As some of you may or may not have noticed, its been quite some time since we've heard from the trolls brilliant minds down at our Structured Products Desk. Truth be told, despite our mostly-fictional status as an actual Investment Advisor/Underwriter, there just hasn't been much demand for any innovative structured products over the course of the past few months.
Until now.
Ladies and gentlemen, today, the 1-2 Knockout Structured Product Desk presents the next generation of financial innovation:
The "Short Human Investment Thesis" ("S.H.I.T.") series of Exchange-Traded Funds and Notes. (tadaaaa!)
What, you may ask, is Short Human ("S.H.I.T."), and why (or simply, wtf)?
The point is, investors are sore - like they just spent a few nights in PMITA Prison sore - and they need something to get excited about. As we, ourselves, have pointed out on multiple occasions though, there just isn't much out there to get investors salivating (and Wall Street profits flowing, more importantly).
Thus, to address this relatively non-existent demand, we've spent countless hours slaving over endless piles of "data", and determined that investors respond most enthusiastically to trading opportunities that maximize their schadenfreude utility factor. Picture the Efficient Frontier or basic MPT graph, except with "Schadenfreude" on the x-axis, and our Short Human ("S.H.I.T.") notes and funds both higher, and to the right of any sort of tangency portfolio or "benevolence frontier." Some disgruntled quants among you may (rightfully) consider this a blatent perversion of all that is holy in quantitative investing, however, given most of your track records of late, we consider this to be much to our advantage. (Thanks.)
Thus, based off our cutting-edge research, we have been able to create a return/schadenfreude profile for our Notes and Funds with little/no correlation to the majority of existing asset classes to which potential investors may currently be exposed. Of course, we say "picture" because we had to, unfortunately, "right-size" our Graphics department, and our Indian outsourcing replacement is currently mired in accounting scandal, but I digress.
We're working diligently with our lawyers and other advisors to hammer out the details on the OM and Prospectus, but unfortunately only have preliminary authorization to buy US-based securities (Global and other country-specific products to come!). Below, a summary of a few of the ground-breaking products we plan to offer:
Ultra-Long Obesity ETF/ETN: "Given the choice of "Bacon Cheeseburger" or "Running", 99.5% of Americans surveyed walked briskly towards the buffet."
We haven't finalized the composition or structure of this fund, however as it stands currently, this fund is comprised of long equity derivatives of the firms contributing the most (or short derivative/equity of those fighting the futile battle against) the un-health of the American public, times a BMI and/or LDL multiplier.
Ultra-Short Financial Responsibility ETF/ETN: "Because your neighbor is actually somehow MORE credit-rich than you are."
The same caveat applies to this product as well, which follows a similar investment strategy as the ULO fund/note. The basic strategy is based upon the high propensity of both individuals and firms to both over-extend and under-prepare (for a rainy day, unemployment, ARM-resets, credit freezes, etc). The fund will seek to acheive positive returns on a leveraged basis (approx 10x, in keeping with the investment thesis of the Fund/Note) of the underlying constituent positions, e.g. long OTM Rent-A-Center puts or simply shorting every single consumer ABS we can get our hands on.
i^2 (Information*Intelligence) Arbitrage ETF/ETN: "No one has ever gone broke underestimating the intelligence of the American people."
This innovative (no more alliteration, promise) product seeks to exploit the well-documented rift between how smart and informed we believe ourselves to be versus how stupid and ignorant we really are. Short: newspapers, publishers (especially non-fiction oriented ones), bookstores. Long: US Weekly, News Corp, Wikipedia.
Some critics have argued that investors can create similar trades with existing securities, such as the Vice Fund, one of our admitted inspirations, LoSC "Satan''s Portfolio(s)," or a variety of combinations of individual debt/equity securities.
We believe this to be absolute nonsense.
1-2 Knockout Short Human Investment Thesis Funds & Notes: Short the S.H.I.T. out of your fellow man!
Waiting for more products in the Nihilism family...
Posted by: Calgary Schmooze | January 28, 2009 at 06:00 PM
@ Calgary
Not so much nihilism, more plain, run-of-the-mill cynicism.
Posted by: Anal_yst | January 28, 2009 at 07:00 PM
Given your impressive work as a "mostly-fictional" Investment Advisor/Underwriter have you considered becoming a rating agency?
Posted by: Lee D | January 29, 2009 at 12:13 PM
Anal,
It's so true, it's scary.
Posted by: LA | January 29, 2009 at 06:29 PM
@ Lee D
Unfortunately there isn't much of a market for a subscriber/investor-pays Ratings/Research service; you think we'd be doing this for Free if there was?
@ LA
Alas, to the point where I've considered whether these would, in fact, be viable investment products, hmmm...
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