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Keep Your Investments Simple #APPL #InvestmentIdeas

By January 31, 2013June 14th, 2019No Comments

How did the fall in Apple’s share price hurt some bondholders?

In Jason Zweig’s article in the Wall Street Journal this weekend, he talked about investors getting hurt by the fall in Apple’s share price, and how it hurt some bondholders.  The headline grabbed my attention.

These so-called bondholders are people who bought equity-linked structured products from some of the big investment banks.  The investors in these products got better yields than typical bondholders, and if the underlying stock price stays flat or goes up, investors got their money back at maturity.  Seemed like a safe bet with Apple, right?

However, if things went wrong and the company’s share prices go down 20%, the investor winds up getting shares in the company instead of getting their money back.  So the investors bought a safe-sounding product for its higher yield and will now lose a lot of money.

A long time ago I read some great advice in Forbes magazine.  The editor at the time said to buy stocks or bonds, or funds of stocks or bonds, and that’s all.  Anything more complicated than that was made by the intermediary to make money off its customers.  I couln’t agree more.


Michael Garry Yardley Wealth Management

Author Michael Garry Yardley Wealth Management

Michael Garry is a CERTIFIED FINANCIAL PLANNER™ practitioner and a NAPFA-registered Financial Advisor. He is a member of the National Association of Personal Financial Advisors (NAPFA) and the Financial Planning Association (FPA).

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