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  1. #2926
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    Chris Lee yesterday launched his book Billion dollar bonfire, well worth a read imo.

  2. #2927
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    Quote Originally Posted by whatsup View Post
    Chris Lee yesterday launched his book Billion dollar bonfire, well worth a read imo.
    relevant article here, https://www.nzherald.co.nz/business/...ectid=12228125

    and I dont even think its premium so aren't you guys lucky
    For clarity, nothing I say is advice....

  3. #2928
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    "Lee's portrayal of Hubbard makes no bones that he had deep flaws, including operating the same kind of Ponzi scheme that brought down famous fraudsters, New Zealand's own David Ross and New York's Bernie Madoff, both of whom are still serving lengthy prison sentences."

  4. #2929
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    https://www.stuff.co.nz/business/117...ensation-fight

    Chris Lee trying to get taxpayers to bail out his clients who he put into SCF preference shares?

    Taxpayers are already out of pocket by $1.6 billion, no thanks to the Allan Hubbard and his gross mismanagement and incompetent lending and investing practices.

    Suggestion for Chris (he once thought the sun shone out of Allan's posterior and considered him to be a financial giant) - sue Forsyth Barr and himself.

  5. #2930
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    I haven't read his book but wonder why he thinks taxpayers should bail out South Canterbury Finance shareholders?

    Sadly one lot of participants in the collapse of the finance companies who played a big part but were not held responsible were "investment advisors" who advised clients to invest in finance company debentures while they collected commissions from the finance companies. It was outrageous but no one was ever held to account as far as I know. I heard stories like a widower asking a financial advisor how she should invest her life insurance payout and was told to put it all in mix of finance company debentures. I think Northplan in Whangarei got people out of diversified portfolios and overweight in Bridgecorp debentures.

  6. #2931
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    Yes, Aaron, but we must not forget that finance company debentures were highly popular at the time, particularly amongst those who didn't understand or trust the sharemarket - the 1987 crash still loomed large in many memories - and attractive returns were scarce, apart from finance company rates!
    I spent a lot of time convincing a close friend who wanted to put his mother-in-laws nestegg into a variety of finance co.'s to instead seek out good quality industrial debentures on the secondary market. These were available from time to time and he bought a few parcels. Unfortunately, he also put some money into South Canterbury Finance....
    Last edited by macduffy; 06-12-2019 at 09:45 AM.

  7. #2932
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    2.5% over bank deposits according to this article.

    https://www.nzherald.co.nz/business/...ectid=10456901

    How do you assess risk and the premium you need to justify it. Nearly impossible I would say.

    People are currently foolish having money in the bank but it could be worse if there is a crisis and what is the investment alternative in this current environment.

  8. #2933
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    Quote Originally Posted by Aaron View Post
    2.5% over bank deposits according to this article.

    https://www.nzherald.co.nz/business/...ectid=10456901

    How do you assess risk and the premium you need to justify it. Nearly impossible I would say.
    At the time, you could buy 7 year Infratil bonds at issue with an 11% coupon. The problem was, those didn't pay advisers 4% commission.

    Both Bridgecorp and Capital & Merchant used to run around talking up the "Lloyd's Guarantee" on their debentures, which was a total fiction. Ironically, you only had to read the Investment Statement to find that out.

    Basically most of the finance companies were Ponzi schemes. They were paying quarterly interest on the debentures but capitalising the interest on the loans to property developers, leading to a big funding mismatch. As soon as people stopped investing or reinvesting in the debentures, the whole thing collapsed.
    Last edited by Tronald Dump; 06-12-2019 at 01:35 PM.

  9. #2934
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    11% what a juicy yield. Unthinkable today but it makes you wonder how much less risky Infratil is today than it was back then. I am left leaning but I can't help think the market should be left to decide interest rates.

    That is the good thing about finance company accounts when the developers stop paying their loans you capitalise the interest so your interest income is growing and your loan assets on the Balance Sheet are also growing. To bad if it is difficult to provision for bad debts. I think it was Hanover Finance that paid its shareholders a dividend just prior to the s**t hitting the fan, basically sucking out any cash left and ensuring the shareholders owed the company nothing and leaving debenture holders high and dry. This is just hearsay though as I never looked at the financial statements.
    Last edited by Aaron; 06-12-2019 at 01:54 PM.

  10. #2935
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    Quote Originally Posted by Aaron View Post
    11% what a juicy yield. Unthinkable today but it makes you wonder how much less risky Infratil is today than it was back then. I am left leaning but I can't help think the market should be left to decide interest rates.
    My point was that Infratil bonds were probably priced appropriately for the risk, whereas clearly debentures were not. Anyone with half a brain could have seen that. The market will decide rates and spreads, but only if it's and informed/intelligent market.

  11. #2936
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    Quote Originally Posted by Aaron View Post
    I haven't read his book but wonder why he thinks taxpayers should bail out South Canterbury Finance shareholders?

    <snip>
    SCF had two types of instruments - plain vanilla bonds, and perpetual preference shares. A whole lot of people were shoe-horned into both by the financial services industry, with no idea of what they were buying. Headlines of the time proclaimed the listing of the perpetual preference meant that "South Canterbury Finance had floated on the NZX".

    When it all inevitably hit the fan, the bondholders got a government guarantee, but the preference share holders didn't. Given the way that the things were marketed and bought, I reckon they probably should have.

    But the waters were well muddied by the bottomfeeders who were buying both the preference shares and the bonds at about 25c in the dollar. And once the bonds were government guaranteed, it was fantastic - a government guaranteed 20% yeild.

    Mister Lee is concerned with the poor sods who were shoe-horned into something they didn't understand at the time of issue , rather than the bottomfeeders.

  12. #2937
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    Quote Originally Posted by GTM 3442 View Post
    Mister Lee is concerned with the poor sods who were shoe-horned into something they didn't understand at the time of issue , rather than the bottomfeeders.
    I would be concerned that NZ taxpayer dollars are being spent reimbursing people who made bad investment decisions or relied on bad advisors.

  13. #2938
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    Quote Originally Posted by Aaron View Post
    I would be concerned that NZ taxpayer dollars are being spent reimbursing people who made bad investment decisions or relied on bad advisors.
    Problem was many of the elderly people that went to advisers, trusted them .They didn't know they were bad advisers . They had no idea that spreading 100 K , into 10 different finance companies wasn't a spread of risk ......
    Pity their advisers didn't know this either, many were tainted by large commissions from the finance companies.

  14. #2939
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    Quote Originally Posted by stoploss View Post
    Problem was many of the elderly people that went to advisers, trusted them .They didn't know they were bad advisers . They had no idea that spreading 100 K , into 10 different finance companies wasn't a spread of risk ......
    Pity their advisers didn't know this either, many were tainted by large commissions from the finance companies.
    It was a disaster, no doubt about it but still I don't think it is the NZ taxpayers problem. We will stump up for national super but they will have to accept a reduced retirement due to poor investing decisions. What should have happened was their "advisors" should have told them they were actually commission only sales agents for the finance companies. Instead it turns out their "advisors" were deceptive lying pieces of s**t that should have gone to jail. I don't know if the investors had any redress under consumer protection laws for being sold a crappy product.

  15. #2940
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    Quote Originally Posted by Aaron View Post
    I would be concerned that NZ taxpayer dollars are being spent reimbursing people who made bad investment decisions or relied on bad advisors.
    Oh Aaron! Those taxpayer dollars have already been spent, bailing out SCF and some of the others, getting on for a decade ago.

    Mister Lee's book is mainly concerned with the shambles that was the collapse of SCF - the book demonstrating that greed, panic, and incompetence make very dangerous bedfellows.
    Last edited by GTM 3442; Today at 03:23 PM.

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