Stock market: Promises of guaranteed funds are binding only on those who believe them

Formula funds have become the stars of the commercial networks of financial institutions.

Indeed, there are few brands that do not offer them, whether in a simple securities account, a stock savings plan or, most often, under a life insurance policy.

On paper, these products have almost everything to please: easily accessible, a few hundred euros are enough, they promise to make you participate in the rise of the stock market while enjoying after a few years (5 to 8 years in general) of a guarantee or protection of the capital.

Obviously, the reality is generally less glowing and their final performances are often disappointing. It is also by one of these funds, Bénéfic, of the Bank Postale, that arrived one of the biggest scandals of the popular savings … when the subscribers realized that they had lost 30 to 50 % of their stake when they thought they did not take any risk.

Taking advantage of rising markets without taking risks is what these car title loans would allow- look at here now.


Before succumbing to one of these products, it is, therefore, necessary to take a lot of precautions and to try to understand how they work.

The first point to consider: the warranty. When it exists, it is never permanent. It is necessary to wait until the end of life of the fund – 4 to 8 years – to benefit from it. Thus, any saver who withdraws his money before maturity may lose part of his stake.

It should also be known that many of these funds are not guaranteed, only “protected”. In other words, the financial institution agrees to repay the amount invested provided that the market does not fall beyond a certain level, usually 40 or 50%.

If the stock market slips more widely, all securities fly away and the loss is at least equal to that of the markets. Although the risk seems low today given the level of the indices, it is to be taken seriously.

Second important point: the performance. This is very variable from one product to another. Some commit to giving part of the rise of a stock index (75% for example, but without dividends), others calculate it according to the average valuation of a basket of shares; others – especially those sold in the wealth management universe – provide for the payment of a high coupon, sometimes more than 10%, if the stock market stagnates or progresses.

But in general, these funds “coupons” provide for an early repayment if this scenario is realized. Thus, in 2012, several of them launched the previous year were reimbursed in advance with the high coupon, because the stock indices were higher than their original level. Too bad for the saver who thought to receive a high return for several years.

“We do not advocate this type of products to our customers, especially as they are very difficult to understand, although there are serious companies and well-designed products, ” warns Jean-Pierre Rondeau, president of Megara Finance.

To make sure of this, you must immerse yourself in the information leaflet. And if you do not understand it – which sometimes happens to professionals – the easiest way is not to subscribe to it.

The financial crisis provokes controversy over the Greenspan era

What does Alan Greenspan play?

By declaring, Thursday, September 6, that the attitude of the markets was “identical” to that which was observed during the stock market crash of 1987 or during some of the biggest financial crises of the United States, the former boss of the American Federal Reserve (Fed) caused a mini-storm on the markets. His words had the immediate effect of increasing the monetary tensions related to the failure of housing loans to US subprime – the famous subprime.

They have also rather irritated many international central bankers, who believe that the current financial crisis is a direct result of Greenspan’s lax monetary policy of nearly two decades.

This one, by its action, would have facilitated the appearance of speculative bubbles with repetition. In the aftermath of the stock market crash of 1987, the Fed had massively injected liquidity into the US economy. What then led to the creation of a real estate bubble and the bankruptcy of the savings banks. After this storm, Greenspan had once again sharply lowered rates, this time favoring the appearance of a stock market bubble on technology stocks. Following the breakup of the latter in 2000, Mr. Greenspan had again implemented an expansionary monetary policy, which, according to his critics, would ultimately lead to the subprime crisis. In a word, Mr. Greenspan, nicknamed “the Maestro”, would have been a manufacturer of bubbles.

This is the reproach addressed to him by Gerard O’Driscoll, the former head of the Federal Reserve Dallas, but also most of the top monetary leaders in Europe. “Mr. Greenspan is not deflated to give us lessons today,” says one of them, exasperated.

While some have decided to hear the trial of the mythical Alan Greenspan, others are attacking the opposite policy of his successor, Ben Bernanke, accused of not having been aware of the dimension of the crisis and of having been slow to inject cash. Mr. Greenspan may have been producing bubbles but he has allowed unprecedented growth in the US economy.

In recent days, dissensions have emerged within the board of the Fed.

President of the Reserve in San Francisco, Janet Yellen considered that the risk of a strong impact of the real estate crisis on the entire US economy has increased “very significantly”. “If the fall in real estate prices is combined with a rise in unemployment,” she added, ” the risk would become significant.”

Frederic Mishkin, a member of the Fed’s Board of Governors, predicted that household sentiment could “soften” even more in the face of increased “anxiety” over “recent market developments”. The Fed, he said, must be “ready to act”.

Others have advocated serenity. “So far, our economy seems to be weathering the storm,” said Richard Fisher, who chairs the Federal Reserve in Dallas. In his view, the fall in employment is only a “cyclical discordant element”. His Atlanta counterpart, Dennis Lockhart, contrasted with the recent bad clues “the positive numbers of retail sales” – especially automobiles.

Is there a “break” between “Bernankiens” and “greenspaniens” inside the Fed? The exuberant Mr. Greenspan was the Herault of the markets, and he remains to this day their hero. The placid Mr. Bernanke appears more orthodox, more cautious about the same markets, or less willing to comply with their immediate wishes. Some analysts point out that he is not only less mundane than his predecessor but from a modest provincial family.

The head of the Fed, Goldman Sachs chief economist Jan Hatzius said, “was convinced that a collapse of subprime mortgages was inevitable, perhaps even to a certain extent. that the US economy was strong enough to absorb its impact, and now the Fed will have to fix its line in the face of serious recession risks. ”

Hatzius, on the other hand, does not believe in a clash between “Bernankiens” and “Greenspaniens”, in which the former would be “hawks” against the markets and the second “doves”.

While there is a great deal of uncertainty about what the Fed will do on September 18 – lowering its key rate by a quarter of a point or even a half? – The unpopular Ben Bernanke – invited on Tuesday by the Bundesbank floor before an audience of economists in Berlin on the theme of “global imbalances” – did not let anything show through his intentions.

The day before the meeting of the Monetary Policy Committee, Alan Greenspan’s highly anticipated memoirs will be released in the United States. As if the former president of the Fed still did not let go of the new bride.