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Banks 1 Congress 0

June 7, 2012

Drama. The smartest guys in the room don’t speak the same language as the smartest guys on the street – that would be you and me – and we’re just not that “smart” when it comes to our money and glorious profits on other people’s money.

We gave them TARP and they said, Thank You! Thank you very much! How much can we have if it doesn’t affect our compensation package?

We gave them The Dodd-Frank Wall Street Reform and Consumer Protection Act and they’re now saying that their short positions are actually “meeting client and broader market needs – market-making, actually” – which is another way of saying that their trades and trading desk profits are client-related and are, therefore, not proprietary trades that might eventually be banned under the Volcker Rule. Duh. How stupid can we be not to understand that?

However, there is one thing that these guys will understand and that one thing is competition that they can’t beat and that can beat them out of their Mc-mansions and Mc-sail boats and back into the work force and the business of enterprise that we’re in.

What they will understand is the investment product that we have called The Canada Pension Bond™ –  “3% plus inflation, every year, no matter what” guaranteed – which obtains its returns through portfolio investments in the ordinary common stocks of the stock markets and provable replication technology.

If anyone offers it and, particularly, the government or the major private and public pension funds or insurance companies, then so must they if they’re going to survive in a competitive market for our money. No doubt, one of their peers will take it up.

If they don’t survive, oh well, what are they doing anyway if they can’t get 3% plus inflation, every year, no matter what” guaranteed in the bond and stock markets of the world? At least we can retire with the grace and dignity now reserved for the swells on Wall Street and Bay Street.

The Price of Risk

The calculated Risk Price (SF) is a provably effective estimate of the “price of risk” which is “the least stock price at which the company is likeable” (Goetze 2009) and “likeability” is determined by the demonstrated factors of “risk aversion” – we want to keep our money and obtain a hopeful return above the rate of inflation – and the properties of portfolios of such stocks.

Stock prices that are less than the price of risk can be said to be “bargain prices” but with the risk attached that the company might never get a higher price other than that due to ambient volatility or “surprise”; on the other hand, investors who are willing to pay the “full price” above the price of risk, and buy and hold the stock at those prices, must also be confident, and have reason to believe, that the company will produce those values, absent new information.

Please see our Posts, The Price of Risk, August 2012 and The Nash Equilibrium & Its Stock Price, October 2012, for more information on the theory.

To see what else “risk averse” investing can do for us, please see our recent Posts, The Wall Street Put, April 2013, and earlier Posts such as The Dow Transports, March 2013, or The Risk Adjusted Dow, March 2013, or The Canada Pension Bond, February 2013, and for a more colorful description of investment risk and the application of the “price of risk” to mergers & acquisitions, please see our Post, Bystanders & Collateral Damage, April 2013.


We are The RiskWerk Company and care not a jot for mutual funds, hedge funds, “alternative investments”, the “risk/reward equation” and every other unprovable artifact of investment lore. We have just one product

The Perpetual Bond
“Alpha-smart with 100% Capital Safety and 100% Liquidity”
With No Fees and No Loads on Capital

For more information on RiskWerk, please follow the Tags or Categories attached to this Letter or simply enter Search for additional references to any term that we have used. Related data may be obtained from us for free in a machine readable format by request to


Investing in the bond and stock markets has become a highly regulated and litigious industry but despite that, there remains only one effective rule and that is caveat emptor or “buyer beware”. Nothing that we say should be construed by any person as advice or a recommendation to buy, sell, hold or avoid the common stock or bonds of any public company at any time for any purpose. That is the law and we fully support and respect that law and regulation in every jurisdiction without exception and without qualification to the best of our knowledge and ability. We can only tell you what we do and why we do it or have done it and we know nothing at all about the future or the future of stock prices of any company nor why they are what they are, now. The author retains all copyrights to his works in this blog and on this website. The Perpetual Bond®™ is a registered trademark and patented technology of The RiskWerk Company and RiskWerk Limited (“Company”) . The Canada Pension Bond®™ and The Medina Bond®™ are registered trademarks or trademarks of the Company as are the words and phrases “Alpha-smart”, “100% Capital Safety”, “100% Liquidity”, ”price of risk”, “risk price”, and the symbols “(B)”, “(N)” and N*.

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