Since my column on principal-protected notes was published in the Globe & Mail on August 1st, I've had lots of e-mails. Almost without exception, they've been supportive of my view. Stuff like: "right on" ... someone needs to take a stand on these products" ... "your column should be required reading for anyone who is about to buy a PPN". A couple of the responses suggested that I seek protection myself ... physical protection ... because the banks may have a contract out on me.

In any case, for those interested in reading more on PPNs, I've got a couple of suggestions.

A friend of mine has written an article in defense of PPNs. Thane Stenner heads up a very successful advisory firm for ultra-high net worth individuals, T. Stenner Group, which operates under the CIBC Wood Gundy umbrella here in Vancouver. He published an article on fundlibrary.com in July, 2003 highlighting the merits of PPNs and in the July issue of Advisor's Edge magazine he did a follow-up entitled "In Defence of Note".

Thane's article is what I'd call a soft defense. He doesn't really refute the criticisms leveled against PPNs, but suggests that if investors get appropriate guidance and pick the right ones, they will be well served.

Also, the British Columbia Securities Commission has a primer on PPNs on its website. It covers most of the same points I made, although in a more clinical way (read: less emotive).

Neither of these pieces changes my mind on PPNs. I still think they are the Vioxx of the investment industry. Why this loaded comparison? Because Vioxx should have been a drug with sales in the hundreds of millions, used only by severely ill patients where the risk/reward made sense. Instead Merck turned it into a $2.5 billion drug used by all kinds of patients. In my view, PPNs are being used by clients that have no need for principal protection. Instead of being sold to a select group of clients, PPNs have become the industry's multi-billion dollar drug. And I'm afraid the industry is addicted.