[Hedge funds, of course, do not advertise; and if they did, they would not do so in the following manner of a fly-by-night brokerage. But this is only parody; cast it as you will, with people or personifications.]
He asks the cold caller: "Why on earth would I want to put any more money in a hedge fund now?"
"Qwant isn't just any hedge fun. We've been working with MontéBank to solve the credit crisis."
"How are you going to do that?"
"We've had a team of top minds from the Endower Institute working on the problem for months. They've developed a completely new securitization model—the LBS. It's a complete drop-in replacement for the MBS. Nobody else know how to do this yet—this is opportunity knocking."
"An MBS, that's a—"
"Mortgage-backed security. The LBS is completely different—it's a whole new way of thinking about the problem. None of the dangers of the MBS."
"No risk of homeowners defaulting, you mean?"
"None at all—returns are guaranteed with volume. This has nothing to do with homeowners or mortgages. It's a sure thing."
"So there's no debt involved?"
"Oh, well, yeah, sure it's a securitized debt—but there's no risk of default."
"How does that work?"
"Well, I don't want to get into the mathematics, but you can trust me on this one. Some very smart people put this together."
"But just how does it work?"
"Well, sure, I could give you a lecture, but I've got a lot of calls to make, so are you in or out?"
"What's your name?"
"Well, Ben, I just have a few qustions. LBS—that's a something-backed security, right?"
"So what's the L stand for?"
"You want me to put it in a nutshell for you?"
"It's like a microloan."
"So it's for developing nations?"
"No, no. This is all domestic."
"So then what are the microloans for?"
"OK." Cough. "These micro-loans are made to eligible parties throughout the country in order to purchase diverse kinds of government debt instruments."
"You mean Treasuries?"
"No—Treasuries are no way to get rich."
"What kind of bond then?"
"No. Bonds are old hat. We're breaking new ground here."
"Can't you just explain it to me?"
"OK." Cough. "We deploy advanced computer modelling on complex statistical datasets to ensure a high overall rate of return."
"Statistical? What kind of government debt is statistical?"
"Well, there's always ratios of risk and return to be calculated for any investment."
"So . . . this is some kind of investment with a good—what's it called—beta?"
"Oh yeah. Almost completely uncorrelated with the stock market."
"So it follows interest rates."
"No correlation there either. This is a total market-beater."
"It's not interest-bearing?"
"This is independent of the Fed."
"So what the hell is it?"
"It's the future, and you've got the chance to get in on the ground floor. Now I think I've explained this to you pretty thoroughly. I'm going to need your decision or I'll have to move on."
"So. Government debt . . . no interest . . . statistical . . . microloans—no, you can't be—"
"Don't be small-minded, sir. The numbers are good. There's always a payout, and we always get our cut."
"I don't care about the math. I'm not putting money into that."
"Look, sir, don't be afraid of a name. Sure, I could say 'lottery-backed security,' but what matters—"