I think Annette is being overly harsh and defensive with regard to Dion's comments. The original post set red flags for me as well. Why? Several reasons:
The title, "Complete US Social Housing Bond 3-5 Yr. 14% Guaranteed" combines US, Bond and Guaranteed is such a way as to lead one to think that this is a US government guaranteed bond. Anyone who knows the bond market knows that there's no such thing as a bond that yields 14% that's guaranteed by the US. Yields that high are well into junk bond territory.
Then there's the notion of "guaranteed". Guaranteed by whom? Is there some sort of credit default swap arrangement? No? So how is the promised 14% return guaranteed in the event the borrower's investments underperform expectations? What backstops the investor against excessive expenses or dare I say it, corporate malfeasance?
As best I can tell, there is no guarantee that means anything. There's just the word "guaranteed" used three times in the original post to promote the 14% return.
Reading further in Colonial Capital's brochure (clearly not a legal prospectus) they state:
No currency risk to investors. Funds can be
invested in Sterling, US Dollars, Euros Yen or
Yuan.
• Interest and redemption payments paid in
original currency invested.
How can Colonial Capital guarantee a 14% return when they are absorbing all currency risk for the investor? If over the next 3-5 years the dollar depreciates significantly versus the Pound Sterling, Euro, Yen or Yuan, Colonial Capital will have to pay back more than 14% on a US Dollar basis. How does Colonial Capital plan to deal with that unknown currency risk? Do they purchase currency swaps for each non-dollar demoninated investment? I doubt it.
Yet you "guarantee" the investor will get their money back. Suppose the US continues printing money and the dollar drops 50% versus the other-than-US-Dollar invested currency. Will Colonial Capital be able to return 28% per annum, AND $32,000 at the end of the 3-5 year period (versus the stated 14% and $16,000 amounted when using the US Dollar as the investment currency)? That's what would be required to fulfill the promise in their brochure.
Just the fact that someone is pitching a bond on here without realizing that they are doing it in a manner contrary to the highly regulated and structured way in which that is done should raise a red flag for any reader or potential investor. The original post raises red flags and a detailed reading of Colonial Capital's brochure raises more.
Annette, if you're going to pitch this type of thing here, don't be surprised when someone gets a bat on it and hits it back hard. And when Dion's average post is informative, detailed and clearly the product of in-depth understanding of the subject matter, and yours are usually self-serving rah-rah sales BS don't be shocked when you're called out on it.
