South Canterbury Finance Limited

[whatsup]

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

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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

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the ultimate irony of course with SCF was how (after the government guarantee ) it became the best investment in town. Not that I would ever have played that game.
How did it work out for those invested? Did the loss of opportunity cost cripple the (I presume) full return one eventually got from the government?

[GTM 3442]

the ultimate irony of course with SCF was how (after the government guarantee ) it became the best investment in town. Not that I would ever have played that game.
How did it work out for those invested? Did the loss of opportunity cost cripple the (I presume) full return one eventually got from the government?

One of my roles is as an inveterate bottom-feeder, and I bought both the bonds and the preference shares.

By the time that I bought them, the bonds came with a government-guarantee, and were yielding about 20%.

I bought the preference shares at about 25c , and sold out at about 60c, although IIRC they went higher. Later, the price went back down to about 30c and I got greedy and used half the profit I'd made to buy more in anticipation of a successful resolution. But then the "rescue plan" failed, and I got wiped out.

All three purchases were sheer speculation. Two wins, one loss.

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Well the bondholders got the benefit of the government guarantee, but the holders of the preference shares didn't. And seeing that both instruments were marketed to the same target audience, the difference seems rather inequitable.

That's the point of that little exercise - simple fairness.

Its not the audience in finance that determines outcome though, and shares are equity and equity is taking more of a risk than bonds - well that's the way I see it anyway.

One of my roles is as an inveterate bottom-feeder, and I bought both the bonds and the preference shares.

By the time that I bought them, the bonds came with a government-guarantee, and were yielding about 20%.

I bought the preference shares at about 25c , and sold out at about 60c, although IIRC they went higher. Later, the price went back down to about 30c and I got greedy and used half the profit I'd made to buy more in anticipation of a successful resolution. But then the "rescue plan" failed, and I got wiped out.

All three purchases were sheer speculation. Two wins, one loss.

It was a smart thing to do and in another time or place I might have as well.

[GTM 3442]

Its not the audience in finance that determines outcome though, and shares are equity and equity is taking more of a risk than bonds - well that's the way I see it anyway.

Peat, you know about this stuff, I know a little about this stuff, but those poor b*ggers were just fish in a barrel.

I suspect that many if not most of the good (but financially illiterate) folk who bought these things had no idea what they were buying. None. Zero. Zip. Nada.

Blissfully ignorant of any difference between debentures, bonds, and term deposits, there's a good chance that they thought that "Equity" might be good for a place in the 3:30 at Trentham.

In many cases, seeking professional advice provided no better outcome (if not worse) than clipping the coupon in the paper and sending it off to one of the abysmally-supervised and appallingly-regulated many finance companies which blighted the early 21st century New Zealand landscape.

Now, given that financial markets regularly blow up about every ten years or so, where should we look for the next explosion?

[Balance]

Peat, you know about this stuff, I know a little about this stuff, but those poor b*ggers were just fish in a barrel.

I suspect that many if not most of the good (but financially illiterate) folk who bought these things had no idea what they were buying. None. Zero. Zip. Nada.

Blissfully ignorant of any difference between debentures, bonds, and term deposits, there's a good chance that they thought that "Equity" might be good for a place in the 3:30 at Trentham.

In many cases, seeking professional advice provided no better outcome (if not worse) than clipping the coupon in the paper and sending it off to one of the abysmally-supervised and appallingly-regulated many finance companies which blighted the early 21st century New Zealand landscape.

Now, given that financial markets regularly blow up about every ten years or so, where should we look for the next explosion?

Always interesting how the good folks will spend days and weeks checking and researching before a new car or a new fridge - but do bugger all when entrusting their money to someone.