Structured products investor

Two Lessons from the Death of Structured Products

Another herd-mentality, let's-pile-on, pseudo-intellectual piece offering up a blanket evisceration of an innovative and crucial investment strategy that has prevailed in Europe for decades. Yep, everyone is an I-told-you-so genius after Lehman Brothers goes out of business -- geniuses who must be smarter than Alan Greenspan, who got up before Congress and said even he couldn't predict the current credit crisis (even though, arguably, he's primarily responsible for it).

A classic double-speak in this Investment U article: "I don’t fault Dr. Brooks for believing that a note guaranteed by Lehman Brothers was pretty safe. Ninety-nine percent of investors would have made the same assumption 12 months ago." Anyone who believes that firms such as Barclays, JPMorgan, Bank of America, Wells Fargo and other issuers of principal-protected index-linked notes should stay away from structured products -- while you're at it, avoid all equity, notes, convertible securities, bonds and debentures offered by these financial firms. It would be intellectually dishonest to suggest that principal protected notes have a higher credit risk than any of these other instruments issued by a financial institution.

To be clear, a once-in-a-lifetime credit crisis that killed off a 158-year-old venerable institution of the magnitude of Lehman does not instantly make structured products more risky and "gimmicky" than other securities affected by the credit crisis. The readers of SeekingAlpha.com are likely to be too smart to swallow that.