Storm Financial Group

[shibby]

The website is still down.

It looks bad for the investors.

They said they would be back on board this morning.

gg

They are back I spoke to Sydney office today they are fully staffed, does that mean it doesn't look bad for investors?
In my humble opinion it looks like they are tring to do the right thing - they are not hiding, have not left the country, they are there to answer questions.
So lay off and give them a break until the truth is revealed.

 

[Julia]

Hi Julia,

When you consider people who are seriously wealthy, most of them got that way by taking risks and using maximum leverage.

In 4 years of 20+% sharemarket returns at 80% leverage you would have almost doubled your money annually.

ie 1 million to 8 million ( if no fees were involved)

My point was rather that if the poster had $4 million why was there a need to leverage further, thus risking considerable loss in a downturn.

if u did not monitor things on a very regular basis, with that leverage you could be wiped out completely in the year 2008.

Quite so. Therefore it's beyond my comprehension that anyone would have that sort of money invested, leveraged so highly, be unable to avoid hearing about how the markets were falling, how the whole financial system was coming down around our ears, and not do anything about it???

I don't care how much claim people make about trusting their financial advisers etc etc. If you put money out there in the market, you have to take responsibility yourself for showing a modicum of common sense about what happens to it. If you're dealing with millions of dollars, then it's just damn stupid not to equip yourself with a decent level of financial literacy.

there are so many people who have been in business or inherited or sold there place in Sydney that would put $1m into an investment and believe they were on a great thing, its not funny, they would not be sharemarket sophisticates.

You don't have to be a sharemarket sophisticate to monitor what the market is doing. It has been all over all the media almost every single day throughout 2008. You'd have to be living under a rock in the Gobi Desert not to know what was happening.

I had money in 2 geared share funds) Colonial First State and Macquarie Geared) and they performed fantastically for 3 years.

Luckily I sold them as soon as the market was down 10%.

I'm pleased to hear it. However, luck should have had nothing to do with it, but rather a considered decision which you seem to have made.

I would hazard a guess a lot of people didnt

No, and we now see the results.

 

[Solly]

Can anybody explain how the insurance works?
Can the clients have access to any pay out with out taking "legal" action?

 

[Trevor_S]

investors: someone who'll hold in a bear market in the mistaken belief 'itll come back'.

For that statement to have any validity you would need to be able to show a decline in the All Ords in Aus. that hasn't come back. The issues STORM clients have at the moment are all about using the wrong methodology to leverage purchases (that and the fact huge fees cut into any genuine profits made but that's another matter entirely) I have never run my margin loans above 30% LVR and always gear positively.

I am still banking my dividends from shares purchased in the early 1990's and held through several market "corrections". I just don't accumulate at times when shares are over priced, like the last couple years but I do hold, accumulate cash and wait.

I am buying again (not much but into the six figures worth, started in late Nov and Dec) because I think in 10 years time the market will be above where it is now. I have paused now, will wait another couple months, continue to investigate companies I am interested in and start purchasing again

You could be right, this time it might be different and we'll never recover but my "guess" is you're wrong and I am backing my guess with cash.

 

[Stormin_Norman]

stop losses anyone????????

how can you let your stocks fall by half and not get out?????

investors: someone who'll hold in a bear market in the mistaken belief 'itll come back'.

For that statement to have any validity you would need to be able to show a decline in the All Ords in Aus. that hasn't come back.

very true trevor.

i guess my 'long term' of 4 days is a bit shorter then other's definition of long term.

i will point out that the 1927 DOW correction took to 1968 to recover in real dollar terms in some floppy attempt at defending my point. rather then getting out at -10% investors believe itll come back, with a much more short term view then you have.

youre a warren buffett buy and hold man. im a john henry go with the trend man.

 

[Glen48]

In the 16 hundred 's we have the Tulip bubble collapse in the 2,000 we had the credit bubble collapse, in the X yrs we will have the next one.

 

[Stormin_Norman]

dont forget the railways (1800s), and the automakers (1920s).

the only big bubble that didnt really crash the economy was the dotcom (2000). maybe our current drama is a hang over from that somewhat?

anyways. this is tangential to storm financial.

why will people get two opinions on their health, but not their financial affairs?

 

[awg]

There website is operating

http://www.stormfinancial.com.au/index.php

no mention of any trouble!

here's a quote off it

" We've seriously bargained to achieve reduced interest rates, lower establishment and transaction costs and some of the lowest management fees in Australia. This is the result of significant positive relationships with some of Australia's leading financial institutions."

Kind of ironic in light of some of the posts on this thread.

As I have mentioned before, what really does not add up to me is how people found themselves in margin calls.

I cannot find any plausible explanation for this


As I see it there are only a few possibilities

1) Storm had a arrangement with CFS, where funds where pooled and each client had there individual gearing managed by Storm ( this seems to be the most likely)

2) Storm managed each account individually, and did not advise margin call being reached

3) People failed to reduce there margin after being advised ( as seems possible from the letter posted in an earlier post)

4) Some unfortunate combination of the above.

Fact of the matter if you are in negative equity, you either inject more and hope the market recovers or go broke.

My understanding is that FP Professional Indemnity Insurance would only be applicable if advice or action was incorrect, and is limited to a set amount.

You can bet there will be records of emails between Storm and CFS come out in the legal process

 

[Gerkin]

Can anybody explain how the insurance works?
Can the clients have access to any pay out with out taking "legal" action?

All auth reps and AFSL holders as well as doctors, lawyers, accountants have professional indemnity insurance. However to get a payout you have to prove negligence in the professional advice given or that the adviser has broken a statutory law, and that you relied on the advice.

If after all this some are deemed to be negligent, and you are suing the adviser/afsl holder you may be eligible for something, however the insurer will appeal any decision if its a court decision and drag it out longer, prob take around 4 years.

The insurer will also have a get out clause capped at xxx amount.

 

[Solly]

"Storm Financial bosses break their silence"

Story from The Townsville Bulletin....

http://www.townsvillebulletin.com.au/article/2009/01/07/31725_hpnews.html

Some very interesting replies to some very direct questions...:22_yikes:

Your views??

 

[Garpal Gumnut]

"Storm Financial bosses break their silence"

Story from The Townsville Bulletin....

http://www.townsvillebulletin.com.au/article/2009/01/07/31725_hpnews.html

Some very interesting replies to some very direct questions...:22_yikes:

Your views??

I read it over a Smoked Salmon Eggs Benedict looking out from Magnetic Island this morning in the Townsville Bulletin, and it is the usual stuff that comes out in these debacles from the principals of Financial advising establishments on the ropes.

As Mandy Rice-Davies said of Lord Astor who denied r**ting her at a trial in the 1960's in the Old Bailey.

"Well he would say that , wouldn't he."

http://en.wikipedia.org/wiki/Mandy_Rice-Davies

Poor, poor bastards who have lost their hardearned. I'm over here looking at Units. They are cheaper than before Christmas.

gg

 

[Solly]

.........
"Well he would say that , wouldn't he."

http://en.wikipedia.org/wiki/Mandy_Rice-Davies

gg

That's a classic gg.

Also I found this quote from the article rather strange...
"We are also a large part of the negative equity issue.
While this is no consolation, we are sure it proves we have not acted differently for ourselves. Being in the front line of course makes us the first casualties, and as such the Storm group accounts for the biggest losses alongside the group of clients that are in that position."

"the Storm group accounts for the biggest losses"....

This to me is rather a strange admission ...Storm has the bigest losses .....WTF ..... and they were giving advice to others....

 

[bunyip]

I read it over a Smoked Salmon Eggs Benedict looking out from Magnetic Island this morning in the Townsville Bulletin, and it is the usual stuff that comes out in these debacles from the principals of Financial advising establishments on the ropes.

Poor, poor bastards who have lost their hardearned. I'm over here looking at Units. They are cheaper than before Christmas.

gg

Sure you have to feel sorry for them. But among all these investors who've publicly said they've been cleaned out by the Storm Financial debacle, very few have shown any inclination to admit that they themselves bear some responsibility for their cavalier attitude towards investing. I mean, nobody these days can possibly be unaware that very high returns go hand in hand with very high risk. And nobody could have been unaware of the storm clouds brewing over the financial markets. Every day it was plastered all over the media.
I thought Julia summed it up very well by saying 'You'd have to be living under a rock in the Ghobi desert not to know what was happening.'

If you're heavily leveraged and the warning bells are ringing loud and clear in every newspaper and on every TV news and financial programme, surely you'd take at least partial defensive action such as quitting portion of your investments, reducing your leverage etc.
If not, then you risk getting taken to the cleaners, and it's just not reasonable to put 100% of the blame on your financial adviser.
Sure, Storm have a lot to answer for, but so do the individual investors who got stung.

 

[Glen48]

GG
Smoked Salmon eggs for breakfast things changed since I was on Magnet Island the best we could hope for was something slightly cold that ran down hill.
Is the Beer ticket machine still on one of the columns in the Public bar?
I set that up for old mate Tony Moody before he make good.

 

[donteventryit]

A bit of light reading.

If you want to know exactly what has been going on for the last few months, from Storm's and the CBA's perspective, have a read here.

http://tinyurl.com/8d89ax

Courtesy of http://business.theage.com.au/business/cba-and-storm-battle-over-meaning-of-court-order-20090107-7c19.html

Discuss.

 

[Gerkin]

Solly,
Of course the Storm group accounts for the biggest loss, there trail income is stuffed and goodwill non existent after the media is through with them

 

[Garpal Gumnut]

GG
Smoked Salmon eggs for breakfast things changed since I was on Magnet Island the best we could hope for was something slightly cold that ran down hill.
Is the Beer ticket machine still on one of the columns in the Public bar?
I set that up for old mate Tony Moody before he make good.

All quite posh now mate, although I know where there is a beer ticket machine on Maggie on Good Friday every year, the godbotherers don't let you drink that day.

gg

 

[Solly]

A bit of light reading.

If you want to know exactly what has been going on for the last few months, from Storm's and the CBA's perspective, have a read here.

http://tinyurl.com/8d89ax

Courtesy of http://business.theage.com.au/business/cba-and-storm-battle-over-meaning-of-court-order-20090107-7c19.html

Discuss.

This is the quote from Justice Grenwood that I find the most interesting:
"Storm has demonstrated a sufficient likelihood of success in terms of Australian Broadcasting Corporation v O’Neill demonstrating that the statement as to sole management of the margin loan accounts and instructions allegedly given in the meeting on 4 December 2008 are capable of being misleading or deceptive or likely to mislead or deceive. Of course, the ultimate position must be tested at trial where the evidence will be closely examined and findings reached on all aspects of the controversy."

The important words are "capable of being misleading or deceptive or likely to mislead or deceive.......the ultimate position must be tested at trial where the evidence will be closely examined"

What is very clear to me is that in the Justice's opinion there is a possibility of being deceptive etc....but this needs to be tested at trial for a finding. The words "capable/likey" do not translate as "actually" being deceptive etc.

My belief at this point is that this is neither beneficial to Storm or The Comm Bank.

All I can see at this stage is, Lawyer's, QC's and the media all circling above...."and loving it".

And what benefit will all this be to those poor souls who are now living in trailer parks

 

[donteventryit]

And what benefit will all this be to those poor souls who are now living in trailer parks

How will a judgement from the courts help the existing clients? From what I can make out, Storm are just nitpicking ... what are they actually trying to prove? That Colonial Geared Investments (CGI) should have been in touch with Storm's clients the whole time informing them of their LVR and margin call position? It seems absolutely ludicrous.

Can anyone help me out here?

 

[Julia]

How will a judgement from the courts help the existing clients? From what I can make out, Storm are just nitpicking ... what are they actually trying to prove? That Colonial Geared Investments (CGI) should have been in touch with Storm's clients the whole time informing them of their LVR and margin call position? It seems absolutely ludicrous.

Can anyone help me out here?

If the investments were placed via Storm, then CGI wouldn't have been communicating directly with Storm clients.

Re the nit picking, you might be right. I expect Storm are running round trying to be seen to be doing something, anything.