Use of financial planners

[tech/a]

Tech, what specifically gave you the confidence to sell your whole portfolio?

The consensus of opinion of those who I respect as traders was that this (The Bull run) could not go on forever.
Started thinking seriously about the possibility of a sustained bear market at around 5000 but by around 6000
My own analysis which is here on ASF if anyone wants to have a look---suggested that at around 6400 that this was the top. That's when I sold. The power of the Bull Market did continue and was followed in analysis.
My View wasn't held alone but certainly not by most.

https://www.aussiestockforums.com/forums/showthread.php?t=6211&page=2

Which at the time I was considered a nutter as the thread shows. The eventual top was 6880 so was 450 points off

Bugga!

Not long after the same people were suggesting that a new high may not be reached for 7 yrs.
That too went down like a lead balloon.

So you'll be a long time "IN the Market!"

But even now your hearing about such amazing bargain 70% off their highs
Incredible.

Really!
Ever though that NOW that's all the stock is worth?
That a return to yesteryear is not really on the cards.
That all sorts of drastic measures maybe needed just to keep a float!
Parts may be sold,extra capital may need to be raised.

Basic stuff but do you hear your F/A spruiking any of it?
Nah! Didnt think so

 

[helicart]

Basic stuff but do you hear your F/A spruiking any of it?
Nah! Didnt think so

I got out just over 6000, in April 07. Fundamentals guys I respect in the US were starting to warn of how big a problem sub prime was. (James Grant, Barry Ritholz, Bill Gross, John Mauldin, Roubini, Shiller, Faber, Rogers etc.) Credit would tighten in the face of higher rolling CDO tranche refinance or bad debt write downs.

So I couldn't see significant capacity for the US consumer to take on higher debt....ergo global consumption had to plateau or fall. The China decoupling thing was pixiesville back then imho. Will take another decade for that.

I missed a lot of profit on commodities, but risk/reward didn't justify it.

Built a couple of duplexes on two lots put under contract in Feb07 in Brissie instead...and decided to flick them in March08 when I saw no further growth in property for years.

Since 2001, I have tried to understand the source of the capital behind the cheap credit that has fueled Australia's property boom. Maybe 3-5% of finance people I have spoken to have any idea.

Even now, few understand how reliant Australian property prices are on foreign sourced credit, and how associated growing net foreign liabilities impoverish us.... I cannot see property prices maintaining late 07 values in real terms for at least 10 years.

I sat in cash until gold started to move up strongly aug08 and rode that until TA got me out in march09.

I spend a lot of time reading global fundamentals and capital movements these days and that has driven my trading of this bear rally as much as TA.

But difficult to get an intelligent discussion about this stuff with an FA.

 

[Jack Payback]

But difficult to get an intelligent discussion about this stuff with an FA.

That is because most of the analysis an FA gets, comes from fund managers, and they don't want you to sell

Most FA's concentrate on prospecting, conducting seminars etc, to generate new clients. If they've got between 1000-2000 clients to look after they don't have the time to do that sort of in depth analysis, they just buy it from a research house, and no research house I came across saw it coming either.

Having said that, in terms of predicting a downturn in the market, I saw a much simpler way of predicting it. We were in the best bull market ever, 4 consecutive years of +20% growth on the ASX. It had to let off some steam, and usually when a market rises quickly it corrects quickly too.

 

[Julia]

t between 1000-2000 clients to look after they don't have the time to do that sort of in depth analysis, they just buy it from a research house, and no research house I came across saw it coming either.

.

This is beyond belief imo. It didn't take any 'in depth analysis' to see it coming.

 

[Calanen]

I recently paid $2750 to have a financial planner to create a Statement of Advice for me in terms of setting up a long-term financial plan.

For some background I'm 29 with a high income ($150K+)

You're certainly helping the financial planner hit the goals in his own financial plan.

The only thing you might need to do is buy a book from Dymocks and read it, keep it simple. Don't get into US denominated junk bonds with a leveraged warrant stock option set up in a shelf company in the Bahamas with a twist of lemon. Just buy a unit somewhere and negative gear it so you pay less tax. If those financial planners really knew, they wouldnt be advising you, they'd just be investing themselves.

Loads and loads of people who told me, oh you'll miss out on the market..you need to borrow and buy shares..all that capital is wasted in property..you're a fool....almost to a man are now regaling me with tales of how they lost hundreds of thousands even millions.

I've lost nothing, and I don't owe a penny to anyone. And now I can buy whatever I want, cheaply. But of course I was the 'fool' for not buying into the bubble on borrowed money.

 

[Jack Payback]

This is beyond belief imo. It didn't take any 'in depth analysis' to see it coming.

Like I said....

I saw a much simpler way of predicting it. We were in the best bull market ever, 4 consecutive years of +20% growth on the ASX. It had to let off some steam.

And I think the previouse posts were about picking the top of the market.

 

[Mr J]

Regarding the arrogant complacency, it's just basic human psychology. Part of it is out of sight, out of mind: we don't worry about problems until they're problems (i.e. causing us harm). There's the herd mentality: if everyone else is ignoring it then it can't be that much of a problem. There's the part telling us that it won't happen to us: we're different. There's the intelligence factor: if the experts don't see a problem, why should I expect one?

Of course these are mostly rational thoughts, but only at a most basic level.

I saw a much simpler way of predicting it. We were in the best bull market ever, 4 consecutive years of +20% growth on the ASX. It had to let off some steam.

I agree. Balance is required, and therefore a correction should be expected at some point. I really dislike the description that is "the Global Financial Crisis", as if it is some sort of disease. But then "correction" isn't egotistical (remember, the need to feel special), and not dramatic enough for the media and governments.

 

[helicart]

This is beyond belief imo. It didn't take any 'in depth analysis' to see it coming.

In light of the damage done, I don't agree.

Central banks, ratings agencies, the world's major investment banks, businesses continuing with a strategy of nonchalant even aggressive debt financed acquisitions or growth (MacBank, B&B, Centro, ABC Learning, ANZ, NAB, Fortescue, many Aussie miners, etc etc), others not reducing their DSRs, most of the world's equity funds, LGAs, State Govts, SWFs........they all suffered severe losses because they didn't see it coming.....

The right questions were not being asked by the research houses and analysts.... Trust was implicit and it had been broken. There had been a lot of doom sayers around saying "eventually" things would fail based on an Austrian Economics perspective alone.....The D&G titles in Borders and Dymocks were on the rise from 2003.

But Bill Gross' Pimco was the first tangible and reliable research that warned me in 07 that things would blow up very soon. And I didn't want to take the chance of having the ASX gap down 15% one morning rendering stops useless. Gross started to get suspicious of the ratings given to the sub prime and alt a stuff, and eventually realized they needed to do their own research into who was being lent all this sub prime money for property....what they saw shocked them.....

 

[tech/a]

Soros Wrote a book about the impending issues and spelt out what they were 12 mths before the whole thing hit.

 

[It's Snake Pliskin]

Soros Wrote a book about the impending issues and spelt out what they were 12 mths before the whole thing hit.

Tech what is the title because he wrote a couple, one after it I think.

 

[Julia]

I got out just over 6000, in April 07. Fundamentals guys I respect in the US were starting to warn of how big a problem sub prime was. (James Grant, Barry Ritholz, Bill Gross, John Mauldin, Roubini, Shiller, Faber, Rogers etc.) Credit would tighten in the face of higher rolling CDO tranche refinance or bad debt write downs.

So I couldn't see significant capacity for the US consumer to take on higher debt....ergo global consumption had to plateau or fall. The China decoupling thing was pixiesville back then imho. Will take another decade for that.

I missed a lot of profit on commodities, but risk/reward didn't justify it.

In light of the damage done, I don't agree.

Your two comments above are contradictory. If you saw the problem coming why didn't research houses?

 

[helicart]

Soros Wrote a book about the impending issues and spelt out what they were 12 mths before the whole thing hit.

Soros was one of the guys I thought had been D&Ging for quite a while.
He even admits so......

Soros' 2008 book, The New Paradigm for Financial Markets, describes a "superbubble" that has built up over the past 25 years and is now ready to collapse. This is the third in a series of books he's written that have predicted disaster. As he states:

I have a record of crying wolf…. I did it first in The Alchemy of Finance (in 1987), then in The Crisis of Global Capitalism (in 1998) and now in this book. So it's three books predicting disaster. (After) the boy cried wolf three times . . . the wolf really came.[19]

​

Which of his books did you have in mind?

Though he is one of the guys I pay attention to these days.....

 

[helicart]

Your two comments above are contradictory. If you saw the problem coming why didn't research houses?

Because the research houses, central banks, et al don't respect Mises and Hayek as much as I do.

 

[Julia]

Because the research houses, central banks, et al don't respect Mises and Hayek as much as I do.

Surely the above were not the only clue? I don't know anything about them and I sold out in January 08. Certainly gave back some profits by waiting until then.

 

[helicart]

Julia, the two guys I mentioned are famous elaborators of the Austrian School of Economics' perspective on recessions, depressions, and the cause of credit bubbles. Much of what the other guys warned the world of is derivative of that school....

If you google "Minsky Moment" it encapsulates how the Austrian's views explain so much of the last few year's events (though Minsky wasn't an Austrian).

I've never met a FA or investment banker or stock broker (including my brother the broker) who is well versed in the above.

 

[Julia]

helicart: thank you. I will google as you suggest.

However, my point was rather that no one needed to do any indepth analysis to recognise that the market began to tank significantly after the highs of November 2007. This was combined with ever increasing bad news globally and the worsening of the US sub prime situation.

Simple capital preservation would have surely indicated the need to sell if the basic principle of stop losses was used.

So don't we have to conclude that the continued admonitions of the financial services industry to "hold on - it will all be OK'" were motivated by their own best interests, rather than any genuine advice to their clients.

I don't really care: it's all history now. But it should be a lesson to all those who continue to place their trust in the so called financial advisers.

 

[helicart]

helicart: thank you. I will google as you suggest.

However, my point was rather, that no one needed to do any indepth analysis to recognise that the market began to tank significantly after the highs of November 2007. This was combined with ever increasing bad news globally and the worsening of the US sub prime situation.

The central banks were continuing with propaganda that sub prime would be contained, and any slowing of the markets would be orderly and small to moderate, and not cause for concern. Indeed, our RBA was denying Australia would be effected in any significant way right up to September 08, when it finally realized there was a problem for Australia, and they needed to bring rates down. In general, Australian media and analysts were buying the RBA con...


Simple capital preservation would have surely indicated the need to sell if the basic principle of stop losses was used.

My view is the number of investors who understand capital preservation and/or use TA determined stop losses is miniscule. Many are in funds and the performance of funds in the last 12 mths is testament to how well they understand capital preservation.

So don't we have to conclude that the continued admonitions of the financial services industry to "hold on - it will all be OK'" were motivated by their own best interests, rather than any genuine advice to their clients.

Well, I see it more as personal interest and ignorance.....ignorance of what was unfolding in the US, the importance of the US consumer to global consumption, and Australia's dependence on that.

Of course, any FA that took a broader interest and advised clients accordingly, would be serving their personal interest much more intelligently, and garnered a market advantage over their dill competitors.

I don't really care: it's all history now. But it should be a lesson to all those who continue to place their trust in the so called financial advisers.

Agree.....two things you shouldn't outsource 100% - the decision for brain surgery, capital preservation.

 

[tech/a]

Tech what is the title because he wrote a couple, one after it I think.

I've had a better look at my copy and in it he says that he wrote the book at the end of 2007. So things were on their way.
It was published 2008.

The title was pretty gutsy had the market reversed like it did in the late part of 2007,would have looked pretty silly had it just kept going.

"The New Paradigm For Financial Markets
George Soros
The Credit Crisis of 2008 and what it means."
ISBN978-1-58648-683-9

 

[jono1887]

The title was pretty gutsy had the market reversed like it did in the late part of 2007,would have looked pretty silly had it just kept going.

Well he isnt just an average everyday trader... he been doing it for most of his life and highly successfull at it too! of coarse he's gonna be confident in his predictions...

 

[tech/a]

When you can cause a countries currency to be under pressure then you command respect.
Soros used to move markets on his own.

Thats why I bought the book.