Saturday, January 24, 2009

Off Topic – info for HPC regulars who have switched to cash during market uncertainty

Standard's pension sterling fund invested more in sub-prime than cash

Standard Life’s Pension Sterling Fund has a higher weighting in sub-prime mortgage backed securities than it does cash, it has emerged. Despite being promoted as a home for investors’ money “when the short-term outlook for equities, fixed-interest securities and property is uncertain”, the fund has 13 per cent invested in “non-conforming residential mortgage-backed securities”, while only 12 per cent in cash. The insurer has been bombarded with complaints from both advisers and investors after it performed a shock revaluation, which saw nearly 5 per cent wiped off the value of its Pension Sterling Fund.

Posted by jack c @ 09:43 AM (920 views)
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5 thoughts on “Off Topic – info for HPC regulars who have switched to cash during market uncertainty

  • japanese uncle says:

    It is a matter of time this firm is renamed ‘Substandard Life’

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  • the attraction must have been leveraging or more simply fractional reserve banking on steroids.

    ~~~~~~~~~~~~~~~~

    Bernie Madoff showed us how it was done: you induce many investors to invest their money, promising steady above-market returns; and you deliver – at least on paper. When your clients check their accounts, they see that their investments have indeed increased by the promised amount. Anyone who opts to pull out of the game is paid promptly and in full. You can afford to pay because most players stay in, and new players are constantly coming in to replace those who drop out. The players who drop out are simply paid with the money coming in from new recruits. The scheme works until the market turns and many players want their money back at once. Then it’s game over: you have to admit that you don’t have the funds, and you are probably looking at jail time.

    A Ponzi scheme is a form of pyramid scheme in which earlier investors are paid with the money of later investors rather than from real profits. The perpetuation of the scheme requires an ever-increasing flow of money from investors in order to keep it going. Charles Ponzi was an engaging Boston ex-convict who defrauded investors out of $6 million in the 1920s by promising them a 400 percent return on redeemed postal reply coupons. When he finally could not pay, the scam earned him ten years in jail; and Bernie Madoff is likely to wind up there as well.

    Most people are not involved in illegal Ponzi schemes, but we do keep our money in accounts that are tallied on computer screens rather than in stacks of coins or paper bills. How do we know that when we demand our money from our bank or broker that the funds will be there? The fact that banks are subject to “runs” (recall Northern Rock, Indymac and Washington Mutual) suggests that all may not be as it seems on our online screens. cont. ~~~

    http://www.webofdebt.com/articles/ponzi.php

    BORROWING FROM PETER TO PAY PAUL:
    THE WALL STREET PONZI SCHEME CALLED FRACTIONAL RESERVE BANKING
    Ellen Brown, December 29th, 2008

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  • Which is why you should always manage your own investment. Quite frankly, if this fund was sold as somewhere to put your money when property was uncertain, and they invested over 10% of the fund in property, then they should d*mn well be strung up and fined for miselling.

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  • little professor says:

    This is outrageous. Pension firms are supposed to stick with the safest, lowest risk investments.

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  • where would the other 75% be placed?

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