Exchange-Traded Notes: Read Up Before Buying And Selling
Wall Street just loves to securitize things. There are, in fact, people who do little else than dream up new things to buy and sell. The problem is that average investors - and even some stock brokers - may not adequately understand what they are buying. Currently, an industry regulatory group is sounding warning bells over exchange traded notes, which are becoming increasingly popular. ETNs are unsecured debt obligations that trade on exchanges and are linked to a market index or some other benchmark. They are complicated and carry unique risks. At its Web site, the Financial Industry Regulatory Authority carries an excellent, plainly-written explanation of ETNs: what they are, how they work, and questions consumers should ask before diving in. Anyone considering investing in these complex critters would do well to visit the Finra site and give this a read.