Accumulators In The News Again
The notorious Accumulators, also known “I Kill You Later”, are in the news again. An 88 year old Indonesian businessmen has sued a bank for US$17m for losses in Accumulators linked to currencies.
As usual, the bank has claimed that the plaintiff has “extensive experience in a wide range of investment products, and is described by other banks as a ‘wily trader’ “. (03rd Aug 2011 The Business Times – ‘Frail victim’ is a wily trader, claims Citi)
If the bank’s description is true, then Accumulators are really untouchable since a ‘wily trader‘ with ‘extensive experience‘ got burned as well.
Accumulators give you limited upside but potentially much more downside. It is common to find sales personnel emphasizing the potential gain but not touching much on the negative side. Why jeopardize a potential sale? The same can be said of consumers when the market is in a bull run. Greed is a powerful force that clouds many investors’ eyes.
There was a report on Accumulators titled “Kill or get Killed‘ on the 07th August 2011 edition of The Sunday Times. The caption says “The accumulator, aka the deadly derivative, enable investors to make a killing, but can also bleed them dry“. Enough said.
Please read the posting here if would like to know how 1 type of accumulator work.