That’s a paraphrase from Ray DeVoe’s old maxim about money being lost reaching for yield. For some reason—gee, I wonder if 2008 had anything to do with it?—investors are intensely allergic to equity risk right now. So, instead, they are buying safe things like structured notes. That hasn’t worked out too well. According to an article in Investment News:
Structured notes and other derivatives products have been marketed by Wall Street as safe and secure investments. Of course, there’s safe and then there’s safe. Retail investors of all stripes have lost at least $113 billion by purchasing these purportedly safe instruments, according to a new study conducted by the nonpartisan policy center Demos and The Nation Institute, a media think tank.
“In my three decades of Wall Street experience, I have not seen any other product as absurdly destructive as retail investments linked to structured products,” securities arbitration consultant Louis Straney wrote in the report.
We’ve written about this kind of karma boomerang before: the harder you try to avoid getting nailed, the more likely it is that you’ll get nailed by exactly what you are trying to avoid.
This happens because risk cannot be defined simply by volatility or capital loss. Risk is much more encompassing and there is no way to avoid it. Since you can’t avoid it, take your risk without significant leverage, in assets that have a chance to grow in value, in relatively liquid marketable instruments that you can understand—and do so in a systematic fashion.
Do you feel lucky, punk? Do ya?
Source: www.simpsonwallpapers.net
very good and accurate article especially ion this interest rate environment-some income with a chance for growth of capital is the way to go!!
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Großartige Seite, vielen Dank! Im Folgenden habe ich in einem Blog noch ein paar zusätzliche Infos gefunden!
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