Posted on 06/20/2008 10:01:11 AM PDT by Ernest_at_the_Beach
‘Taken from Investopedia:
[A]…derivative itself is merely a contract between two or more parties. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. Most derivatives are characterized by high leverage.
Futures contracts, forward contracts, options and swaps are the most common types of derivatives. Because derivatives are just contracts, just about anything can be used as an underlying asset. There are even derivatives based on weather data, such as the amount of rain or the number of sunny days in a particular region.
Due to the complex structure of derivatives, it becomes very difficult to evaluate the underlying assets of many derivatives. Problems in the industry could lead to massive derivative writedowns by banks. Derivatives could form an extension of the collateralized debt obligation [CDO] and mortagage backed security [MBS] problems that fueled most of the recent writedowns by financial institutions. If there are too many sellers and not enough buyers in the derivatives market, investments become stagnant and pose the possibility of devaluation if anxious sellers seek to cash out.’
You keep telling me to ignore the equity. This is your problem Todd in your thought process Todd. Also, how’s the monolines doing? Going to be hard to raise money at this point, now isn’t it? John Sinclair is oversimplistic in his reasoning, he doesn’t have much of a following with my thought process.
Where did I say ignore anything? I want you to stop confusing equity with a derivative contract.
Also, how’s the monolines doing?
Ummm, not so well?
Going to be hard to raise money at this point, now isn’t it?
I guess, so what? I'm not a monoline.
John Sinclair is oversimplistic in his reasoning, he doesn’t have much of a following with my thought process.
Good for you. Now if only you could only correct your misconceptions, you wouldn't sound so silly.
Good luck to you Todd. My silly misconceptions will keep my family and fortune well protected. I hope you supreme clarity does the same for yours. I mean you well but you don’t get the big picture, your focusing on nuances which I have already shredded but your holding on to. My attempt to educate was honorable, I do not believe your intentions with this continued dialogue are.
As long as you don't get involved in derivatives, your ignorance probably won't harm you.
I mean you well but you don’t get the big picture, your focusing on nuances which I have already shredded but your holding on to.
Yes, the difference between an equity and a derivative is a nuance. LOL!
My attempt to educate was honorable
You would have to get educated first. Good luck with that.
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