Stock Market Products Guaranteed To Go Up?

Fobes Magazine had an article on financial products that are designed to let you capitalize on a rising stock market, but still gain some return if the market goes down.

These products are called "structured Retail products". They started being marketed aggressively after the 1990's bull market.

An example product is Bank of America's Minimum Return Eagle (Equity appreciation growth linked security). It is a 5-year note that pays the greater of two amounts: either a 0.98% compound return, or the "return" on the S&P 500.

In this case, the catch (and there is always a catch)is the way the "return" is calculated. The stock return is compounded quarterly, and capped at 7%.

So, for example, if the stock market is up 10% one quarter and down 5% the next (for a net 4.5 % gain), the eagle would get +7% and -5% (for only a 1.65% net gain).

Another catch is that these products could be replicated with less cost through the use of options.

Also, these products would make sense for those who need to invest for a short time horizon, who think the market will likely increase modestly in the near future.