Christchurch woman Rose Fraser and her children John and Lela invested US$285,000 ($341,700) in leveraged options with the firm. This meant they bought gold and borrowed against that investment to buy more, hoping the profits from its sale would be more than the interest payable.
You would have thought by now that the adjective leveraged and the noun options would be enough to make any potential investor turn around and run as far away from the potential investment as they can. But no, the world still contains people like the Frasers. People like the Frasers have two fundamental characteristics that make them attractive to people called brokers: people like the Frasers are (a) greedy and (b) stupid, a irresistible combination to those who will gladly separate them from their money. The Frasers could have put their not inconsiderable sum of money into a bank and gained a safe and healthy return; but no, they wanted to make their money work for them (or somesuch vapid phrase) and so they entrusted all of it - half a million - to a company which had a single director, a director who had a single big and stupid idea about making money out of money.
When the inevitable happens, people like the Frasers get all whiney and tell their stories to the papers, which are happy to take photographs of the whiney victims looking miserable. And so it came to pass that the New Zealand Herald puts this story on its front page; and this during the week in which it is running an important series about the poor in Auckland - people who never have had this kind of money and probably would make a better job of hanging on to it if they had such kind of money.
Oh well, at least the Government won't be bailing them out with our money.
Neil Young and the Shocking Pinks
2 comments:
As well as greed and stupidity they also seem never to have heard the aphorism: never put all your eggs in one basket. I have the same reaction when people put all their retirement savings in single small finance companies. Are people in NZ uniquely susceptible to such scams? or is it that the media splash them making them visible? or is it that corporate governance rules are shockingly lapse in NZ? The repeated story of finance company directors who spend investor's money on fast cars and fast living then declare the company insolvent would suggest the third option along with the first.
"at least the Government won't be bailing them out with our money"
Because they didn't have the political clout of the Allan Hubbard cultists?
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