Structured Products Offered by banks

[hotmark777]

Have any of you had any experience dealing with the various structured products offered by banks? They are products based on an underlying asset (such as a stock index, price of commodity, or even currency exchange rate) that try to offer higher yields than simple savings account interest rates.

The catch is that basically if certain conditions are broken, you can lose either the interest payment promised, or even part of your capital. An example that i came across recently was one involving the Eurostox50 index where basically an investor was offered 9% on the dollar for three years, however if the Eurostox50 index fell below 50% of its current level, you would be paid back only 50% of your initial investment.

Although this is highly unlikely, i believe banks make their money on these products because they calculate the probablity of such an event occuring, then offer a product that has a positive EV for them. For example in the Eurstox50 case, they are losing 4% if things remain the same, while they will be gaining at least 50% if the Eurostox50 falls below 50% of its level. So for this to be profitable, there should be around a 10% probablility that it can happen, which isnt far from impossible given the current global market turmoil and volatility.

So from the previous conclusions, is it safe to say that one should never invest in stuructured products offered by banks as they are always structured in a way that it is highly +EV for the bank and not the investor, although at face value the investor will think that he will be gaining a much higher yield as long as an improbable event does not occur?