Should we feel sorry for these investors?

Discussion in 'Investment Strategy' started by big max, 27th Feb, 2017.

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  1. Marg4000

    Marg4000 Well-Known Member

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    Even sorrier for Qld taxi licence owners who get $20K per licence for up to two licences. Quite a few own more than two!
    Marg
     
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  2. Otie

    Otie Well-Known Member

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    I feel sorry for them, Im sure a lot were sucked in by spruikers etc, they got sucked in only trying to better their futures, and doing what everyone else was doing but were ill informed.
    I have sympathy for the taxis, though I don't agree with the govt buying them out, govt wouldn't buy my bad investment out, govt wouldn't save my business if I didn't keep up with the times and diversify. Everyone is just trying to make a future, we shouldn't have to subsidise bad ventures, it can happen to any of us.
     
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  3. ORAC

    ORAC Well-Known Member

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    The situation does bring about the wider issue of financial education and awareness in the community, particularly with the focus on saving for retirement and moving away from government dependency during retirement. If you talk to property investors, a common response for why they are doing it, is to provide financial security additional to their super fund (not everybody has the luxury of a defined benefits pension scheme!).

    There is so much emphasis and pressure for individuals to take care of their own retirement funding, that people are making decisions (albeit ill-advised or poorly executed) to address that concern.

    Hence, the problem is that we have a mismatch between community expectations (of providing for one's own retirement) and the level of knowledge, education, skill-set, and regulation to successfully execute and deliver an investment strategy with a foremost investment class - property!

    It is likely that many of the investors in mining towns thought they were doing the right thing, they may have been advised to do so by educators who they thought were experts, or they invested because their mate was doing it. For what ever the reason, many considered "it was the way to get ahead", and now that it has become "pear shaped", it's what happens next that is the concern, as a lot more people become dependent on the government because of a failed financial strategy!

    The poor outcome in mining town investment property is not the only failed investment regime, there have been many others (e.g. Storm Financial) that has also left many in tears.

    I don't know the answer, but I do see the gross gap and mismatch that does need to be addressed. Should property investment advice be regulated?, and if so, what would be the generally accepted body of knowledge for property investment?

    There is likely to be more investors to feel sorry for to come.
     
  4. Tim86

    Tim86 Well-Known Member

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    I like my investment strategy because if I go down it wont be a couple thousand in a small mining town going down with me. It will be half the country.

    Sure Ill be miserable. But at least Ill have company.
     
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  5. Whitecat

    Whitecat Well-Known Member

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    Some might. But you just don't know. Others may have been humbly investing but not having a lot of knowledge or foresight. But trying to do the right thing for themselves.
     
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  6. Obsidian

    Obsidian Well-Known Member

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    Who cares. It does not take a genius to work out the paying $900k for a house in the middle of no where was going to end in tears.
    Taking the words from the insurance ad. If you invest in "woop woop" , you are eventually going to be up "ship creek" when the bottom falls out.
    Don't feel sorry for them at all. So many gloating back in 2011/2012 when times were good. Just as so many gloating in Sydney today. Should we fell sorry for idiot investors who loose their ***** when the bottom dalls out of the Sydney market when the cycle turns.
    You have to take the good with the bad in investing.
     
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  7. Ed Barton

    Ed Barton Well-Known Member

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    The govt ran a protection racket for cabs. Charging huge fees to protect the industry. Then they didn't provide protection when most needed. I'd want a refund on the extortion fee.
     
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  8. Stoffo

    Stoffo Well-Known Member

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    As per the post by @New Town #18
    (Sorry didn't quote it)


    This probably covers many of us ;)

    There is ALWAYS risk, with any investment :rolleyes:

    It is the level of risk V's reward that is hard to balance :confused:

    I have an OTP to settle in July/August, am I worried, VERY :(

    Do I have a plan/options, you bet, mad if i/we didn't o_O
    Just hoping now :rolleyes:
     
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  9. Yson

    Yson Well-Known Member

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    What happens to Qld taxi?
     
  10. kierank

    kierank Well-Known Member

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  11. Anthony Brew

    Anthony Brew Well-Known Member

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    More likely than not they were less educated about how to invest and lacked an ability to understand the risks to make a more informed decision rather than being greedy. I suspect this because anyone who really understood it would not have made this decision.

    I would go as far as to say that going by your definition of greed, every person who is on this forum is "greedy". If you were a little less educated about investment and did not understand the risks and consequences, you would have done exactly the same thing in an effort to improve your financial situation and resulting quality of life. If that makes someone greedy, then you are just as greedy and by your own statement you deserve to suffer the way they have.

    The only thing that separates you from them is luck.
    And I don't mean luck in your investments.
    You got lucky that you were born with a higher level of intelligence, or went to a better school, or had family or friends who were able to teach you a little more than what those people were taught. None of which you did anything to deserve.

    I saw a good TED talk about studies done with a rigged game of monopoly (they got more moves to throw the dice compared to the other player) and those who it was rigged for did exactly what you did and were convinced that they won as a result of their skill, despite the rules of the game clearly showing it was rigged.
    Keep sitting up on your high horse telling yourself that you deserve your life and those less fortunate (such as lacking an education in investing) deserve theirs, and blame it on any false reason like your phony definition of greed which does not separate you from them.
     
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  12. Beano

    Beano Well-Known Member

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    What i find with investments is it is hard to measure risk so we can work out whether the return is high enough.
    Valuation reports state if the property is low or high risk but they don't state potential growth.
    Anyway will your OTP property be cf+ if the rental market becomes weak at the time of completion and the bank insist on principal repayments?
    If it does then you probably do not need to worry too much.
     
  13. S1mon

    S1mon Well-Known Member

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    Reminds me of the bali 9, took a big risk to get ahead, and failed. A lot of us would love to get ahead overnight, but the risk/reward just isnt worth it.

    Having said that, i feel for them, especially those sweet talked by spruikers
     
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  14. Obsidian

    Obsidian Well-Known Member

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    Sorry mate. Don't think so. There were plenty of API and other mag stories. The Maloney's even won "investors of the year 2012" when at 24 they had 16 properties in Moranbah with loans of $8.5m. Plenty of other stories at that time about people being smug about how clever they were in investing in mining towns.
    YIP mobile
    No sympaphy at all for these people. High returns , high risks.
     
  15. Scott No Mates

    Scott No Mates Well-Known Member

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    You've forgotten 'drive'. I know plenty of postwar migrants who have done well with the opportunities presented to them. Little to no education (nor the English language in their tool kit) but a strong desire to have a better life.

    Their school was 'hard knocks', many tried many failed but others succeded everyone from Bruno Grollo, Frank Lowy or Harry Triuboff down to Luigi Pasta-muncher ie no names who own a few shops or a couple of 4x2 blocks of flats etc.

    Many had no one other than their uneducated cohort, others were fortunate being able to team up with the likes of John Saunders to build on an idea from the US.
     
    Last edited: 28th Feb, 2017
  16. New Town

    New Town Well-Known Member

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    The successful can have as much bad luck as they have good luck. So mostly luck only plays a small part overall.
     
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  17. Tom Simpson

    Tom Simpson Well-Known Member

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    But for the grace of god there go I.

    Education and luck are the big differentiators here. Joe Smith thought he should become educated, he went to the wrong person for advice, didn't do enough research because he trusted his adviser and sunk his gold into a pirate ship destined to sink.

    Bad luck that he went to the wrong person, imagine if he had (luckily) gone to the right adviser and was sitting on a gold mine?

    Some people are so financially illiterate that any advice seems like good advice. Joe Smith might be REALLY REALLY good at his trade and earns a bucket load but there is NO WAY he can get his head around CG and CF+. If he pours ALL of his cash into a bad investment based on bad advice which he listened to in good faith he's done.

    We all make mistakes and have to live with the consequences. Be empathetic to their plight and thankful you have the mental aptitude to learn how to better your lot in life AND the good luck that we live in Australia and not some war torn hell in which our daily struggle could be to put bread and water on the table.
     
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  18. Anthony Brew

    Anthony Brew Well-Known Member

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    Yeah I agree with you that 8.5m in loans (without having another 50m+ in other investments) is pretty stupid and in that case I would not have much sympathy. If that is who you are referring to, then fair enough.
    I think that is an outlier and not the average person who invested there though.



    I am not discounting drive. There are plenty of people (especially those born in Australia) who have opportunity and just sit there with their thumbs up their ass doing nothing. But I don't consider it as much of a success story as you do that an uneducated migrant had to work 16 hours a day, 6 days a week, never have enough money to go on holidays or enjoy life - and do that until he was 65 essentially forgoing his quality of life to try and give his kids a better life that he never had. You might look at his financial situation at the end and call it a success, but he gave up pretty much his life. I don't call that a success. I call that bad luck.

    On top of this, just because you see a couple of examples who worked and saved and ended up financially secure does not mean it is the norm. That is like saying "oh look, Mark Zuckerberg got to be a billionaire, so it isn't luck, it is all hard work and anyone can do it". The US media does this all the time claiming that the US is the land of opportunity where anyone can do anything, yet with the top 20% being 15x more wealthy than the bottum 20%, good education and therefore opportunity only afforded to the wealthy, even if you see an example of a person who ended up rich from a the bottum 20%, it means nothing since even with hard work you have negligible chance of ever getting out of that situation.
     
  19. Whitecat

    Whitecat Well-Known Member

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    I don't disagree with your points that it should have been more obviously risky. But not everyone gloats and shows off in investing. Plenty of people get burned by just trying to do the right thing in their mind (quietly). You cannot generalise all investors in mining towns based on a few show offs.
     
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  20. DaveM

    DaveM Well-Known Member

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    If you are not willing to lose what you have invested, you should not be investing in leveraged speculative assets/strategies.

    Nothing irks me more than people who are greedy and keep on piling into debt, then when it all falls apart blame everyone but themselves and how its the banks/governments/brokers/sales agents fault they lost millions, never their own. HOW COULD THE GOVT ALLOW THIS TO HAPPEN???

    The decisions to invest ultimately lie with the investor, but taking responsibility for ones actions is a lost trait for many.