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Author: Dwdonhoff Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75781  
Subject: Re: May want to re-think traditional allocations Date: 9/27/2012 4:18 PM
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Ray,

Nothing magic, nothing hard to do, anybody can buy these issues, no pixie dust.
Agreed that its nothing magic, which is what I've been saying all along.

Matching the performance is obviously something you don't see how to do (nor is it required, you don't have to be a mechanic to drive a car.)

6, of misleads) You don't capture the first 8%-9% of the equity's gain. 1% fee + 6.8% or 7.8% of the gain. You only get the gains that are in excess of that. That's pretty darned expensive to get to break-even.
Only if you fail to put on an option spread to neutralize the delta (and this the cost drag of the long options.)

Buy a call, and you have to earn the hurdle of the cost to break even.
Buy ATM, sell OTM, to equal your safe leg yield, and you are cost neutral, protected against market downside, and participating in the upside.

But you are pushing them. Don't you do any due dilegence or even smell testing? You believe anything that somebody tells you?
You're wrong. I just linked them as one fund providing the trade outside the life insurers. There are others, and they're getting the similar results.

Again, not rocket surgery (just not your religious bias.)

Do you somehow think that PIMCO is hiding their short-term high- quality low-risk 5% portfolio under a blanket, and offering it only to a few special friends?
I'm sure they sell it to the buyers they want to sell it to. They do it for their parent.

Stop defending the indefensible. Stop pushing crappy investments that you don't understand. Please!
Clearly I'm not the one failing the understanding of how they work.

You've demonstrated you don't understand option spreading.
You have no idea where they're getting their safe leg yield,
(Hint; While I don't have the position breakouts, I know that the safe leg portfolios that they guarantee with their own reserves is comprised of a mix of corporate bonds, commercial notes and real estate, and 'other securities.')

When they claim "safe" and back it up with annually audited reserves to make good on any drawdowns should they incur them... that's 'safe' enough for me.

Its really *NOT* rocket surgery... but you're doing a fine job of making it appear to be.

Dave Donhoff
Leverage Planner
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