Introducing 'Auto-Callable Notes': Wall Street's Latest System To Rip Off Retail Investors

I saw that ZeroHedge headline yesterday together with skipped the even out thinking "Why is this news? Someone told me nearly these wee beasties a piece ago." And promptly moved on to wondering what the temperature was inwards Blagoveshchensk together with if in that place was was fourth dimension to brand a dash earlier the weather condition turned.
Then this morn it striking me. No ane told me nearly auto-callable notes.

I read nearly them. At FT Alphaville. In July.

Here are the showtime twosome paragraphs of the ZH piece:

It's a classic Wall Street bait-and-switch.

Despite the obvious flaws inherent inwards sure as shooting structured products targeted at retail investors - flaws that would larn readily apparent to unsuspecting mom-and-pops if they solely bothered to scrutinize the fine impress instead of blindly trusting their fiscal advisor - the large wirehouses rarely girlfriend an chance to seduce customers alongside high advertised yields, masking the fact that buyers are virtually guaranteed to pay to a greater extent than inwards fees than they earn inwards returns.

The Wall Street Journal highlighted the latest display of this predatory withdraw inwards a even out published Tuesday nearly the latest pop investment trend: "auto-callable notes" tied to the FANG stocks. The notes hope investors a sizable yield, but they tin give the sack likewise locomote "auto-called" - i.e. the authorities notation is cancelled together with investors are handed dorsum their regulation (minus a generous slug of fees) - should the underlying stocks outperform or underperform (the details vary from offering to offering). These authorities notation were supposed to tending retirees together with other retail investors reap whatever rewards associated alongside the stocks continuing their tape run, piece shielding them from the inevitable denouement. Or at to the lowest degree that's what they were told past times their fiscal advisors....

And then I remembered I non solely read the Alphaville postal service but idea plenty of it to link to it inwards July 23's "Structured Products Are Back Baby!":

Back inwards the 24-hour interval (2005 - 2008) structured products were all the rage inwards many areas of finance together with ane nosotros posted on quite a few times was the structured carbon trading biz.
Mainly because the manifestly vanilla instruments simply weren't opaque enough—read profitable for the marketeers—there were some actually creative packages beingness set together.

Top-tick of those halcyon days tin give the sack locomote pinpointed equally Dec 3-15, 2007 when, of the 4483 Non-Governmental Organisation (NGO) delegates to the U.N. climate conference inwards Bali, the lFT Alphaville. In July.

Here are the showtime twosome paragraphs of the ZH piece:

It's a classic Wall Street bait-and-switch.

Despite the obvious flaws inherent inwards sure as shooting structured products targeted at retail investors - flaws that would larn readily apparent to unsuspecting mom-and-pops if they solely bothered to scrutinize the fine impress instead of blindly trusting their fiscal advisor - the large wirehouses rarely girlfriend an chance to seduce customers alongside high advertised yields, masking the fact that buyers are virtually guaranteed to pay to a greater extent than inwards fees than they earn inwards returns.

The Wall Street Journal highlighted the latest display of this predatory withdraw inwards a even out published Tuesday nearly the latest pop investment trend: "auto-callable notes" tied to the FANG stocks. The notes hope investors a sizable yield, but they tin give the sack likewise locomote "auto-called" - i.e. the authorities notation is cancelled together with investors are handed dorsum their regulation (minus a generous slug of fees) - should the underlying stocks outperform or underperform (the details vary from offering to offering). These authorities notation were supposed to tending retirees together with other retail investors reap whatever rewards associated alongside the stocks continuing their tape run, piece shielding them from the inevitable denouement. Or at to the lowest degree that's what they were told past times their fiscal advisors....

And then I remembered I non solely read the Alphaville postal service but idea plenty of it to link to it inwards July 23's "argest unmarried contingent was from the International Emissions Trading Association (IETA), 336 potent together with fully 7.5% of all the accredited delegates. (a total of 10,000 attendees flew inwards from roughly the basis because Bali climate)
Good times.

Anyway, that stroll downwards Memory Lane was triggered past times a slice Dan McCrum wrote concluding week.
From FT Alphaville:

RBC, through the FANG barrier 

One of the products Mr. McCrum highlighted are known as:

"Auto-Callable Contingent Coupon Barrier Notes Linked to the Lesser Performing of Four Equity Securities, 

Due July 1, 2021."

to which the solely possible reply was:

How tin give the sack anyone hold back on this together with non yell tears of joy?

That my friends is the highest appear of the marketeers fine art together with makes our old favorite pale inwards comparison. ...

And, if you lot are wondering, the depression temperatures inwards Blagoveshchensk side past times side calendar week are forecast to locomote 5°C (41°F) therefore I may bring missed the season. Decision time.