Mitts stock market

A Risk Free Way to invest in the Stock Market

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world. The stock market has no sure things, but Market Index Target-Term Securities, or MITTS, are about as close as you can get.

Investors are guaranteed to get their principal back plus appreciation based on the performance of the underlying index. Think of MITTS as stock market plays for chickens.

Here's how they work: That can present some interesting opportunities. That's a guaranteed return of 9. The cheapest MITTS aren't necessarily the best plays.

Skousen recommends the Russell MITTS that mature in because unlike most, they have no adjustment factor. These derivative securities have characteristics of both stocks and bonds, but for tax purposes, the Internal Revenue Service considers them bonds.

Since the principal is backed by zero-coupon bonds, MITTS holders are liable each year on the accrued interest even though there is no cash payment. And the payoff from the index appreciation is considered income, taxed at ordinary rates, not as long-term capital gains.

All things considered, MITTS should work better in tax-deferred retirement accounts. And they should be held till maturity to get the full benefit of their final payout.

Although MITTS have been around for nearly a decade, they're not well known or understood on Wall Street. And different MITTS built on the same index can vary in their payouts and adjustment rates, so investors need to pay scrupulous attention to details.

A good place to get info is the "Index Notes" section of the Amex Web site: Also on that page, you can get info on "TIERS" and "PEEQS," similar products offered by other investment banks. There are several sector and foreign MITTS worth a look as well. No MITTS or any of their cousins would perform as well as a plain-vanilla index fund if the bear market ended tomorrow. But that's probably a bet most investors wouldn't take. Bloomberg Anywhere Remote Login Software Updates Manage Contracts and Orders.

Market Index Target-Term Security (MITTS) Definition & Example | Investing Answers

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