I received a call the other day from an investment advisor pitching me reverse convertible bonds for Apple Computer. Basically, I would receive a 12% coupon and get my principle back if AAPL stock stays above a certain price. If the price falls however, I receive a stated number of shares. That is where I could get killed. I knew I did not like the idea but I said I would call the guy back later.
I called the guy back and told him I didn't like the idea. I mean AAPL has been going up for the last couple years. The only way I see this stock going up or even keeping its value is if the company comes out with a great new product. I am surprised that the investment advisor would try to pitch such a crazy idea. I could be wrong on this one but I am willing to take that chance. I could have used his advice to buy the stock when it was at $12!
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