You have sold a property, but you do not get the amount in lump sum, but as installments. Now you are in need of cash, and the buyer of your property is unable to pay you a bulk, as per the agreement. In such a situation, you can make use of your promissory note to acquire the money. First Equity Note is one of the leading Promissory Note Buyers, and we assure you a great deal for your promissory notes, something that you could have never imagined. We are the right authority to whom you can sell your note and we will help you meet your financial needs.
Note Buyers Network
Finally, we need to understand how much downside protection the 10% buffer really provided considering how much of the upside was surrendered. Looking back at the period between October 1988 and September 2009, the buffer would have saved you only 6.6% on average, not 10%.Why? The dividends decrease the value of the buffer. For example, for the 18-month period ending July 2001, the MSCI Emerging Total Return Index was -36.4%, MSCI Emerging Price Index was -38.6%, and the structured note therefore was -28.6%. So for this 18-month period, the 10% buffer really was only worth 7.8% (36.4% – 28.6%) compared to just investing directly into the index.
Still Interested? What if you really don’t care about credit risk, pricing or liquidity? Are structured notes a good deal? Given the extreme complexity and diversity of structured notes, we’ll limit the remaining focus to the most common type, the buffered return-enhanced note (BREN). Buffered means it offers some but not complete downside protection. Return-enhanced means it leverages market returns on the upside. The BREN is pitched as being ideal for investors forecasting a weak positive market performance but also worried about the market falling. It sounds perfect, almost too good to be true, which of course, it is.
Investment banks advertise that structured notes allow you to access asset classes that were previously only available to institutions or were hard for the average investor to access. While this might have been the true five years ago, today there are plenty of public funds available in just about every niche possible – perhaps too many. Besides that, do you really think investing in a complex package of derivatives (structured notes) is considered easy to access?
Credit Risk Since structured notes are an IOU from the issuer, you bear the risk that the investment bank forfeits on the debt. Therefore, it is possible for the stock market to be down 50% but the note to be worthless. As a matter of fact, the underlying derivatives can have a positive return and the notes could still be worthless – which is exactly what happened to investors in Lehman Brothers’ structured notes. A structured note adds a layer of credit risk on top of market risk.
What Are the Advantages of Structured Notes? Investment banks advertise that structured notes allow you to diversify your investment products and security types in addition to providing asset diversification. I hope no one really believes this makes sense because it doesn’t. There is such a thing as over-diversification and there is such a thing as pointless diversification. Structured notes are the latter.
The only benefit that makes sense is that structured notes can have customized payouts and exposures. Some notes advertise an investment return with little or no principal risk. Other notes offer a high return in range-bound markets with or without principal protections. Still other notes tout alternatives for generating higher yields in a low-return environment. Whatever your fancy, derivatives allow structured notes to align with any particular market or economic forecast. Additionally, the inherent leverage allows for returns being higher or lower than the underlying asset which it derives from. Of course, there must be trade-offs, since adding a benefit one place must decrease the benefit somewhere else. As you no doubt know, there is no such thing as a free lunch. And if there was such a thing, the investment banks certainly wouldn’t be sharing it with you.
Once you sell off the promissory notes to us, we take the responsibility of acquiring money from the buyer of your property. Moreover, we will also take care of the legal proceedings and the necessary paperwork by means of which you can be assured that you will not have to undertake any hassle. It has after all become one of the most acceptable methods for non-traditional lending. The money that you acquire from us on selling the promissory notes can be used in buying another property or for serving some other financial purposes.
Conclusion Structured notes are very complex and few really understand how they will perform relative to simply investing directly in the markets. The illustrations and examples provided by investment banks always highlight and exaggerate the best features while downplaying the limitations and disadvantages. The cost of any perceived protection outweighs and undermines the real benefits. Clearly, investors in structured notes must underweight the cost while overestimating the degree of protection that will be provided. Additionally, there is real risk and disadvantages of structured notes such as credit risk and illiquidity that must be given proper consideration. For all of these reasons, buyers should just pass on this product.
Next, we need to remember that the note is based on the MSCI Emerging Market (Price) Index, which excludes the dividends. If you were investing directly in the MSCI Emerging Market Index via a fund or ETF, you would be reinvesting those dividends over the 18 months. This is a very big deal that is mostly overlooked by retail investor and barely mentioned by the investment banks. For example, the average 18-month return for the Emerging Price Index between 1988 and September 2009 is 18%. The average 18-month return for the Emerging Total Return Index (price index including dividends) is 22.4%. So the correct comparison for the performance of a structured note isn’t against a price index but against the total return index.
Buyers Note To Seller
We even offer free advice to the sellers who are wondering whether this is the right time for them to sell off the notes. We will take a close look at your notes along with the current market value. On the basis of that, we will give you the most appropriate suggestion that will suit your needs. Till date, we have been helping large numbers of individuals in selling their promissory notes and getting the best deals from us. Therefore, you should also not be an exception to the same. It is high time to make a move and get in touch with us.
What Are Mortgage Note Buyers
First, please note the areas marked “Capped!” in the graph showing how many times the 24% cap limited the note’s performance versus the benchmark. For example, the 18-month return of the index ending in February 2000 was 107.1%, whereas the note was capped out at 24%. Second, notice the areas marked “Protection?”. See how little the buffer was able to protect the downside against loss? For example, the 18-month return of the index ending September 2001 was -49.7% versus the note being -39.7% due to the 10% buffer. Yes, the note did better but a -39.7% hardly seems like protecting the downside. More importantly, what these two periods show is that the note gave up 83.1% (107.1% – 24%) to save 10% on the downside which seems like a pretty bad trade.