No. of Recommendations: 0
Ti, thanks for the response (I gave you a rec for your thoughts).

I understand what you are saying. However, if what I am looking for is a fixed return and I want to limit the exposure to interest rate risk, I should be able to hedge the interest rate risk and still receive the interest income. I would give up the opportunity for capital gain on the underlying security but I would still collect the interest. It is not quite the same as your roulette analogy (maybe the double zero is the default risk?).

It would be interesting to hear from someone who has done this, how they did it and what was the result.

I have seen lengthy threads about whether there is a disctinction between investing and speculating and I did not intend to begin another one of those arguments. The derivative comment is mainly my opinion about those instruments.
Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.