There Is No Such Thing As A Free Lunch

By: ispeculatornew
Date posted: 08.24.2012 (5:00 am) | Write a Comment  (1 Comment)

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I feel like I’m repeating myself… over and over and over. There are hundreds of examples but I continue to hear questions and comments that ignore this. A few examples:

Covered Call ETF’s provide extra yield by selling insurance BUT they have more limited upside in rising markets
High dividend stocks provide more income BUT have greater risk and volatility
-Many structured products guarantee the invested capital BUT they also have less upside
Financial or insurance brokers that offer free consulting BUT they are likely receiving kickbacks which makes it difficult to get an objective opinion
Dividend stocks offer immediate income BUT under certain circumstances they will underperform
Raising taxes on the rich brings additional revenues BUT it decreases incentives for innovation/entrepeneurship and increases motivation to legally avoid taxes
-etc, etc, etc

It’s simple isn’t it? If something seems too good to be true, there is usually another side that you should consider:) Believe me, nothing comes free in this world, especially in the world of finance:)

Sorry for the rant today:)

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1 Comment

  1. Pingback by Gen Y Dividends » Link Time 08/25/12 — August 27, 2012 @ 5:57 pm

    […] Intelligent Speculator chats about when returns are too good to be true […]

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