what doesn’t.
I could give you many heart-rending stories of what I saw – suffice to say that it was traumatic for those affected, and many people remain traumatized a year later.

You Stormers have had a tough time, no question about it. You’re more than justified in feeling that life has dealt you a rough hand.
But on this day I ask you to spare a thought for the flood victims who’ve lost even more than you. Not only have they lost money like you have, but many lost their entire businesses and livelihoods, their homes and possessions, their pets, their cars, and worst of all, friends and family.
Some families have not even been able to give their loved ones a decent burial - the bodies have never been found.

Sometimes we need to take a step back from our troubles and realize that there are people worse off than ourselves.

+1. And their situation is not being helped by the fact that the government is apparently still sitting on some millions of the donated relief funds.
http://news.theage.com.au/breaking-...ctims-desperate-for-funds-20110505-1e8w8.html

 

[SJG1974]

Happy new year to all...have just returned from a break and ready to get stuck into the New Year.

In looking back, I noted that Frank mentioned that borrowing against his home was high risk, and totally unnecessary. I am pretty sure this is the type of thing that people like me have been angling at all along!!!

Further, I believe that in many cases borrowing against people’s houses was totally unnecessary and was merely a device to inflate Storm's bottom line.
In our particular case, our borrowing against the house with the assets we already had in cash was totally unnecessary and of no benefit to us whatsoever even if the markets had not been subject to a GFC. Every time we borrowed, Storm lined its pockets. Everything it did therefore was to achieve this end.

Personally, this is the type of thing that I have been challenging Frank on from the beginning….why would he do something that was completely unnecessary, just because a licenced adviser said it was a good strategy? If Frank thought that taking such a risk was unnecessary and of no benefit, then why do it???

I understand that Storm may have glossed over the entire LVR in the SoA, by ignoring the debt against the home, but again, clients would have known they had the loan, they signed the paperwork! Its your money Ralph, as the old saying goes….

As I pointed out in an earlier post, the double gearing brought forward the negative equity situation for clients…the absence of a margin call only enhanced the problem…

We have a scenario where:

Client borrows $400K against house
Combined with $600K of own investments, to make $1m
Then gears this up again to have a margin loan portfolio worth $2m....

So total debt is $1,400,000
Total equity is $2,000,000
Margin Loan LVR is 50% (as they would count the borrowings against the house as equity)
Total LVR is 70%

In this scenario, it would take a fall of 30% in the investment, for the client's total LVR to be 100%:

Total debt still at $1,400,000
Total equity is $1,400,000 (having fallen by 30%)
Margin loan LVR is 71.4% ($1,400,000 of equity divided by margin loan of $1,000,000)
Total LVR 100% (i.e. no equity left)

At this point, the fall in the investment hasn't even triggered a margin call...by the time the margin call comes, the clients will be well and truly in negative equity (assuming my figures are right)!

So to use Frank’s words, not only was borrowing against his home totally unnecessary and of no benefit, what it did in fact do was escalate the problem to a high degree, and I am guessing that clients didn’t even realise they were in negative equity that early in the piece; only thinking they were when the margin calls failed to materialise and their margin loan portfolios slipped further and further. They were screwed well and truly before that happened.

I agree with doobsy on the value I personally get out of this forum…

Maybe I approach this thread differently but I see it as:

1. A discussion point about how the storm model worked
2. An education process so that other "spruikers" don't rip off the next generation
3. A chance to get feedback from ex clients explaining what value they saw and why they felt it was a good idea.

..........

I enjoy this forum and all of it's participants and hope that we continue to flesh out the saga as it continues.

I would add that for me, the psychology of investing is quite fascinating…why do people take risks with things they don’t understand, why don’t people take the time to understand the risks they take, why do people take risks when they don’t need to, and how do they react when things ultimately go wrong? And on top of these, how do the spruikers, the conmen if you like, sell the dream to these investors and justify the fees they charge? All of these questions and their answers are things that I like to read about and have found this forum helpful in providing an insight. However, there are still many answers to come I hope.

Today, January 10th, is the first anniversary of the flash flooding that devastated parts of southern Queensland this time last year.
As a resident of an area that was right in the thick of it, I was an eye witness to the horrors that unfolded as homes and business were destroyed and lives were lost.

Three teenagers lost both their parents as the flood tore apart their home. The surviving son, big brother to his two younger sisters, was burnt to death in a house fire last year. Many families lost one or two members, their homes and all their possessions, and then had their insurance companies refuse to pay up due to some stupid technicality about what constitutes a flood and what doesn’t.
I could give you many heart-rending stories of what I saw – suffice to say that it was traumatic for those affected, and many people remain traumatized a year later.

You Stormers have had a tough time, no question about it. You’re more than justified in feeling that life has dealt you a rough hand.
But on this day I ask you to spare a thought for the flood victims who’ve lost even more than you. Not only have they lost money like you have, but many lost their entire businesses and livelihoods, their homes and possessions, their pets, their cars, and worst of all, friends and family.
Some families have not even been able to give their loved ones a decent burial - the bodies have never been found.

Sometimes we need to take a step back from our troubles and realize that there are people worse off than ourselves.

Good call again bunyip.