One of the core tenants tenets of capitalism is that risk and reward are related. The reason equities have done better than CDs historically is that they are riskier (move up and down a lot more).

Without the risk, they would behave like CDs.

If they behaved like CDs, they would pay like CDs.

Problems arise when you decide that you want (or need) the REWARD of owning equities without the RISK.

You start getting things like:

• High yield bond funds that promise “equity-like” returns without all the risk. But then when the tide of easy credit goes out, we find out they were swimming naked the entire time.
• Hedge funds that promise they can deliver the “stock-like” returns without the risk. Turns out that at best, they are just very expensive mutual funds for rich people, and in some cases, giant Ponzi schemes.

The investment industry is full of people that might sell that promise (high return with low risk), but very few that have delivered on it. Sure, there are the few that appear to have found a better way, but I can’t tell you how many times I have heard someone describe their latest wango-pango investment product and “like a CD” but better. If an investment has the risk of a CD, guess what, it will pay like a CD.

I guess it is hard to have your cake and eat it too after all.