Steve Navra - Guru or Ghost?

[House_Keeper]

The last few times I have spoken to a financial planner, I had those responses:

• "It sounds like you know more than me, sorry I can't help you"
• "You are self-educated in financial matters, this is not for you"
• "You're doing very well already. Keep doing what you are doing"

Most of theses candid replies shocked me, as I thought that financial planners had some extra knowledge or experience I was lacking. They didn't have much to offer.

I have learnt a bit about investments, but I am far from understanding this field that well. It shocked me to find out that licensed "specialists" had so little to offer to an amateur. I suspect that, when they make a nice income from selling managed funds to the less informed, they don't need to be experts.

My wife knows a bit about health (self-educated), but when she goes to the doctor, the doctor at least can tell her something that improves her knowledge.

 

[abbyfresh]

In all due respect, how could any junior FP replicate the education that some us of develop on the property trail.

To me most financial planners unfortunately are centred around only pushing their super fund / preferred managed fund, and personal insurances etc. This is not complete financial planning but rather a push of a few products which many don't and will never be best suited to be boxed into.

A true FP plan should involve a unique combination of non biased products of literally hundreds of investment strategies. Unfortunately most such clients are pushed to follow similar strategies using similar products, which is directly correlating to panic selling when people turn to cash overnight for example. One big herd in many cases.

 

[agent007]

My big learning was to trust my own experience and ability. In all instances, my decisions and actions have been superior to FPs that I have had dealings with, NFS or otherwise. My second big learning is to steer clear of managed funds and structured investment schemes.
Michael

Ditto!

In the world of investment I'm noone. I only exist by reference under the banner of "mom-and-dad" investors or more politely "retail investors" Nonetheless, the portfolio I've built from scratch over the past 10 yeas or so has total returns (in avg) of approx 17% pa. So, how is that possible? Why simple people can do it but, professionals can't? It escapes my comprehension.

Back in 2007 I was invested in a structured product of a well known investment Bank. That year I think to remember the ASX went up approx 20% but, the fund only did 2% or 4% (can't remember exactly). At the time, I thought well if this is the return when the market goes up by 20% I don't want to be here when the market turns flat or even negative. This is specially so because all funds were borrowed though "capital protected" if left for 10y at 8% pa interest. It took me 3 months to finally close that fund. It was easy to get in but, difficult to get out

 

[oracle]

In general I wouldn't say the issue was due to excessive debt but, rather that no one planned to such massive drop. I understand that some unit holders were close or at margin calls and could not cover those calls without selling units. Personally, I was in the position to hold since I had enough resources to cover margin calls. However, the fund was taken to cash when it was at a very low point. Thus, even though I understand why it was done, that action itself went against the main "philosophy" of the fund to "buy low and sell high". So, when the market bounced back (as it always eventually does) we missed a good portion of the "recovery". I also know that in retrospective it is easy to look back and talk about it. However, at that time there was great confusion. Neddleless to say that (IMO) the fund never recovered after that action. When it went to cash I decided to leave and never come back

Today, there was an interesting article in the fr. They mentioned that Super performance in the last 10 years or so was between 3.8 and 5 percent. Nonetheless, i believe that in AUS we pay $50m daily in fees. It looks there is
something wrong with the entire financial industry. Therefore, who we should blame?

Thanks that makes sense.

Yes, totally agree that unless a fund cannot beat market and by market I mean the All Ordinary Accum Index (which includes re-invested dividends to calculate returns) and not their benchmark whatever that may be, it is not worth investing in that fund.

I think it should be made mandatory for each fund to show their results (after their fees deducted) against the All Ordinary Accum Index irrespective of whether it is a growth fund, income fund, value fund.

Secondly, each FA before recommending any funds to investors should clearly outline why the fund he is recommending is better than just buying low cost index fund or ETF.

Cheers,
Oracle.

 

[topcropper]

Ditto!

It took me 3 months to finally close that fund. It was easy to get in but, difficult to get out

I thought I was just unlucky.

A few months ago I was cleaning up some investments and feeling bearish. There was a colonial state fund that I wanted to get out of and collect the cash, worth 40k. So the wife start proceedings. A month later it still wasn't done. There was so many problems and roadblocks put up, from changed internet address's to every other tiny thing.

By this stage the market had plunged and the 40k was worth 34k. I decided to forget it. At least with this partial recovery, the fund has also recovered, but not back to 40k.



I won't ever invest into a fund again for Australian exposure. I'd rather just buy the shares myself. And the only fund I will ever go into will be platinum funds to get international exposure. With platinum I have international, international brands, Asia, and Japan. All have done very well, except the Japan one, and believe it or not, they are well up from the market top in November 2007 by some 14%, and that's including the Japan one. Anything else has been absolutely hammered.

Platinum go short as well as long, as well as go to cash at times, and obviously they must just know when to go short and how to do it to be up so much when markets have crashed so hard.

Platinum have always been great to deal with, and I always give them a plug here, as they deserve it.


See ya's.

 

[topcropper]

With platinum I have international, international brands, Asia, and Japan. All have done very well, except the Japan one, and believe it or not, they are well up from the market top in November 2007 by some 14%, and that's including the Japan one. .

I sort of find it hard to believe myself.

Most of the gains since the November 2007 market top have been from the international brands fund. It is up 30%. The other 3 have been basically flat.

The international brands fund is up 66% from the market bottom in March 2009.


See ya's.

 

[redwing]

Lets for a moment imagine that you are dropped into a remote rainforest location. You are a city slicker, you can find your way around a cafe latte and a chocolate croissant, but out here you find yourself alone, in a completely unfamiliar environment. There are crocodile infested rivers and swamps, bugs the size of cats, strange sounds and furtive shadowy movement wherever you look - get the picture? Pretty scary. Well that is how I felt when I consulted a Financial professional. A guide, someone who knows what to steer clear of (or so I thought) and what was safe. Like a jungle native inhabitant who had lived his whole life in the jungle and could navigate the terrain. Given this scenario, would you have trusted this native of the jungle? Well now that I am older and wiser I agree with you wholeheartedly - yes I am responsible for managing my risk, but just as the person in the above story, it's hard to manage risk if you don't even know what is risky and must trust and rely on someone to help you.

CW

"Welcome to the Jungle, how can I serve you", takes on a whole new meaning CW. You need to tread warily of trusting some of the natives also

 

[chai walla]

"Welcome to the Jungle, how can I serve you", takes on a whole new meaning CW. You need to tread warily of trusting some of the natives also

Love it!

 

[redwing]

You make it sound as though advisors should be omniscient?

I had to look it up Sim..


Omniscient = All Knowing, Wise, Well Informed

or

Omnipotent = Allmightly, Invincible, Unstoppable, Godlike

 

[Go Girl]

I think that when Pelos (way back at the beginning) was asking this question he was asking is Steve Navra a Guru (one who is regarded as having great knowledge, wisdom, and authority in a certain area, and who uses it to guide others) or a ghost - something that appears real but has no substance, someone or something that cannot be relied upon to 'be there', something ethereal...

Given the fact that many of his companies have now gone into receivership and are no longer 'there' - I think that this certainly tips the scale to the side of ghost and not guru...

 

[Steve Navra]

Given the fact that many of his companies have now gone into receivership and are no longer 'there' - I think that this certainly tips the scale to the side of ghost and not guru...

Dear Go Girl,

I certainly am not ethereal or a ghost

Very simply I have decided that I no longer wish to be a Financial Planner and so I have closed two of my companies – NFS and the Licence; these relating to financial planning.

I still continue to run my Funds Management business.
I still continue to run my Property business.
I still continue to run my educational business.

In the absence of the financial planning business I have arranged two facilities to cater for all of my clients that previously did their financial planning through me:

1) Interim Arrangement: Navra Financial Solutions.
This is a new company run by Bob Penter a licensed Financial Planner and an Authorised Representative of the Dover Group. Bob is the director of Navra Financial Solutions and I have no interest in or ownership of this company. I do offer consultancy services to this company.

This is an interim arrangement, only until my clients can be catered for as per number 2 hereafter. I put this interim arrangement in place so that my clients were not left in the lurch during the time of closing my Financial Planning services and up until the new Joint Venture is up and running.

2) New Joint Venture:
Navrainvest Ltd is currently concluding a “joint venture” with a large financial services and planning group. (The JV will be announced after it is approved at our shareholders meeting, to be held 3rd Nov.)

As I promised my clients at the most recent client get together – I would set up a facility for them to continue their planning that would include:
a) Ongoing education
b) Property Services
c) Accounting Services
d) Legal Services
e) SMSF
f) Financial Planning
g) Online education and networking
h) Rewards Program

All of the above come into effect from 4th November and all ex NFS clients are catered for.

I am certainly “here” – continuing to do what I enjoy most.
(Mainly Education and Property)

As mentioned earlier:
I no longer believe the equities market represents a viable investment option. I am changing the nature of our Navrainvest Funds to concentrate on Property, Business, Annuity and Cash income streams and away from direct equity investments.

I was asked earlier in the thread to comment on my very negative thoughts about the equities market and I will do so in another post.

Kind regards,
Steve

 

[chai walla]

Steve,

What you fail to mention is that you had to close down your businesses due to the fact that a certain percentage of your clients took their grievances to the Financial Ombudsman. You have said 3% of your client base did this and that they were related to the Great Southern situation. I dispute both the percentage that you put forward as well as the assertion that they were all related to the Great Southern failure. I know of several people who currently have FOS claims underway that were not in the Great Southern Schemes and I know of several others who while they are unhappy with the advice they received from you have not gone down the litigation or FOS route. You paint a picture where you portray yourself as choosing the course of action that that you have taken, however the truth may be more accurate that the actions you have taken have been in reaction to situations that have been thrust upon you. I am not even sure if this post will survive given the amount of material that has recently been removed but I see nothing in it that should raise the ire of the moderators so I post in good faith.

CW

 

[Steve Navra]

Hello Chai Walla,

I have previously stated in this thread that 3% of clients registered complaints against the company. These relate to approximately 30 complaints to FOS and 2 litigation cases, of which one has subsequently been withdrawn. We had approx 1,200 clients on our books, so given even a few more claims of which I am not aware this still constitutes approx 3%.


To date, none of the claims have been proven and they are all being defended.
We supplied each client with a full Statement of Advice, which stipulated all aspects of their investment. Every client signs the S.O.A. as well as an authority to proceed.

It is thus with amazement that I view these claims - where clients state that they didn’t understand what they were investing in, or that they purchased products that were inappropriate to what they wanted, or to their circumstances.

Somewhere in this world there must be a point where the investor takes some responsibility for their own investment choices. After all an advisor is just what the word implies: They “offer advice” and it is up to the investor to follow that advice or not. By signing an authority to proceed signifies that the investor has made their own decision to follow the advice.

Anyway, this will be decided by a court of law and not by me, you or anyone else offering their 2c worth about how the industry should be governed.

As yet no claims have been proven or admitted.

I repeat my reasons for closing the Financial Planning and Licence companies:
1) As a result of claims being submitted (wether they are successful or not) the insurance premiums escalated to the point of becoming unaffordable for the company.
2) The company can not operate it’s license (AFSL) without the insurance and hence had to close.
3) I am somewhat disillusioned with Financial Planning, where any client who feels aggrieved irrespective of whether they chose to follow my advice and instructed me to proceed with the investments on their behalf, can abrogate responsibility and submit claims, which effectively put the company out of business. (Who would ever want to be a financial planner in such an environment?)
4) I no longer wish to advise clients in an equity market, where I no longer believe the free market system is honest.

Nothing was ‘forced upon’ or ‘thrust on’ me, after all no claims have been proven and aside from the insurance premiums have had no financial effect.

We all have choices in life and I now choose to do what I enjoy most and that is the educational side and property.

Regards,
Steve

 

[investor2009]

Onya' Steveo'!

You're still my (money) hero and I'd like you to know that I have a permanent spot in my emails with one of your posts to A.L that gives me much inspiration each time I read it. Knowing that I am nearing that point.

I spoke with you once and you were great to chat with, and to this day keep your mobile no in my phone book because one day I'd like to call you agaion to give the news that I am officially financially free. I know you have no idea how much of an inspiration you are to me, but I'd like you to know.

So Thanks, mate.

 

[Peter Parker]

Steve,

4) I no longer wish to advise clients in an equity market, where I no longer believe the free market system is honest.

It appears then that you have taken a principled approach to exit equities.

Could you please elaborate on this, eg:

Supposing equities boomed in the last five years would you still be in the market, on the basis of the high returns provided and the fruitful results of anyone who took your advice?

Or would you have passed up such returns and urged investment in sectors that you judged more honest (eg cash, better quality fixed interest, precious metals, unlisted companies?).


In other words, what proportion of your no longer favouring equities is for pragmatic reasons (ie large capital losses, or increased risk*) and what proportion is on ethical grounds?

A second question if I may.

You mentioned that you now favour property. Real estate has its share of shonky estate agents, financiers, developers and two tier marketers, etc that must have some effect on the system.

However the existence of these unethical types appear not to have deterred you from property.

Are you taking a different attitude when faced with shonks in shares compared to shonks in property? Is it a matter of degree - ie are they more numerous and worse in equities than property? And if it was such a high number, how did an informed observer and participant miss it five or so years ago?

Why not much of a share man myself, what could be wrong with buying well-priced shares in profitable businesses? If they represent fair value, why should the presence of 'ethically challenged' people somewhere else (not even connected with the business) so greatly colour your view and thus advice to clients?


(*) Although my belief is that real risk would be higher when share prices are high than when they are low relative to the worth of the asset or its income.

 

[shuggy]

I repeat my reasons for closing the Financial Planning and Licence companies:
1) As a result of claims being submitted (wether they are successful or not) the insurance premiums escalated to the point of becoming unaffordable for the company.
2) The company can not operate it’s license (AFSL) without the insurance and hence had to close.
...

It seems that lack of insurance caused by high premiums played a role in the closure which is a shame . I guess the lesson learnt is that Financial Planners need to mitigate any legal claims so that insurance premiums don't escalate to the point where they become unaffordable.. but that's the tricky part .

 

[Steve Navra]

It appears then that you have taken a principled approach to exit equities.

Could you please elaborate on this

Hi Spiderman,

As mentioned earlier I will post an in-depth response to this question, soon after I have completed the JV we are currently working on.

The short answer is the level and extent of the invisible (hidden) derivative debt that underlies and holds up current world equity markets.
Total derivative debt amounts to well over a quadrillion dollars! (About 23 times the total sum of all nations GDP's )

In other words the entire system is bankrupt:
No matter how good a particular stock looks; it cannot sustain another derivative meltdown.

Prior to the GFC, literally no-one knew the extent of derivative debt. Now that we are aware of the enormous extent of such debt, it is crazy to consider such a risk profile.

More on this topic at a later time.

Regards,
Steve

 

[Piston Broke]

It's the typical story all over the world all over again.

Take personal credit for a bull market, blame the market for the losses.

Oh look, someone maybe knew about this stuff...

The whole concept of not being paid unless you perform is overly romantic (in my opinion) and ridiculous (in the long term) and assumes you can effectively get something for nothing.

Yes it certainly is to those who get paid for turning up regardless of what or how much they do, ie employees.

....
If Mr Navra had never looked at the last 100 years of financial history, then I don't think he would belong in any financial industry. If you have never read or even heard of the books "Irrational Exuberance", "The Go Go years", "Fiasco", "Rogue Trader" "The great crash" to name a few, then you need a lesson in recent financial history.
If you have, then your just another pompous financial trainwreck of a finance industry well versed in smoke and mirrors.

OMG! How could anybody have possibly known such things!!

this is my opinion only based on my personal observations. make your own osbervations, read the damn prospectus and make your own conclusions, and always seek advice from an urelated party ie one that does'nt make a commision on your investment.

Overall Health Check:
As I can see from the prospectus this company has been only making losses, with no dividends in the short to medium term.

Current Prospects:
So far returns have not been very good, infact comparable to fixed interest, but considerable more risk.

Capitalisation & Liquidity:
This company does not have a large (infact very small) capitalisation, and the liquidity of it's share is very dubious. It may be very difficult to offload shares promptly if the need may arise.

Financially Robust Shares:
While the company does not have debt, it's cashflow is still very low and has only generated losses. Of the $6 million raised in Nov 2002, at Sept 2003 it has less than $2.5 million in cash.
It has also acquired for $1 million the Navtrade system which is it's main revenue generating asset. Returns for the funds managed so far have not been above ordinary, and considerably low in relation to the risk.

Conclusion:
This company's sole purpose seems to be managing the Navra funds. Basically it has one only client. There seems to be no past proven record for the Navtrade system (at least five years) for which $1 million was paid, which means future prospetcs are dubious. For all this uncertainty Mr Navra and Mr Bill de Steiger will recieve a salary of $150-200K plus expenses. The company's office is rented from Navra Financial Services for $170K per year.
Bottom line this seems a very lucrative deal for the existing selling shareholders, with a very uncertain and risky future for the new acquiring investors.

Nigel, if you have a geared real estate portfolio (ie with a loan) you can make much better returns by just putting that money in thoise loan accounts. Most are paying more than 6% on their loans and the compoumd effect multiplies it over the long term. And of course risk & volatilty is almost zero. Imagine how much you could've saved as interest rates go up....

NavTrade & Navrainvest so far makes great returns for Navra & partners not the investors.
$1,000,000 for a trading system without even putting an audited 5 yr performance record in the prospectus! Please tell me if I missed it...

Seems to me that Mr Navra should be going back to school himself instead of pretending he can teach others how to manage their funds.

 

[slammindan]

Hi Spiderman,

As mentioned earlier I will post an in-depth response to this question, soon after I have completed the JV we are currently working on.

The short answer is the level and extent of the invisible (hidden) derivative debt that underlies and holds up current world equity markets.
Total derivative debt amounts to well over a quadrillion dollars! (About 23 times the total sum of all nations GDP's )

In other words the entire system is bankrupt:
No matter how good a particular stock looks; it cannot sustain another derivative meltdown.

Prior to the GFC, literally no-one knew the extent of derivative debt. Now that we are aware of the enormous extent of such debt, it is crazy to consider such a risk profile.

More on this topic at a later time.

Regards,
Steve

Steve, do you have an update on this?

 

[Steve Navra]

Steve, do you have an update on this?

Hi,

I am struggling to upload my presentation slide show on this topic.

I will email slides and notes to Sim and perhaps he will oblige

Cheers,
Steve