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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Riskmgmt who wrote (19954)	7/2/2007 12:26:27 PM
From: energyplay	Read Replies (1) \| Respond to of 219426

Well, I didn't mean too scare you. I have bought and sold various ultra - short funds, mortgage REITs, and some foreign currency products. The structured product blow up might happen about once every 20 years or so. Most of the time these products are sold to institutions, not individuals. Having a few percent in one or two of these for 2-4 years may be reasonable, depending on other factors. Remember that most asset classes have problems. Either erosion through inflation (cash and bonds), business changes (Ford Motor), long down cycles (like tech has now, and metals had for 20 years), high taxation (look out oil industry), or some other thing. Examples of various structured securities blowing up - "Portfolio insurance" blew up in 1987. There were some real cute real estate appreciation products that were clobbered in the 1980s. Mortgage REITs, which are roughly similar, also died at that time. Mike Farrell, the CEO of Annaly (NYSE: NLY), a mortgage REIT, has a speech in which he points out that of about 20 mortgage REITs from the 1970s, 16 went bankrupt. He then points out that NLY has the same risks, then says how they reduce risk, but the risk does not go to zero. >> The salesman will be able to tell you why these examples don't apply, and his product is different. I also agree with TJ - the price you are paying for increased safety is pretty high. Also look to see how and when you can get your money out. I have found that cash is a good hedge for risky investments. Very low transaction costs ;-)