How This Lady Lost $1.15m On Her Portfolio Of Stocks And Structured Products On Margin...
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- เผยแพร่เมื่อ 13 มิ.ย. 2024
- Today, we'd discuss about a true story of a lady who seem to be poorly advised on her investment approach. Her portfolio consist now of stocks that were purchased from previous equity linked notes and more structured products
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0:00 Introduction
0:24 Structured product geared accumulator
How CITIGROUP shares (NYSE: C) is designed into this structured product which has forward contracts to buy 5 shares every 9-10days at strike price $61 and knock out price $75.
3:04 What is her position as an investor into such a product
4:37 Explaining the risk of fixed coupon notes and equity linked notes
Articles have mentioned for investors to steer clear of complex structured notes
5:35 My thoughts on options trading
6:38 How her margin loans grew to almost $3m
The portfolio had wide swings from dec2019 to now
7:49 Key lessons
#howtoinvest #structurednotes #equitylinkednoted
We do not make any recommendations on whether a security is a buy/sell as every investor has different investment goals and risk profiles. The presentation of ideas from Josh Tan and TheAstuteParent are strictly for education purposes. You are advised to perform independent research yourself or seek a qualified financial adviser. We will not be liable for any losses directly or indirectly from the material. Some of the referral links in the video summary are products and services personally used by Josh Tan and they may pay an affiliate commission or referral bonus.
It is not an endorsement of the product unless explicitly stated and we will not be liable for any losses. The content in this video and any promotions mentioned is accurate as of the posting date.
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About Josh Tan:
Josh holds a degree in Accounting from NTU. In 2016, he co-founded the financial education website TheAstuteParent to provide detailed insurance plan analysis and financial planning tips.
As a ChFC Charterholder, Josh has agreed to be bounded by the ChFC®/S Code of Ethics. This includes, among others, acting in a professional manner when it comes to conducting due diligence on primary and secondary sources of investment-related data, and articulating his investment opinions based on his research and beliefs. Based on his research and analysis, he highlighted his beliefs and opinions, and illustrated the concept of time value of money, as of the time of the video.
Learn more on financial planning and insurance concepts, visit
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A very good and timely message for many who do not understand the complex structure product. I have bought these products many years ago and after netting the gain with the loss, the overall return did not justify the risk that comes with these products. My advice is we should just stick with good blue chip stock.
Good video with substance, thank you Josh !
Thank you for sharing this lesson learnt by others.
To me, a structured product is simply a directional bet on the price of an underlying asset(s) where you assume all the risk and the bank who structured it never loses.
Well-put, and yes, it's a gamble!
They earn the spread
Can the bank lose on any asset class it offers though? Should the bank assume some or all of the risk and offer customers free options?
Thank you - very down to earth message.
That’s a good sharing there. I have participated in FCN before and most had turned out well. But there’s one particular one that’s tied to Sembcorp marine and the losses were 82% which is $165k. The coupons collected over the years on the other structures may not be enough to cover this one mistake.
Hi Josh, thanks for sharing. Do Keep up the work. There are too many noises and so call guru who are trying to exploit the greed in us. We should made efforts to understand the companies and keep up to date on the news, and just do simple investing. Get the dividend and sit back, relax.
I rewatched this when i was been introduced to FCN. And, it brought me to sense after the 2.5hr.of sale talk.
Hope it has helped you. Be careful 🙏🏻
Share with someone who should see too
Josh. I have noticed you make various videos to warn people about the pitfalls of investments as well as highlighting some misleading advertisements about investments. I truly admire your golden heart. God bless you.
Thank you Victor for the high praise 🙏
I feel her pain… I bought FCN and got converted… still carrying the baby. Somehow I felt that the banks know something (which we don’t know) when they package such instruments. As such they are hedging their risks or betting at the expense of their clients.
We have limited upside, and all the downside.
You are right just keep it simple like straight bonds or shares or ETFs.
thanks for the validation Christopher
This I agree
Spore savings bonds and cpf and etf safer
well said Chris! to me -- these bankers /financial planners.....will care only for their income.
Ok, to see you suffer 100% and they gain their commission
** Josh sorry for my remarks.
All the banks RMs are assigned to pitch these structured products to their HNW clients. So never assume that they have your interest at heart just because they are your RMs. They are out to hit sales targets and maximise banks profits.
In this case, you are playing the role of insurers, for a coupon rate of 8-10%, you assume all the downside risks and forego all the upside profits.
Insurance companies underwriters charges risk adjusted premiums, they are the dealers as in a casino. How ready are you to play this role?
Jai Hinduja. My own feeling is that RMs targeting savers are worse beasties than Casino junkets who target gamblers.
Bless you for educating people.
Thank you.
Derivatives have killed several banks in the pasts, for individuals, stay away.
this was the kind of products that were sold to the retail investors (aunties and uncles) at our retail banks before the Lehman Bros collapse. Back then, the returns (premiums) were worse at around 3% or 5% p.a., locked in for 3 to 5 years with a portfolio of 100 stocks. The risks were far too high versus the returns but many were attracted to these because interest were almost zero back then and many were ignorant.
🙏🙏
this is good, hope more ppl watch this video
Thank you for the high praise
Lobe your contents Josh! And yes I think you should definitely do a presentation about options. Lots of fake gurus prowling and luring unsuspecting people
MAS should look into thodr claim for the options ads
Government cant police everything. But we can do our best to educate everybody
If one is a novice in stock n want to sleep at night, stick to Index fund ,ETFs (MSCI) , government bonds,GIC
Great sharing Josh. Keep it up
It normally structured in a way that your gain is limited but loss may be enormously unlimited.. remember Pinnacle Notes ?
Good example
A honest and heartfelt video. I get terribly annoyed when I am served options ads; specifically the one promoted by one audacious young lady who looks like she has never tasted salt in her life before. She certainly comes across as a milk-bottle/pacific sucking financial "guru". We need more down to earth credible people like you who shares honest and sincere financial information. Thank you Josh.
yes she is a scammer
Wait till you are sold leverage products you the bank!! It’s even more scary coming for men in suits from top banks showing how to be a “safe leverage king”. 3X returns.
haha that Chloe lady that travelling NZ and Europe.
@@gomugomu4489 property agents do the same thing, hahahahhahahah
These RMs what are their qualifications?.
A good test is to ask these RMs if they bought the very product they trying to sell you
They may not qualify hence they didnt buy. Or sometimes they do buy also unknowing also of the risk of the product
Hi Josh, I wish your video would have come out last year. I bought into FCN last year August, giving 8% return on my $50k investment for 8 months. The 3 stocks are Paypal, Netflix and Amazon. In May this year, I have to pick up Paypal shares which dropped the most. The value of my investment was $12k. I realised a $38k loss. Luckily I did not leverage, otherwise it would be a much bigger loss. Your 4th point says it right - keep it simple.
Thank you for validating the key message of the video Philip. Hopefully we can educate more first before they choose to buy
OTM 0 dte options?
Not sure what it is but I'd still stick to simplify, just pure equity is fine enough
Steer clear if you are unfamiliar with delta and gamma risks & how to hedge them out.
Simplify better. Ive even no idea what gamma risk
Gamma is second order effect of delta price risk I.e. the rate of change. Institutional asset managers use derivatives to hedge out risks. Most retail should steer clear.
Golden advice! Thanks! Think about it. It is already hard enough to predict the price movement of underlying assets, so it does not make sense to add to these challenges by using leverage derivatives.
Hi Josh! I have followed your channel since the beginning. Can you do a video on ZIM?
P/E ratio is under 2.
Dividend yield is 40%
Haha I've no idea on ZIM unfortunately sorry. But do share what you understand researching into their books
Haha shipping counter. I'm working in the oil shipping industry and I think that's a good counter, but very cyclical in nature... In the long run, all things adjusted should be very good returns but lethal risk is there as shipping companies are not the best managed ones...
As always, I enjoyed every of your financial education videos. Just my opinion, even though i'm a long term investor, I often find it hard for myself not to look at my equity portfolio and and when i saw those red color values, i kept asking myself why didn't i sell earlier, why didn't i sell earlier? Is never easy for people with huge amount of money invested into stocks and other complex financial instruments to tolerate pain if the portfolio value kept going down for years and years. I wish there could be videos of people sharing their past or current experience on how they overcome their negative thoughts and emotional pain when going thru a bear market.
Thanks Les. The focus is not on "selling earlier", that regret factor cannot change outcomes. Rephrased from warren buffett "if you are going to be buying in the next few years... you should be happy that the prices come down"
You overcome by focusing on other stuff so have a new hobby, go smell the roses, exercise, find your purpose in life etc and IMHO meditation helps me to be much less triggered.
Remember Synthetic CDO Squared? The nuclear option, ha ha ha
oops ya
Hi Josh, thanks for sharing. Have you heard of FX loan switch offered by standard chartered? Anyone has any views on this? Thanks.
No idea. My guess it’s for leverage tied to an insurance annuity plan?
@@joshconsultancy yes you are right. Any views?
@@dt31cf19 I’ve advised private clients to pull it to back to sgd. simplify things, remove FX risk from the equation and go back to the roots on original intention which is to get sgd based monthly cashflow. Hope it’s good food for thought
@@joshconsultancy Thanks Josh. Have a great weekend!
Don't buy structured products. . They are terrible. .. Investment
Do u think that chasing trends and investing in meme stock like BBBY will also result in this kind of situation?
Meme stocks would be in structured products you'd realise... my guess is coz it cannot deliver the illusion of safety
When investing, understand the risk first before talking about returns.
it's purely gambling with unlimited downside and fixed upside, what do you know about a single stock anyway? In my view, this should be further regulated
In the accredited investor space, regulations are less
The poor woman can sue the financial institution for selling instrument for which she barely understands.
Hi Josh, please remove my comment if you find it offensive.
Citi products are highly risk and likely to trap you from changing bank using their so called leveraging tactic. If you are persuade to leverage, Their LTV can be very subjective,
example: Gov link company Bond can go as low as 50% while dual currency link note with highest risk can be as high as 90%. As such, I made a hard decision to end the relationship with the bank and bring over all the fund to another bank with a loss.
Need to clarify, so that I also avoid trouble - product NOT sold from CITI but another bank. Underlying stock of the product is citigroup shares
Just stay the away from insurance linked investments , margin and stick to index and ETF.
This sharing is not on ILP but rather structured products actually
Sorry I have to be rude, where got people buy bank product one? Bank is not your friend.
There are many... that's why I've done this sharing
I beg to differ josh
Covered calls are still ok
I bought Google at 130 lost $10
As the the price came down to 120
Sold call to gain back $3 premium sold my cost become 127
If excerised I still earn 300
I prefer to not foresake the equity upside (which is the whole idea of investing) because markets can suddenly turn bullish against all expectations (which is rooted in the concept nobody knows where the market will be next month). But I understand your perspective.
@@joshconsultancy like u said see red pain
At least less pain I feel overall is risk reward
@@joshconsultancy what u said is true
Now in telegram a lot selling courses but dun dare show portfolio some even more funny show watchlist and say they sell put . Yesterday I thrashed them saying so good so much money to excerise all the put .
Then they blocked me .
Now have professsional puller
Pull property Course
Pull option course
@@joshconsultancy I now currently slowly building with tiger vouchers then
I sell call as most of my purchases are 10% to 20% of discount
I just sell call even near my purchase price
If I have 10 usd most likely I buy $100 usd
If I have 25 usd voucher I buy $250
stay away from options; margin; cryptocurrency. Greed is in every human.
I have faith in ETH as a currency for blockchain transactions on ethereum but yes agree avoid almost all other cryptos, Margin use and options
Yes totally agree. These are just vehicles to lose wealth fast. Not build wealth fast
Options is the hottest "thing" now
No greed no gain
Golden advice: Lesson #4, Simplify your investment approach. 👍🏻
Simply don't be greedy. Look at cryptos (Hodlnaut, Celcius, etc). Invest something you know and understand. Currently SSB so popular that I am getting lesser allocation than I got few years back. But recent T-Bill at 2.98% for 6mths consider not bad for me. Just maneuver here and there, and earn some interest. The rest will be stocks for ling term....along with some commodities.
Options is nothing new. Its new only to be used as an instrument to bullshit others to join a “masterclass” 😂😁🤣 i have been using options since 2003, thats like 20 yrs ago. Mostly for taking a certain position and making a bet on the direction over a period. Dont ever think you can get rich by trading options. You probably lose more than you make. Its just ridiculous watching amateurs on adverts talking like they are grandmasters of options and saying they can gain financial freedom simply by trading options.
20 years, so overall your gain is?
What's your favourite strategy? Covered calls? Spread?
@@forevergraceful6160 i think you misunderstood, i dont trade options. I use them to enhance my positions or as insurance. So how much money i make in options dont matter, its my portfolio which matters. As a rough round figure, my gains over 20 years is around $4-5mil? Quite low becos i am not crazy aggressive.
@@choonpingsim3209 strategy depends on my positions and my views. As mentioned, and i repeat, i dont trade options to make money repeatedly to grow my wealth. Options are an instrument which i use to enhance my positions or as insurance. 🙏 i am no expert options trader , never said i was.
Banks love to make all sort of complicated products and derivatives or whatever they call it...but at the end of the day it's still down to one thing: prediction. The difference in all the products is only down to one thing: odds of winning. And "odds of winning" may seem higher for people who lack certain understanding of risks, and lower for those who understands. And I guess the reason why certain sophisticated product exist is to gain advantage of those who are too lazy to read and understand the fine prints.
Brutal but some truth to it
Sad event for your client . So she bought those products from RM/WM of the banks ?
Id have to be savvy and avoid specifying
Jai Hinduja. As a greenhorn sucker, I had paid for my tuition fees to the banksters. Buy Singapore Bank stocks and Properties. But at the same time, best to stay away from those kinds of investment advisors.
Josh, very good thanks.
Not sure people understand that you DO actually make profits on these things (there are many many different types with different terms) if the market is moving in the right direction. The issue here is the market moved in the wrong direction. So it is a really question of not overextending exposure if you decide to invest.
My Sing bank (same as here.??? Yes, I think....) had a whole series of these products many years ago and, TBH, if anyone had invested in them all they would have made a LOT of money - because the market was moving as expected. However my young banking lady was also heavily encouraging margin to magnify exposure on investments (........) - and I think that's often where the larger problem lies if it all goes South.
"encouraging margin to magnify exposure on investments" - thats the part haiz...
if it is too good to be true, then it is not true
Actually seems like the danger here is not options. Rather, it's the use of margin to over leverage and unhealthy risk management. It's also to understand the price at which the underlying is of a fair value.
If spy is currently 400, selling puts at 390 to gain an income shouldn't be any wrong. If it drops to 350, the loss should not be compared from 40/share to no losses. It should be compared to 50/share as you would have bought it at 400 instead. That's risk mgt.
Also, stock buying is not more safe than options. Look at the PLTRs, the Coinbases and other stocks that have fallen 80-90%.
End of the day, it's doing the correct due diligence and understanding risk mgt rather than avoiding it altogether.
I've a different perspective. "stock buying is not more safe than options" Safe part is not really the debate. But options run 2 likes of risk, one is direction and the other is time
I agree with unused name in this case. Shld not leverage. Otherwise, selling covered put fine as long as you have done your homework on the underlying asset.
But I also agree there are too many advertisements promoting Options; making them look risk-free and easy money.
@@lewispeh208 agreed on the terrible false marketing. I think there is too much misconceptions with options and more can be done to educate people who want to take on slightly more risk for a slightly higher growth but also understand how to manage that risk.
It's definitely not free income or easy money but can be used to have a part of their portfolio with bigger growth potential
Cash covered put is ok
Marry buffet ?
Hottest thing is option now. U will likely heard all your Investor friends talking and trading them now. It is like the new bitcoin
These leveraged double barrel puts are dangerous. The leveraging exaggerates the returns but you are doubly hit when the market comes down. The seller or the arranger which is the marketer of these products collects selling of the put options while the buyer has unlimited downside risk and only half of the upside and in some structures limited upside gains. Stay away unless you can take the long terms swings on margin calls and is long term bullish on the underlying assets. If you have enough money you can actually arrange this trade without the seller pocketing the option sales
I stay away once I see the word “structure”. ⚠️
"Avoid synthetic shorting with options" - Seems like Josh is pointing his barrel at someone 😶
Oops... I didn't name names... not keen to start another war
Those stuff are for very sophisticated investors. Common retail investors do not need them. Shit happens when the products are more sophisticated than the buyers.
@@joshconsultancy 三十六策 走为上策，我先告辞了！
Haha Chi Keng, 不要引戰。😆
🐔
do not be greedy, selfish and ignorant
in this current market situation its better just doing normal stock trading.if buy at a loss ,as long never sell n hold n average out and wait for the upthread
When u meet the criteria of a high net worth congrats u just become a carrot for private bankers. Must be very wary.
Options trading shouldnt be offered to those without proper training in an instituitional setup. Even for those that had, (me included), due to a different product, it was also hard to adjust initially when transitioning to another product, either you will be underleverage or over leveraged... Basically... DONT TRADE OPTIONS IF YOU DONT HAVE FORMAL TRAINING!
When you write an option, your losses are unlimited. Most real option traders do both to balance up their risks and payouts. But retail investors always end up selling or writing options and when markets swing they get caught deep on the wrong side. Why? Heh heh heh. …..
A beautiful n splendid casino operator spends billions to doll up its premises. Ask yourself …. It did all that and welcomed you in to make money! Come on man! Same with financial institutions that come up with ‘products’ ( I hate this term used by them cos it’s a worthless piece of paper) to sell to you to help you make money? Very high chance the individuals will lose big time. The FIs know the market better than the individuals. It still amazes me why individuals especially those with money can fall for it. Amazing!
Went for the Option talk. end of the talk, that when the real thing come, ask you sign for the option trading class which cost 4+ thousand for a 2-3 days course. Just say 'thank & bye bye.
Ah!.... kindof expected. Thanks for sharing
she is called arigato investor because she will say arigato to those jiu cai that signed up for her classes
Jai Hinduja. Use spare cash only. Paper losses now but can fatt fatt later when prices recover.
This is still better than FTX. in FTX, you lose everything.
That is in crypto space which is unregulated