Why do they call them “financial products”?
"They are called ""financial products"" because they are contracts that are ""produced"" by the financial industry. For example, you could also say that a car manufacturer does not sell you a car, but a contract that will gives you ownership of a car. And, if a contract is a service and not product, in that case a car manufacturer is only selling services. It seems like it is more about the definition of ""product"" than ""financial product"". I think that as long as something is produced by the effort of labor, it could be called a product, and since financial contracts are produced by the people working in the finance industry, they can be qualified as products too. Maybe this page of wikipedia could explain things better than I just did: http://en.wikipedia.org/wiki/Product_%28business%29"
"For most people ""home ownership"" is a long term lifestyle strategy (i.e. the intention is to own a home for several decades, regardless of how many times one particular house might be ""swapped"" for a different one.  In an economic environment with steady monetary inflation, taking out a long-term loan backed by a tangible non-depreciating ""permanent"" asset (e.g. real estate) is in practice a form of investing not borrowing, because over time the monetary value of the asset will increase in line with inflation, but the size of the loan remains constant in money terms.  That strategy was always at risk in the short term because of temporary falls in house prices, but long-term inflation running at say 5% per year would cancel out even a 20% fall in house prices in 4 years. Downturns in the economy were often correlated with rises in the inflation rate, which fixed the short-term problem even faster. Car and student loans are an essentially different financial proposition, because you know from the start that the asset will not retain its value (unless you are ""investing in a vintage car"" rather than ""buying a means of personal transportation"", a new car will lose most of its monetary value within say 5 years) or there is no tangible asset at all (e.g. taking out a student loan, paying for a vacation trip by credit card, etc).  The ""scariness"" over home loans was the widespread realization that the rules of the game had been changed permanently, by the combination of an economic downturn plus national (or even international) financial policies designed to enforce low inflation rates - with the consequence that ""being underwater"" had been changed from a short term problem to a long-term one." "The ""just accounting"" is how money market works these days. Lets look at this simplified example: The bank creates an asset - loan in the amount of X, secured by a house worth 1.25*X (assuming 20% downpayment). The bank also creates a liability in the amount of X to its depositors, because the money lent was the money first deposited into the bank by someone else (or borrowed by the bank from the Federal Reserve(*), which is, again, a liability). That liability is not secured. Now the person defaults on the loan in the amount of X, but at that time the prices dropped, and the house is now worth 0.8*X. The bank forecloses, sells the house, recovers 80% of the loan, and removes the asset of the loan, creating an asset of cash in the value of 0.8*X. But the liability in the amount of X didn't go anywhere. Bank still has to repay the X amount of money back to its depositors/Feds. The difference? 20% of X in our scenario - that's the bank's loss. (*) Federal Reserve is the US equivalent of a central bank." I am not a structured products expert, just relaying what's in the article, but I'd imagine it includes a larger equity tranche in the structured product, thereby giving more cushion against losses to the actual debt investors in the tranches above it in the payment water fall. Enron did a wide range of dodgy financial accounting, using tricks to severely mis-represent their financial situation. They then used these doctored accounts to fool lenders and stock-buyers that the company had more money, and fewer debts or problems, than it really had. Eventually they ran out of money and went bankrupt, leaving the lenders and stock-buyers with nothing. "It has little to do with money or finance.  It's basic neuroscience.  When we get money, our brains release dopamine (read Your Money and Your Brain), and receiving dividends is ""getting money.""  It feels good, so we're more likely to do it again. What you often see are rationalizations because the above explanation sounds ... irrational, so many people want to make their behavior look more rational.  Ceteris paribus a solid growth stock is as good as a solid company that pays dividends. In value-investing terms, dividend paying stocks may appear to give you an advantage in that you can keep the dividends in cash and buy when the price of the security is low (""underpriced"").  However, as you realize, you could just sell the growth stock at certain prices and the effect would be the same, assuming you're using a free brokerage like Robin Hood. You can easily sell just a portion of the shares periodically to get a   ""stream of cash"" like dividends. That presents no problem whatsoever,   so this cannot be the explanation to why some people think it is   ""smart"" to be a dividend investor. Yes, if you're using a brokerage like Robin Hood (there may be others, but I think this is the only one right now), then you are right on." "From https://secure.wikimedia.org/wikipedia/en/wiki/Banc: Banq (also Banc, banc-corp, bancorp, or bancorporation) is an intentionally erroneous spelling of the word bank, but pronounced the same way. It has been adopted by companies which are not banks but wish to appear as such, and satisfy legal restrictions on the usage of the word bank. ... For instance, if the original company is known as Bank of America, then the new investment banking entity may be known as Banc of America Securities LLC. If the original company is known as Bank of Manhattan, then its insurance business might be known as ""Banc of Manhattan Insurance"" and its holding company might be called ""Manhattan Bancorp"". This practice originates from legal necessity: Under the laws of most states, a corporation may only use the word ""bank"" in its name if it has obtained a banking charter under state or federal banking laws. So, ""Banc of America"" is the subsidiary of BoA that doesn't have appropriate licenses to be called ""bank"". Wonders of complex regulation :)" "Most likely because they don't know what they're talking about. They all have a belief without evidence that information set X is internalised into the price but information set Y is not. If there is some stock characteristic, call it y, that belongs to set Y, then that moves the gauge towards a ""buy"" recommendation. However, the issue is that no evidence has been used to determine the constituents of X and Y, or even whether Y exists in any non-trivial sense." Serious question - I don't work in finance, but I always hear how the big finance firms only hire the best and brightest and if they don't know anything, they'll pick it up quickly. How is it possible that those who work in derivatives find it that difficult to explain them. resistite's definition of derivatives is essentially what is taught to any beginner, so I don't quite understand how anyone with a finance background would find it difficult to explain (at least at a very general level). "CFP stands for ""Certified Financial Planner"", and is a certification administered by the CFP board (a non-government non-profit entity). This has nothing to do with insurance, and CFP are not insurance agents. Many States require insurance agents to be explicitly licensed by the State as such, and only licensed insurance agents can advise on insurance products. When you're looking for an insurance policy as an investment vehicle, a financial adviser (CFP, or whatever else acronym on the business card - doesn't matter) may be helpful. But in any case, when dealing with insurance - talk to a licensed insurance agent. If your financial adviser is not a licensed tax adviser (EA/CPA licensed in your State) - talk to a licensed tax adviser about your options before making any decisions." Ahh the vest. The mark of a Finance professional. Seriously, I don't know of any other person outside of a Finance career that wears it. My theory is that it's warm and it lessens the need to re-tuck your shirt every few minutes for those that don't have tailored shirts. You need wealth in order to have a sovereign wealth fund. The countries that do it are usually petro states such as Norway and Saudi Arabia. Since petrol is in dollars, they sell oil and get dollars.   They need a way to then spend this money, hence the wealth fund. "From my understanding, a CDS is a financial product to buy protection against an event of ""default"" (default of payment). Example: if General Motors owes me money $10,000,000 (because I own GM bonds for example) and I wish to protect myself against the event of GM not repaying the money they owe me (event called ""credit default""), I pay FinancialCompany_X (the seller of the CDS) perhaps $250,000 per year against the promise that FinancialCompany_X will pay me in case GM is not paying me. This way I protected myself against that risk. FinancialCompany_X took the risk (against money). A CDS is in fact an insurance. Except they don't call it an insurance which enabled the financial industry to avoid the regulation that applies to insurances. There is a lot of infos here: http://en.wikipedia.org/wiki/Credit_default_swap" Because the federal government won't use the money to buy a car thus generating profits for the car company. The aim of cheap loans is to drive sales of cars. The difference between the amount of interest paid on the loan, and the amount they could have got by investing it elsewhere, is simply a reduction in the profit. This is true whatever the actual interest rates are. Credit products and securitized debt.  Credit/debt is the flip side of equity but has less volatility. In today's investing environment people are not looking for a big return as much as less risk with a modest return. Another trend I think you will see is the disappearance of the wall between interest rate products/fixed income and credit products. Financial advisors are a client facing role and their utilization of math is relatively limited as far as I am aware. Most of the bigger PWM/AWM groups do the analytical work at a head office and the FA's in the field are basically account men. Their entire livelihood is based around relationship management with their clients.