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Tag Archives: Structured Products
In my 2011 outlook post earlier this month I mentioned that I had raised the cash portion of my portfolio to 40%. I did this by selling out of my commodity positions. A recent post I read at Pragmatic Capitalism reminded of me of this and that I should explicitly talk about it here on the blog. I highly recommend reading Cullen’s entire post but I’ll just use some highlights from it here to make my point. In general, I don’t view commodities as investments in the classic sense. They are a speculation pure and simple relying on selling your … Continue reading
Happy New Year everyone! I hope you had a great 2010 and wish you all the best in 2011. For my first post of the year I wanted to review my 2010 results and highlight a few real successes and of course some bad trades as well. Lets get right to it. My total portfolio return for the year was 18%. And even more important for a retiree like me, total return ex spending (all living expenses for the year) was 13.5%. Take that 4% rule! Just kidding. Total spending was higher than budgeted for the year but not too … Continue reading
I wanted to start discussing some alternative investment strategies that are often not discussed or a just dismissed outright as being too risky. Today, I’ll start with structured products. A structured product is a fancy name for an investment vehicle that combines a traditional investment, like a bond, with a derivative investment, like an option, that generates a different return profile than the underlying assets. The best way to illustrate this is with an example of a common structured product, an equity product tied to the S&P500. This investment combines a zero-coupon bond plus a call option on the S&P500 … Continue reading