David Stevenson’s Adventurous Investor column in FT Money is always interesting and often useful. Last weekend he was worrying that equities might be getting over-valued.
Just what I have been thinking too and McInroy & Wood has been a Bear since 2015 – cutting back equities to 60% and parking 34% in bonds, 5% gold and 1% cash. My strategy when there is a collapse in the stock market is to put on my tin hat and not look at share prices until the market goes back up again. So far this has served me well but this time I’m thinking of taking a more pro-active approach. David Stevenson wrote about Infinite Turbos. This is a structured product sold by French bank, Société Générale. Hitherto the mention of structured products has sent me running for the hills but I think this one is worth consideration.
He suggests one called MF69. Every 1% fall in the FTSE 100 makes a 7.6% gain for MF69. There is no expiry date, explaining “infinite” and the gearing explains “turbo”. This sounds too good to be true and it is. The FTSE 100 is currently around 7,400. If it goes above 8,139 the MF69 is a write-off and becomes worthless. However, there should be good gains on the rest of my portfolio and I can always buy another Infinite Turbo.
Are you itching to get behind the wheel of this souped-up Infinite Turbo? Well you can’t go anywhere near it if you live in the US and if you are in the UK you must complete a Complex Products Assessment. I am in two minds about shifting from my head-in-the-sand, tin hat strategy to an infinite turbo. A disadvantage of the latter is that if it does deliver in a slump, I will have to pay capital gains tax that cannot be offset against the unrealised losses in the rest of my portfolio. I can get round this by buying the turbo in an ISA.
How about some fish? Try the Soul Bossa Nova.