Has anyone else noticed the similarity.....

[see_change]

Chrispy

But they won't listen will they , as it'll be different " this time " ....

Cliff

 

[Token Funder]

Thanks Thommo for getting this debate going.

I have worried for some time about the constant reference to living off equity as if property never goes down and yet both you and I being the older generation know it does. It usually comes back but it can be years before that happens, the same as shares, yes they go down but eventually they will rise.

It is good to put the warning out there to be prepared.

Chris

Geez, some of my views are on the brink of becoming fashionable

I won't comment on the Somers positions because I haven't read the books. What I will say, however, is that one of the characertistics of property investment that changed markedly over the last 15-odd years was the move from a cash-flow view of investment (traditional Italian mum and dad style) to a CG (speculative) approach, with a heavy emphasis of tax benefits. One of the impacts, it seemed to me, was a fundamental change in the view of what an acceptable level of debt was for such investments and a related disregard for downside risk.

Storm and similar models are a manifestation of the same thinking, as were some of the patently nutty things going on in managed investment schemes.

To that exent I agree fully with Sunfish.

I don't think more mature/experienced investors drank the cool-aid to the same degree nor ever based their thinking on what the ex-Amway bloke doing the investment/motivation/weight loss speaking circuit had on his powerpoint. There are still plenty who see property as an investment class rather than a form of magic and take a unemotional approach to what their doing.


Frankly, you rarely see a "hard-head" in your mortgagee in possession list.

Lots of doe-eyed optimists fresh from the seminar, though.

 

[marg4000]

I think the major difference is that investors in Storm paid fairly large commissions to advisors and those who introduced them to Storm. 7% has been mentioned as up-front fees. Large fees were also deducted from the funds along the way, including a reported $2 million "dividend" paid to the operators of Storm the week prior to its going broke.

(So far as I know), the Somers have simply written books on their strategy and left it up to the individual to decide and make their own arrangements.
Marg