In 2002, Warren Buffet stated that “derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal… We view them as time bombs, both for the parties that deal in them and the economic system.”
He is not alone in that view. Many other investment gurus, from Carl Icahn to Michael Burry, agree with Buffet.
Today, the worldwide derivatives market has reached the astronomical figure of more than $1 quadrillion.
Derivatives is a Jenga Tower made of round blocks................
Derivatives are the reason why crashes are so severe. When the worm turns, it is like a rocket ship, turned downward. The rush to the door is a stampede. And the little guys don’t have anyone holding the door for them.