Lipstick on a Pig: The Latest Wall Street Offering

If watching The Big Short doesn’t have you concerned about some of the products coming from Wall Street, perhaps this will. Thomas Macpherson, CIO of the Nintai Charitable Trust, has written a timely piece describing “Wall Street’s new endeavors to avoid SEC oversight by moving from proprietary index notes (PINs) to certificates of deposits (CDs) backed by PINs.” These products are backed by the Federal Deposit Insurance Corporation, aren’t generally supervised by the SEC, and are sold to risk-sensitive clients as a potential new safe-haven. “Peterseil shows the theoretical back tested results of PINs versus their actual abysmal performance when they were launched in 2010. Remarkably (or perhaps not), performance was almost entirely positive in the past and mostly negative after the product launch.” He offers 3 pieces of wisdom for investors: 1) There are no short cuts to profits; 2) There’s a reason for the small print; 3) Simply, simply, simplify. (VIEW LINK)


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