Storm Financial Group

Solly · 24 February 2012

SJG1974 said:
Not a problem Solly. Always happy to clarify my position.

And I have stated several times that I am not putting Frank or any Storm victim "on the stand" as it were.

And I am not bracketing all storm clients as greedy, money hungry morons. I am sure that some of the 4,000 clients probably were, but again, how would we know? And I am certainly not saying that the banks are an innocent party in all this....far from it. But it would be nice to have some balance around here.

Simply put, there is more to this whole saga than what the banks did and didn't do. Much more. There are more factors behind why people lost so much money in this mess than simply what the banks did and didn't do. However, it seems that those posters who were with Storm have chosen to focus purely on this aspect.

Some are happy to accuse the banks of wrongdoing, of the banks and storm for telling fibs, to did and dig to find the "truth". Yet when other aspects are raised, such as the why they invested in the first place, or when they are challenged to back up and explain statements they have made, they clam up.

<snip>

Questions have been asked and Stormers have not been able or prepared to answer them. I cant imagine the hurt of what they are going through, and I genuinely feel sorry for them. This whole mess should not have happened. But it did, like so many other messes before and in the future. But again, this forum is not a Storm support group, it is a place where we can look at all the issues...and at the moment the focus is mainly on one thing and one thing only....the banks. Focussing on the banks wont help prevent the next gullible 65 year old when he walks into a financial planners office, focussing on what that 65 year old should and shouldn't do will provide a better lesson.

Anyway, i trust that has clarified things.

On a separate issue, Solly with your legal knowledge, perhaps you can answer this:

If the UMIS case gets up, who pays the compensation? I am guessing that Storm and the CBA would be jointly to blame, yet Storm no longer exists, so is unable to pay damages. So would the CBA have to stump up Storm's half, or only their own, which would mean that clients would only receive half of what they are entitled to?

Thanks SJG1974,

You have clarified your position to me. I don't hold a view on the apportioning of blame if guilt is determined, that is a matter for the courts.

S

bunyip · 24 February 2012

jjtebj12 said:
Assumptions:

You assume I was greedy for investing in Storm.
You assume I didn't do any investigations.
You assume I wanted a quick get rich scheme.
You assume the banks did no wrong.

I had two Bank Managers and my Accountant meet with Storm representatives and go through the same process that I went through. Then the Bank did there due diligence and said it was a good investment. That Bank has since settled my case. Why because they gave advice based on my assets.

Wrong.....I made none of those assumptions about you or the banks.

bunyip · 24 February 2012

Frank Ainslie said:
Hi jjtebj12!

Some of the self-appointed experts on this forum have labelled those that invested in Storm stupid and gullible. Yet, it seems, Bank Managers, Accountants, and ASIC among others gave Storm’s model a tick of approval? Shouldn’t they too have had more sense? In fact, with their backgrounds in finance, if Storm’s scheme was that obvious, they would have been the first ones to spot it, one would think!

The truth of the matter is that if these professionals couldn’t see through it, how could ordinary investors be expected to do so? People on this forum that claim otherwise should wake up to themselves!

Frank

Is that the best you can do – claim that if ASIC and bankers and accountants couldn’t see through it, then nobody could?

You rarely if ever manage to back your profound statements with any sort of solid logic or sound reasoning or common sense.

After all the years of ASIC’s well publicised incompetence long before Storm came to prominence, I would have thought that a worldly and experienced businessman/investor like yourself would have treated ASIC's views with extreme caution.
As for the opinions of bank managers and accountants - they are primarily lenders and taxation advisors respectively, not investment experts.
Many private investors, like you for example with your shopping center, would have more investment and business acumen by far than the average banker or accountant.

Of the many thousands of people who approached Storm and looked at their strategy, some signed on, some walked away after judging it too risky. There’s no point in arguing if it was 75% who walked away, or 60% or whatever. The fact is that many thousands of people rejected the Storm strategy as too risky.
Clearly, this fact makes a mockery of your continued assertions that ‘this could have happened to anyone, nobody could have seen through the Storm strategy, even savvy investors couldn’t have avoided being caught, etc. etc..

If you’re going to continue making such claims, let’s see you back your viewpoint with some solid argument. Tell us exactly why, in your opinion, nobody could have seen the pitfalls and terrible risks in the Storm model. And don't hide behind irrelevant excuses like bankers and accountants and ASIC. Let's see you come up with a reason why you personally couldn't have conducted your own common sense evaluation of Storm's proposal, just as the thousands who rejected Storm clearly did.

In an earlier post I demonstrated to you how just ten seconds of research could have revealed the risks in Storm’s strategy. I backed that statement with historical figures, logic and sound reasoning.
Let’s see you do the same with your views, Frank – it shouldn’t be too hard if your beliefs are formed from a solid basis of fact.

Tysonboss1 · 24 February 2012

Frank Ainslie said:
1, Some of the self-appointed experts on this forum have labelled those that invested in Storm stupid and gullible. Yet, it seems, Bank Managers, Accountants, and ASIC among others gave Storm’s model a tick of approval? Shouldn’t they too have had more sense? In fact, with their backgrounds in finance, if Storm’s scheme was that obvious, they would have been the first ones to spot it, one would think!

2, The truth of the matter is that if these professionals couldn’t see through it, how could ordinary investors be expected to do so?

3, People on this forum that claim otherwise should wake up to themselves! Storm was one of the biggest financial advisory firms in the country. It's not what Storm offered that is in question.

4, It's what Storm actually did with our money and its motivation for doing so that is central to everything.

1 ,There is nothing wrong or immoral with gambling, speculating or taking a punt, and it is not the Bank managers, accountants or asic's job to stop you gambling, speculating or taking a punt. any one looking at storms scheme prior to the crash would have known that you had a chance of making some very good returns but also some big losses, Hence why they asked to hold assets as security eg, your house, cash and stock.

If you really want to gamble, then it's the banks job to facilitate that by making sure your holding enough equity to cover themselves and the counter party, it is not thier job to worry about your side. they are assuming you have thought things through and are set up to take the risk.

2, easily, a short bit of reasearch on margin loans and a brief understanding of how stock markets have flucuated over the passed 100 years should have given it away.

3, well it was what they were offering, they were offering a product that would work like a charm for 24 years out of ever 25year period, but wipe out 1 year out of 25. unfortunatly you were invested in that 1 unlucky year.

4, they put it on the roullette table just as you asked them to,

bunyip · 24 February 2012

Here’s an interesting snippet from the Storm website........

Despite investors having access to a plethora of live economic and market data, historical records, research tools and market commentaries, we warn that nobody should rely solely on this information for financial decisions. Storm Financial and affiliated companies accept no responsibility for any loss or damages to a person based on decisions they've made as a result of information on our website.

The way I read this, Storm was dropping a subtle hint that investors should do their own research rather than relying solely on the information that Storm gave them.

bunyip · 24 February 2012

Tysonboss1 said:
1 ,There is nothing wrong or immoral with gambling, speculating or taking a punt, and it is not the Bank managers, accountants or asic's job to stop you gambling, speculating or taking a punt. any one looking at storms scheme prior to the crash would have known that you had a chance of making some very good returns but also some big losses, Hence why they asked to hold assets as security eg, your house, cash and stock.

If you really want to gamble, then it's the banks job to facilitate that by making sure your holding enough equity to cover themselves and the counter party, it is not thier job to worry about your side. they are assuming you have thought things through and are set up to take the risk.

2, easily, a short bit of reasearch on margin loans and a brief understanding of how stock markets have flucuated over the passed 100 years should have given it away.

3, well it was what they were offering, they were offering a product that would work like a charm for 24 years out of ever 25year period, but wipe out 1 year out of 25. unfortunatly you were invested in that 1 unlucky year.

4, they put it on the roullette table just as you asked them to,

Good post Tyson, although it might be a stretch to say the Storm strategy would have worked well in 24 out of 25 years.

But your point is well made – the strategy worked well when the market performed well, but was guaranteed to fail spectacularly once the inevitable bear market set in. In other words it was a gamble that couldn’t work over the longer term.

bunyip · 24 February 2012

jjtebj12 said:
Why are some people on this forum so concerned if the Banks are at fault.

Why indeed? And why are these people usually you Stormers?

Could it be because, although none of you truly believes that the banks are solely responsible for your losses, their deep pockets present the only possible means of you getting some of your money back?!

Most of the non-Stormers who post on here have little interest in the banks. We simply offer the completely reasonable and balanced viewpoint of 'If a court of law finds the banks guilty of any illegality, then they should be penalised.'

robz7777 · 24 February 2012

bunyip said:
Good post Tyson, although it might be a stretch to say the Storm strategy would have worked well in 24 out of 25 years.

But your point is well made – the strategy worked well when the market performed well, but was guaranteed to fail spectacularly once the inevitable bear market set in. In other words it was a gamble that couldn’t work over the longer term.

I believe I read that when additional equity became available (growth through 2003-07 for example) additional funds were borrowed and put into the market.. It was always going to end badly..

Harleyquin · 24 February 2012

Julia I am fully aware of what I've posted. I find your comments somewhat confusing.

As for the 7% upfront, it was just that upfront, unlike other planners who charge on an annual fee. We, like many others, thought that over time that those up front fees would pay for themselves. If we were wrong then we were wrong end of story Jula. What is your point in continually rehashing this point?

If you're worried about the future performance of your bank shares Julia then you, like everyone else have a choice.

I hope the Aussie banking sector stays strong. I just want more transparency for all financial institutions.

Harleyquin · 24 February 2012

Thanks Maccka agree with you re Albert Einstein's quote.

Let's hope that some of the more left wing posters on this forum 'get it'!!!

bunyip · 24 February 2012

robz7777 said:
I believe I read that when additional equity became available (growth through 2003-07 for example) additional funds were borrowed and put into the market.. It was always going to end badly..

Which is much the same situation as someone having a win on the horses and then putting those winnings on the next race. And if he has a second win he once again puts his winnings on the next race.
Sooner or later he loses everything.

bunyip · 24 February 2012

jjtebj12 said:
I had two Bank Managers and my Accountant meet with Storm representatives and go through the same process that I went through. Then the Bank did there due diligence and said it was a good investment. That Bank has since settled my case. Why because they gave advice based on my assets.

This bank that told you it was a 'good investment' - I presume this same bank provided your finance?

If so, did it not occur to you that they might have a vested interest in telling you how good the investment was?
Did it not occur to you that such advice could hardly be considered impartial?

Did it not occur to you that asking other people for their opinions was a poor substitute for you doing your own research, such as finding out what the stock market and margin loans were capable of throwing at you?

And did it not occur to you that bankers are lending specialists, and accounts are taxation specialists, but neither of them are investment specialists.

Yes, I know - you went to Storm because you thought they were investment specialists. That was a completely reasonable thing to do in my opinion.
The tragedy is that so many of you Storm clients apparently didn't see the need to conduct independent research before mortgaging homes and committing huge sums of borrowed money to the market.
Or if you did see the need, you appear to have had little idea of how to go about it.

Harleyquin · 24 February 2012

Bunyip stop being a proverbial pain. Sounds like you've got a fistful of bank shares you're just a little concerned about too???

Mindstorm · 24 February 2012

bunyip said:
Yes, I know - you went to Storm because you thought they were investment specialists. That was a completely reasonable thing to do in my opinion.
The tragedy is that so many of you Storm clients apparently didn't see the need to conduct independent research before mortgaging homes and committing huge sums of borrowed money to the market.
Or if you did see the need, you appear to have had little idea of how to go about it.

Bunyip,

This is exactly what I did.

Completely daft in retrospect! Isn't 20/20 hindsight wonderful?

This is not a 'dig' at you Bunyip, you know me better than that

I do have to agree with some other stormies in that we thought we were dealing with 'people of integrity'.

Not sure how old the posters on this thread are, but in my childhood and early adulthood we saw doctors, bank managers, headmasters/mistresses, and the like as people we could rely on in our communities who we could turn to for 'solid' advice.

I personally believe that this was the downfall of many stormies.

MS

Solly · 24 February 2012

bunyip said:
Here’s an interesting snippet from the Storm website........

Despite investors having access to a plethora of live economic and market data, historical records, research tools and market commentaries, we warn that nobody should rely solely on this information for financial decisions. Storm Financial and affiliated companies accept no responsibility for any loss or damages to a person based on decisions they've made as a result of information on our website.

The way I read this, Storm was dropping a subtle hint that investors should do their own research rather than relying solely on the information that Storm gave them.

bunyip

To me your extrapolation is without merit. The statement is valid. The disclaimer is specific in relation to the information contained on the website. Happy to discuss further.

S

Julia · 24 February 2012

Harleyquin said:
As for the 7% upfront, it was just that upfront, unlike other planners who charge on an annual fee. We, like many others, thought that over time that those up front fees would pay for themselves.

Fair enough. I'd never pay for such advice in advance, but can understand why you would have done so.

If we were wrong then we were wrong end of story Jula. What is your point in continually rehashing this point?

I have no wish to rehash anything. It has all been done to death imo. I was simply responding to a post from Maccka.

If you're worried about the future performance of your bank shares Julia then you, like everyone else have a choice.

Why do you assume I have bank shares? Or any shares for that matter?
For the record I do not hold any bank shares. Neither have I held any for more than four years.

bunyip · 24 February 2012

Mindstorm said:
Bunyip,

This is exactly what I did.

Completely daft in retrospect! Isn't 20/20 hindsight wonderful?

This is not a 'dig' at you Bunyip, you know me better than that

I do have to agree with some other stormies in that we thought we were dealing with 'people of integrity'.

Not sure how old the posters on this thread are, but in my childhood and early adulthood we saw doctors, bank managers, headmasters/mistresses, and the like as people we could rely on in our communities who we could turn to for 'solid' advice.

I personally believe that this was the downfall of many stormies.

MS

Mindstorm

I’m not trying to rub it into you Stormers, but this forum gives us a golden opportunity to discover the how’s and why’s of the Storm debacle. By discussing these issues we just might be able to steer some future investors away from the mistakes that helped to bring you undone.
We’ve all made mistakes at times, me included. It’s important to recognise these mistakes, learn from them and accept responsibility for them, as I know you do. But there are some on here who flatly refuse to do so.

bunyip · 24 February 2012

Harleyquin said:
Bunyip stop being a proverbial pain. Sounds like you've got a fistful of bank shares you're just a little concerned about too???

Actually yes, I do have a bank share or three. But I’m not at all worried about them. Here’s why...

Any payout from the banks (if there is in fact a payout) will be a drop in the ocean to them in real terms.
The market will over-react, as markets always do, to any perceived bad news regarding the banks. This may cause a dip in the price of some bank shares. But these over-reaction dips are usually short lived, and the price bounces back in short time.
A nimble footed investor sees these dips as an opportunity to buy merchandise at discounted prices.
Maybe I’ll use the situation to my advantage by buying some long dated call options once banks shares have dipped a little, or maybe some CFD’s......... if in fact there is a payout ruling against the banks. And there’s no certainty about that at this stage.
I’ll play it by ear, but I reckon there’ll be an opportunity in there somewhere for those who know how to take advantage of it.

Honestly HQ - I think you'll find this will be pretty much small beer for the banks if the ruling goes against them.

Garpal Gumnut · 24 February 2012

bunyip said:
Mindstorm

I’m not trying to rub it into you Stormers, but this forum gives us a golden opportunity to discover the how’s and why’s of the Storm debacle. By discussing these issues we just might be able to steer some future investors away from the mistakes that helped to bring you undone.
We’ve all made mistakes at times, me included. It’s important to recognise these mistakes, learn from them and accept responsibility for them, as I know you do. But there are some on here who flatly refuse to do so.

I would agree bunyip, it is a valuable opportunity to self examine on forums such as this.

I for one have learnt from a dispassionate self examination of my investing failures on ASF.

Perhaps for the Storm investors it is too recent, or they will never have the capacity to develop any insight, or that as they say they were jejunes in the hands of Storm, the Banks and ASIC.

gg

Ijustnewit · 24 February 2012

bunyip said:
Actually yes, I do have a bank share or three. But I’m not at all worried about them. Here’s why...

Any payout from the banks (if there is in fact a payout) will be a drop in the ocean to them in real terms.
The market will over-react, as markets always do, to any perceived bad news regarding the banks. This may cause a dip in the price of some bank shares. But these over-reaction dips are usually short lived, and the price bounces back in short time.
A nimble footed investor sees these dips as an opportunity to buy merchandise at discounted prices.
Maybe I’ll use the situation to my advantage by buying some long dated call options once banks shares have dipped a little, or maybe some CFD’s......... if in fact there is a payout ruling against the banks. And there’s no certainty about that at this stage.
I’ll play it by ear, but I reckon there’ll be an opportunity in there somewhere for those who know how to take advantage of it.

Honestly HQ - I think you'll find this will be pretty much small beer for the banks if the ruling goes against them.

Either that or the amount of shares you own are not worth talking about. Mostly in life you will find the people beating their chest the loudest are the smallest in the jungle.

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