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Smith Manoeuvred

Leveraged-investing The stock market is down a stunning 40% in just over four months. (Chart)  Now suddenly investment leverage is working in reverse and the Smith Manoeuvre is a little scarier to some people.

We’re not investment advisors so we can’t comment on whether now’s a good time to jump into this strategy.  But we’re hearing a lot of stories from people employing the Smith Manoeuvre who aren’t too happy with their returns as of late.  They’re also not happy about owing more on their line of credit than their portfolios are worth.

This is just a friendly piece of advice to mortgage brokers everywhere.  Most of us are not financial planners.  Unless you’re licensed to provide investment advice be very very careful what you tell clients.  The Smith Manoeuvre is a long-term strategy that is sometimes subject to short-term pain.  When clients experience pain they look to “offload” it.  Who better to take this brunt than all the advisors who got them into the strategy in the first place.

For our clients we handle solely the readvanceable mortgage piece.  We leave all the investment strategy part to the financial pro’s, who are better equipped to judge suitability.  We work with several advisors closely, but we always stay in our niche.  This approach is in both the client’s best interest (they get better overall advice) and the broker’s.