Between 2006 and 2010 New Zealand saw the systemic collapse of the finance company sector, with 30 finance companies going under. Investors are out of pocket nearly $2 billion dollars and the Securities Commission has large charges against 14 directors.
- 12 lessons that can be learned from finance company collapses:
1. Unsophisticated investors didn’t understand the risk
2. Investments with finance companies are not as liquid as some other classes of assets
3. Finance companies that failed had significant concentrations of credit risk
4. Underlying cash flows of the failed finance companies were very weak
5. Security over assets was weak
6. Rating scales used by Credit Rating agencies contributed to the confusion
7. Investment documents issued were inadequate
8. Financial advisors provided poor investment advice
9. In some cases Trustees did not act swiftly enough
10. Finance companies had significant liquidity risk due to short dated nature of their funding
11. Related Party Transactions were rife
12. Flaws in Legislative framework left investors unprotected

Sourced from Mark Laing a clever friend

Andy

My road trip lead me to Rotorua for the annual tough guy and girl challenge.

The full course is 12 kilometres (7.5 miles), (two 6km laps),and is based on an “Army type obstacle course”. You can run, walk, push, crawl or climb through a variety of natural and man made obstacles.

The course includes water trails, a spiders web net climb, mud slide, crawl under barbed wire, a tricky wire rope bridge, unbelievable native bush trails, paddock running, swamp crossing and more mud. The course has been designed for you to complete and have one of the most memorable experiences of your life.

Well it certainly lives up to the description, one of the guys managed to re-engineer his bottom on a rock sliding down a mud bank, the rest of us were finding mud traces for days and nursing very sore legs.

Sorry about the music, it was a you tube auto selection.

Andy

We are into month three of our investment game and the design studio has been converted into a share trading room with regular crys of buy 2,000 AMP and sell 1,000 WHS.

Recent chatter from the traders

Well yesterday when you sent this email it sat at about $48,500 and was similar when I looked again in the afternoon. Then on the news it said one of our shares had increased in value by $4, so now our fund is worth $52,500. Not bad for one afternoon!
Liz had this to say: Booze is good.Luckily alcohol is addictive so should ride out the recession….yipee!

Codd account is valued at $51,746 with $35,883.50 worth of equities held. Although slightly down on our last update the fund is holding steady. Still got some $ in the tank for the next big thing…

Fisher and Paykel Health Care is our worst performer over the past 2 months of trading. We are hoping the worldwide swine flu scare will benefit F&P Health! ,

“Pork bellies are soooo passé, the future is in TV!”, We lost nearly $3000 in one day early in the month, still licking our wounds, a bit reluctant to make any more big investments.

Andy

I wonder if the owner has even thought of it. I think a nice wrap would look quite nice.

Mark