Investors,

let me relate a personal story of my own with regards to the integrity of brokerages.

I trade through a well known and large brokerage, it is not really important to name it because they are all the same in my opinion.

This occurance happened about 10 years ago in late 98. I had invested my RRSP money in this particular brockerages mutal funds under a self directed account. I maxed out on my RRSP contribution every year and put it all in this brokerages mutual funds that contained resources, precious metals, energy and banks. This was long term money that I did not want wish to handle personally, thinking that I would let the professions look after it just in case I messed up with the money I invested on my own.

After many years I had piled quite a bit of money into this RRSP porfolio and it was worth quite a bit, even thought the mutal funds had returned only perhaps a few percent after charges per year.

I happened to be home from working over sea's when one day I got a call up from out of the blue. It was my brokerage calling me up to set up an interview to discuss my account with them. We set up a date and I said I would be down to their local office to me them. They said there was no need to do that, they would come right to my house. I was impressed and thought to myself, finally I was getting a little service for all those fee's I was paying per year.

Well on the appointed day, sure enough there shows up a very nice fellow in a suit, carrying a briefcase and looking very professional. We discussed many things, he led me to beleave that he would be the one directly managing my account and he would do it actively. He suggested numerous funds, showed me all kinds of research and suggested that I move my porfolio from my not so well performing funds to these funds whose performance would be monitored by him.

I shot down some of his idea's but agreed to most of them. I was not familiar with the sectors he was talking about and could not argue there performance.

Well while it was still a year or so away from the peak of the tech. and .com bubble, that did not matter because there funds performed poorly right up to the crash. Needless to say they even performed more poorly then most during the crash.

I was advised by this financial advisor to get into the tech sector and my money was placed in biotech, .com and pharma funds. Needless to say, we all know how that turned out.

Well I believed that I had a paid manager to actively manage that portion of my money so I never paid much attention to it. Well it was quite a shock, when one day I happened to go through a quarterly statement and noticed that my RRSP portfolio was down about 40%.

I left my money in knowing that there would be some sort of dead cat bounce. Sure enough 3 years later I was about back to even and knew that it was time to get out. When all was said and done I not only lost 3 years investment time, but between the commisions and back end loaded charges on the funds. I also ended up losing 15% of my portfolio. This does not count the aprox 400% I would have been up if I had left my money in the original funds I at initially picked for myself.

You see investors, it turned out that while this nice fellow who showed up at my house my be a so called financial advisor. In fact what he really was is a sales man.

The fact is that my account was never actively managed after the moment I authorized him to switch funds. 

He was not the one really recommending these funds but had been given a list of funds from H.Q. and was told to push these on clients.

When I was in the local brockerage office going through the process of transfering my account to my own personal online account. I was cautioned a number of times at the cost of removing these funds and if I really wished to close out these accounts. The reason you see that certain funds have such large backended charges, which of course are listed only in the fine print, is to shock and discourage you from what I was doing. Namely withdrawing my money due to extremely poor advice and performance. Well I can assure you after me having to tell him a second time I was sure I wanted my money out. I was not asked a third time.

While conducting my business, I overheard whispering people next door mentioning my name and that I was this particular salemans account. Well on my way out, before I reached the door, out runs to greet me is my ex financial advisor. He offered his hand and said "no hard feelings", I replied, why should I blame you for me stupidly trusting your institution with my money. I did not shake his hand though and I have also never entrusted anyone else to look after even a part of my finances since then.

It actually worked out in my favour because I was able to take those funds and more than make up for lost time with them. Something I would probable not done if this incident had not occured.

This experience taught me how the brockerages really work. It is about making money for themselves and perhaps their very large clients. Everyone else, even though you pay them, is there just to be used.

This brockerage who gave advice to buy into a sector near the top of it's bull run, who sent out it's salesmen to push funds on clients, that the brockerage no doubt wished to sell out of or had a large client who wish to sell out of, in the short run may have gained. In the long run they have lost clients.

The moral of this story is that nothing is given for free and even financial advice you pay for may not be worth anything. Therefore do not trust these analysts giving free advice on companies or take there word for anything.  Most of the time even when you pay them,you have to suspect their advice.

These analysts that are covering ARU, while some of their material is decent, alot of it is pure garbage. Take CIBC write up for instance. While they had what I consider the most reasonable target of all the analysts to date at $20 +. Their cost estimate to develope the mine at 500 million was way out of the ball park.

Crystallex which will be a very large open pit mine and much more costly to build because of that fact. Has just come out with their latest cost estimate of aprox. $360 million to build the mine. Where the CIBC analyst gets $500 million to build an underground mine from I will never know. My off the cuff estimate would be around $250 million max.

I have been on site at a number of different mines during investor tours. Let me assure you that from what I saw, these investor representatives would not know the difference between a well run mine and a poorly run one. I remember on fellow who put the lining of his hardhat in backwards and went around with the back mesh of it over his forehead for the whole tour and never clued in hahahaha.

Regards,

F.F.