Oxford Club’s Alex Green explains how Wall Street’s supposedly safe structured products became an investor’s nightmare. In reality, they were just a gimmick. Alex says this just underscores why investors should be cautious of any product that comes with “guaranteed” returns.

This from InvestmentU:

Structured products are securities that are sold as an opportunity to enjoy substantial gains with full principal protection.

For example, an underwriter might offer investors the upside potential of the S&P 500 - or a substantial percentage of that upside - over a certain period of time (say, five years) while guaranteeing no less than full value of the initial investment at maturity, even if the index goes down.

(Or, instead of the S&P 500, the investment might be linked to Asian currencies, or commodities, or something else.)

How can you offer all or most of the upside of a risky investment with a principal

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The wild instability in current markets has me thinking...

"Washington Mutual Becomes the Biggest Bank to Fail in U.S. History," blares a headline.

"Bailout Talks Implode During Day of Chaos," screams another.

That can't possibly be good for the markets, right?  You'd have to think that the Dow and the Select Sector SPDRS Financials ETF (XLF) will be taking another nosedive today unless the government gets it together. In a major league show of brinksmanship, Paulson et al announced the big bailout assuming (correctly) that if you don't follow through and actually fund the plan, that it could exacerbate the situation.  I mean if you make the announcement, at that point, you can hardly NOT fund the bailout, right?

Crazy times.

And our job is to tell you what it means for you as an index and ETF investor.  Does it mean get ready to

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