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URL:  http://boards.fool.com/so-does-anyone-here-have-experience-with-30536084.aspx

Subject:  Re: Structured products? Date:  2/11/2013  10:59 AM
Author:  globalist2013 Number:  34775 of 35392

So, does anyone here have experience with structured investments like this?

Ah, Yes. Structured Products. The Sucker's Bet of all Sucker's Bets.

folgore,

Let me offer you a bit of advice. If you can't evaluate a security with your own, already-acquired experience and skills, and if you have to ask about it in a public forum, then you've got no business even considering it.

Ask yourself this basic question: Who is your counter-party to this trade? Do you really, really think you know the game --and its outcome-- better than them that created it? Yes, just often enough to attract a new stream of dumb money, buying "structured products" will pay off. But the game as a whole is a negative-sum game for buyers in the exact same way that roulette is a negative-sum game for players (but not for the house, obviously). Again, ask yourself this basic question. Who is my counter-party to this trade, and what evidence do I have that he is wrong about its direction? Unless you have clear evidence (1) that the originator of the product has made a mistake and (2) that you will be able to exploit that mistake to your advantage, you just gambling in the worst sense of that term. You're the patsie at the poker table. "Welcome aboard. We're glad you could be here."

Structured products are NOT investments by any stretch of the imagination. For sure, they are structured to look like investments, and they are investments for them that create them. They are a sure means of making money for them that create them, and for them that sell them. But for them that buy them, their expected payoff (winners versus losers) across a basket of purchases is about one out of three. Why do I know that? Because I gained that information in the expensive way, by buying structured products and losing. Yes, for sure. On some of them, I made money. On the rest, I lost, just as my counter-party intended.

If you really, really want to gamble, then find a game --like basic, classic, stock investing-- that you have a decent chance of winning, on average and over the long haul.

Charlie
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