Posts tagged as:

derivatives

From the "Stories That Aren't Getting Nearly Enough Attention" file

May 5, 2010

On page A4 of Monday's paper, the WSJ revealed that Congress Members Bet on Fall in Stocks: In February, Sen. Johnny Isakson (R., Ga.) argued on the Senate floor that "we don't need those speculating in the marketplace to take unfair advantage of the values of equities that are owned by Americans all over this country [...]

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More derivative witch hunts

November 17, 2009

Going through the FT's original post on exchange traded currency notes, I saw a couple of sentences that really bothered me. One thing we do not need right now are witch hunt statements without basis (a point especially compounded by the fact that the FT completely misunderstood how these products worked, even as they wrote [...]

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CDS Markets, briefly (or not so briefly)

July 15, 2009

In response to Daniel Indiviglio's call for "someone who understands the derivatives market," I posted the following comment on the Atlantic Business blog - and I reprint it here not just because it turned out a surprisingly complete thought, but because I'm a glutton for blogging laziness: The CDS market works similarly to any other [...]

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Yet more reverse convertibles: positive sum games?

June 19, 2009

Did Felix Salmon really just write this in defense of his reverse convertibles stance?? For one thing, stocks generally go up over time: they’re a positive-sum game. ... Retail investors, as a rule, have no business buying instruments with limited upside but 100% downside — I’d even include individual bonds in that, despite the fact that [...]

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Wilmott's stages of derivatives

June 18, 2009

Wilmott adapts the Kubler-Ross stages of grief to describe derivatives. An excellent read. Confused disbelief: I'm a great believer in education playing a bigger role in derivatives in future. But not the sort of education that we've got at the moment. I understand Warren Buffett when he says "The more symbols they could work into their writing [...]

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Reverse convertibles

June 17, 2009

Ever since the WSJ published this article on the front page of section C, a lot of people are talking about "reverse convertible notes." James Kwak and Felix Salmon led a charge to ban the instruments but Felix, at least, seems to have backed off a little bit after these responses. I've seen many varieties of [...]

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The Short Squeeze

April 30, 2009

It is a favorite chorus of the anti-CDS crowd that CDS can make it more difficult for a company to survive, since bidding up CDS prices can affect the firm's cost of borrowing. This is about a hair's width away from the oft-cited argument that "short selling is bad because it drives down stock prices," [...]

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