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URL:  http://boards.fool.com/rayvt-first-thank-you-for-posting-some-useful-30460886.aspx

Subject:  Re: Retirement, college, and Obamanomics Date:  1/1/2013  10:39 PM
Author:  KluverBucy Number:  71183 of 80007

Rayvt,

First, thank you for posting some useful numbers about the range of S&P returns. I will accept you "fuzzy handwaving math" and agree with your rough estimate that: "33% of the time the excess gain was 11% and 28% of the time the avoided loss was 14%, so using handwaving fuzzy math that's pretty close to a wash." This is pretty much what I assumed but it nice to see the actual numbers.

However,your statement - "SOMEBODY took the loss when the market lost, and if it wasn't you then it was the IUL company. Likewise, SOMEBODY got the excess gain, and if it wasn't you then it was the IUL company." - is still an inacurate description of the situation. As I explained in my first post, the gains are all made by purchasing options. If a call option expires worthless in a market that dropped 14%, neither the IUL owner nor the company loses 14%. The only loss is the cost of the option; and the funds to purchase that option were generated by fixed income securities. Likewise neither the policy owner nor the company got