Are there any Stock Brokers amoung us???

[callen]

What you say is not incorrect, but still a little over simplistic.

Due to the large reduction in borrowing capacity for virtualy all enterprises, a large number of the listed companies have raised money by issuing capital, thereby diluting the value of the shareholding even further than the crash did.

Therefore, broadly speaking, even a return to an All Ords index of 6800 will not restore the amount you have lost due to the capital raising diluting your holdings.

I'm sure many clients are satisfied with the mantra "you haven't lost anything till you sell", but it's really BS of the highest order, and if any adviser to whom I were thinking of paying a fee for service said that to me I'd be out the door in a flash.

I now have a mentor whose portfolio has returned over 100% this year and the fee for service is $299 per annum. No advice is given, it's just a pity I'm not brave enough to buy what he buys at the times he does, so I haven't made anything like that.

I have already written a page to try and give the OP some assistance so if I wasn't been simplistic I would be writting an essay which I'm not going to.

Yes alot of companies have been capital raising but this capital raising is generally also to existing stock holders so you have the option topurchse more stocks at the reduced rate. Secondly most well managed companies have been using this money to either pay off debt or purchase new companies so although the market cap is increasing so is the net asset so nothing is getting diluted. Two pefect examples of this are RIO and ANZ. Rio's capital raising was used to pay off debt and for those that didn't the over could actually sell their right purchase them for the differnce between the issue prce and the current stock price. The ANZ one the funds were used to purchase the 51% of ING Australia and ING New Zealand hence increasing there net assets so noting has been diluted. I'm not saying that there isn't smaller companies that are getting diluted by using capital raising just to keep paying there execs big fat cheques but it is the exeption rather than the rule.
You obviously have a different perception of what fee for service is as the minimum any broker will charge for this is $1100p.a and it will be for them to provide advice otherwise why on earth would you pay them money even if it is only $299p.a

P.S I trade actively and my portfolio has increased by 380% since February 2009 and yes I take ALOT of risk to get these returns but it can be done in a bull market.

[quozl]

I am not an advisor but make the majority of my income from investing and I have only and will only ever use a Fee for Service financial adviser and they are generally loathed by the institutional advisors.

One thing you are not told is that most if not all institutional advisors receive a good portion of their salary / income through bonuses and kick backs for selling products being promoted by particular companies or investment funds and if the institutional advisor sells that product to you the fund pays them a bonus or kick back so their incentive isn't to you and to recommend the best products for you it is to sell what makes thems the best / most bonus or kick back.

A fee for service advisor on the other hand is paid a set fee by you to give you advice solely based on what is best for your situation and if they do happen to recommend a product that pays a bonus kick back for them selling it the bonus or kick backs are paid directly to you as the investor and not to the Fee for service advisor.

I prefer using a fee for service advisor as they are working for ME not for Colonial or Commsec or whoever.

As for margin loans make very sure you understand the pitfalls as well as the potential windfalls with them, a lot of people I know lost a lot of money by having a high LVR and getting a call and then by selling shares to meet the call that in turn decreased the value of the portfolio and they got another call and so on and they were going from margin call to margin call until they lost it all and still owed the margin loan. You can utilise them for your benefit just make sure you thoroughly understand them and keep the LVR low and no matter what any advisor tells you you DO have to eventually pay the money back Personally I prefer and feel more secure using my own money and not to gear but your mileage may vary.

Cheers Al

[mikepologti]

wholly crap i had no idea i was surrounded by marketing guru's!

[brad]

I read recently that VW shares lost 8.31 percent when Qatar sold 25 million preferential shares. I know nothing about this stuff so I have a couple of questions for the knowledgeable out there

1. can the general public buy said shares?

2. consisdering VW just took over Toyota as the worlds number 1. auto maker is this a good buy considering the current drop in share price?

3. is margin lending a good idea?

.

1. You can buy VW shares but they aren't listed on the Australian bourse(sp?). You'll need to buy off a foreign exchange.

2. Only you can decide that. Any stockbroker that gave advice to you without knowing your financial situation, risk profile & investment goals would be breaching their licence terms.

3. I had a margin loan. It was good when the market was hot. Extra-bad when it was in freefall. I didn't cop a margin call because I was only at 50% LVR but it's mentally distressing having to pay 10%+ interest when your investments are achieving -10%.
margin Loans can also make you think that you are more cashed up than you really are (like a teenager with their first credit card). As a result, you may not apply as much scrutiny to your investments as you would when using your own cash.

Enough to say, I tried a margin loans for 3 years & am now back to $0 & building up my cash reserves for further investment.

[brad]

Margin Lending could be regarded by many as a terrific idea.

Why - because it gives you an exit strategy from the market, something which most people don't have.

In all market crashes (or individual share crashes) the buy and hold people lose bucketloads of money, whereas the margin loan investors (gamblers?) get out when they have lost say 20%.

Buy and hold can lose you 95% or 100%......

Can't quite see why you think this is the case.

People with stop-losses in place have an exit strategy. Margin loan gives you no such thing. maybe you could show me the exit strategy applicable to Prime(?) and those other scoundrels that offered margin loans and are being investigated at the moment.

[Dubdabest]

Can't quite see why you think this is the case.

People with stop-losses in place have an exit strategy. Margin loan gives you no such thing. maybe you could show me the exit strategy applicable to Prime(?) and those other scoundrels that offered margin loans and are being investigated at the moment.

I think his point was that there is somekind of warning/alarm being raised when the portfolio value goes down by a certain threshold value/percentage (though not necessarily alleviating the risks) ... whereas with outright shares ownership you don't get the warning, unless you watch the market by the second!

[brad]

I think his point was that there is somekind of warning/alarm being raised when the portfolio value goes down by a certain threshold value/percentage (though not necessarily alleviating the risks) ... whereas with outright shares ownership you don't get the warning, unless you watch the market by the second!

Nope, no warnings with margin loans until you are up the creek and they are asking for money.

It's up to the investor to set up watch-lists, email alerts, stop-losses, etc

I've got a set & forget portfolio & you have to run it like a business & give it an appropriate amount of time & attention.