Mindset - Part 2
Some have said that borrowing against the house was a complete no-brainer. I’ll admit now that this was an unwise thing to do, but it is not a concept that is completely unheard of in financial circles. This type of advice was not only being handed out by Storm but by other financial advisers as well and was condoned by ASIC and the Banks. When Helen borrowed money to buy her shop, she mortgaged the house to do so which is a legitimate way of obtaining funds needed for a business venture. Today, people are amazed that we did this but they need to remember that this approach was neither illegal or restricted to Storm.
I am not recommending such a practice to anyone because it can prove lethal as we found out! Merely commenting on the legitimacy of such.
It’s easy now to say that Storm’s strategy was a con because their activities have been exposed to public scrutiny these last three years. There was no way of knowing then that Storm was being deceptive or misleading in its conduct or that they would not abide by their contractual obligations; namely to monitor and keep a tight rein on our portfolios and ensure that the safe-guards that they assured us were in place were triggered when the circumstances demanded it. People also need reminding that Storm had a data-base of thousands of clients, an impressive infra-structure that had been built over a number of years, a past history of success reflected in the fact that most of their business came from referrals and were handling hundreds of millions of dollars in client portfolios. They were not some shonky mob bailed up in a backroom in Shonksville with a shingle stating, “Financial Advice for Those that Want to Lose Their Lifesavings!” I think we therefore need to get real about this if we are ever to get to grips with the real story!
There is no question that what Storm offered and the way the directors of Storm went about their business was very slick. Here’s what Anne Lampse said about this in part of her article “Storm Lessons” published in the “Money” magazine in March of 2010.
“Storm Financial client Liz Watts acknowledges that her investment experience with Storm was a clever seduction. From the moment she and her Barrie walked into the glitzy top floor of Storm's North Sydney offices, with its 360-degree view of Sydney's skyline, and experienced the warm hospitality of Storm's friendly and attractive staff, Liz was hooked: ‘The overwhelming message was that this is the style in which we live and we can do the same for you.’
There is no doubt that Storm Financial's Emmanuel and Julie Cassimatis were masterful in their duchessing of clients, imparting comfortable and relaxed’ feelings and membership of a clever, wealth-generating group. ‘We knew we were being duchessed but the people were so genuinely nice,’ Liz recalls. ‘And they all said they were Storm investors too.’
Attending a couple of swish Storm cocktail parties where everyone appeared happy, content and shared their stories of investment success reinforced this view.
Liz was shown charts and statistics about sharemarket behaviour, figures on sharemarket recoveries from previous downturns, and verbally assured of the relentless rise in the real estate market and the continuing wealth of a fast-growing China.
All of this reinforced the investment strategy put in front of her. Her daughter, who also was with Storm, had originally asked to invest only part of her total assets in the scheme. She was told: "The Storm model is not for you then." The push-off worked, and both threw everything into the Storm investment model. Liz said there was never any pressure to invest or to force them to join the scheme. It just sounded almost too good to be true.
Previously a cautious investor who directed her savings into super and bank deposits, Liz and her husband ploughed all their savings into Storm, and borrowed more from the Bank of Queensland, using some home equity to build a bigger investment portfolio.
Soon they had a margin loan as well as a mortgage on a previously unencumbered home. This was all part of the Storm investment template.
Her aim was to have enough for a comfortable and independent retirement and for the first two years of the investment she couldn't have been happier with the result. Returns exceeded 30% a year; the share portfolio was growing with top-ups. They had holidays abroad.
It came to an end at the end of 2008 after the global financial crisis (GFC) tore through the sharemarket, wiping more than 50% of its value over a few months. Now their retirement savings are gone and the couple is left with a mortgage on their home, living on the pension and the odd bit of casual work…
With the wisdom of hindsight, Liz is stunned that she risked her house.
"But it was so slick, so slick. It just seemed to be that they were so into it; that they were such believers themselves."
Julie has said, “Why? Were people so impressed by Storm's gold plated bathrooms and the high flying lifestyle exhibited by those who were invested in the bull market, that they were intimidated out of trusting their own judgment?”
I must confess that I too was impressed by the Storm toilets in Storm’s Brisbane Office. But, then that was part of Storm’s sell. If I had walked into such and someone had handed me a pot beforehand to use, I don’t think I would have been too willing to listen to anything Storm told me. If you want to convey success to anyone, you need to be seen to be successful and this is conveyed by the wealth you exhude.
There was no question that an awful lot of brainwashing took place where Storm’s clients were concerned. Indeed, today there are still some that believe the Casimatises were not to blame for what happened to us despite what has now been revealed.
There are some on this forum that will never accept our explanation for signing up with Storm. They are not alone. When people pick up a newspaper and read about an event such as this, they are apt to remark, “How could people be taken in like this? Stupid buggers! They only have themselves to blame!” We ‘Stormies sometimes endure the same comments from friends or people we meet that learn of our involvement with Storm. I do not condemn them for their views because like many on this forum they are unaware (until now, that is) of all the facts.
Certainly, such epithets as ‘foolish’, ‘unwise’, ‘imprudent’, 'too trusting', or just ‘plain stupid’ can be ascribed to our behaviour because we made some fundamental mistakes. I can live with this! One of these mistakes was our failure to ensure that we understood every aspect of Storm’s plan. Our failure to do that and our failure to get alternative opinions as suggested earlier are things we must now live with and we do.
At the end of the day though the people that lost everything in Storm were not mindless automatons that marched like lemmings until they ran out of land and plunged into the sea. They were people that grew up in a time when trust and integrity meant something. A time when one could leave your door open and no one would steal everything you had. Today, we live in a "dog-eat-dog" world where all the old values have disappeared. People can no longer be trusted and ‘Stormies shortcomings were that they did not insulate themselves accordingly.
There are many ‘Stormies’ that now blame themselves for what happened to them. There is a difference, however, between making an honest mistake in good faith and laying the blame on yourself. The words ‘Mistake’ and ‘Blame’ have two completely different meanings The word ‘blame’ means "to hold responsible" whereas the word ‘mistake’ means 'to make an error in action, calculation, opinion, or judgment caused by poor reasoning, carelessness, insufficient knowledge, etc." Certainly we showed poor judgement when we employed the services of Storm, and this was a mistake on our part. We must therefore be honest enough to say so. We stuffed up big time and we are the ones that are now paying the ultimate price for doing so! However, we all also need to understand that to err is human! If I look back on my life, I have made many mistakes in both my private and business life because I’m fallible like everyone else. I am not the Pope as some suspect although I may come across like him.
The four thousand or so Storm clients that marched into Hell and found no heavenly cause when they arrived there were ordinary Australians from a cross section of our society. They could have easily been family members, friends or acquaintances and some well may have been.
Sometimes, we get lucky in life and our mistakes do not result iin our being hurt or do harm to others. Julia, I believe, had one such moment recently where luck played a part in her avoiding making a bad decision. We ‘Stormies’ should by now be well aware of our mistakes when it comes to Storm. We know many who are aware also, our families for instance -– it’s in our face every day. However, when we joined Storm, our intentions were pure and we never set out to harm anyone. The activities of Storm and the Banks in their dealings with us were neither pure or honest, and were conducted in an unconscionable and self–serving way that is unacceptable. They are the ones that are now being held to account, not us. If the Banks’ lawyers ever stood up in Court and declared, “Storm’s clients are partly to blame!” think how that would go down? You should therefore hold that thought!
That's it folks! I'll now give you some rest for a while!