Still doesn't make sense to me. If I could loan out money at
8% above inflation and had access to sophisticated hedging instruments, yeah I'd take the other side of the trade.
The market's high, the long term return on stocks is 10%, and
So I have to give you back 6% if the market goes up 10%/year.
With any decent hedging at all, I'd still make at least 2-3% on
free OPM, which is what I'd expect as a bank. No riskier
than a used car loan or a small business loan, IMO.
And I still wouldn't want to take the investor's side,
either. 60% of the upside and none of the downside to
me is a MM return if the stock market averages 10%/year
over the next 10 years. I'm sure the minimum investment
is high, and you'd have to take a huge penalty if you
wanted out early, if they'd even let you out.
Mike |
