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Comment Simply Product Differentiation (Score 1) 361

I see absolutely no reason why a single account could not offer all those features. The only reason you "need" all that is because the banks created all these funny rules so that they could introduce more and more products and services.

While some of these product distinctions are due to things like differing tax treatments for different types of investments, most of these things basically boil down to banks attempting to differentiate their products and because different models give different values to certain types of investments.

For instance, there is no inherent theoretical reason, according to the conventional risk-return gaussian models, why bonds should be treated differently from stocks with a suitably adjusted risk premium in the expected returns. But in actual fact, these things are very different: Bonds have a guaranteed return, and stocks could lose significant quantities of their value in a severe market downturn.

For that thing, it's actually a good reason we have all these different types of investment products, because they do have different risk profiles, and to maximally reduce your specific risks you'll want to load up on some and avoid others. It's when someone starts telling you that 'this high-yield investment is just as safe as a government bond' that you should get suspicious.


Submission + - Saudi oil production in trouble

IamTheRealMike writes: As one of the worlds most prolific producers of oil, Saudi Arabian production is of vital importance to maintaining our standard of living in the west. A new analysis from Stuart Staniford appears to show large, fast declines in production throughout 2006 that are uncorrelated with price, world events or OPECs own announced production cuts (in fact, no evidence for those cuts occurring is found at all). Given that the apparent steep decline (8%/year) matches the rates seen in other areas where horizontal drilling and water injection were used, and high prices give the Kingdom every incentive to produce, is this the beginning of the end for Saudi oil?

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