Thread: Derivatives for dummies.

I guess everyone saw the headlines, China will discontinue to buy US derivatives, and they are buying 50 billion dollars worth of SDR's, and backing away from the dollar......oh who am I kidding, the snews ain't telling you this. Anyway, here is a short clip on derivatives, and their effect. Why is this important??? Well I will tell you, your 401 is the funds that support the market, and as such they are leveraged. Do you know what that means???



[media]http://www.youtube.com/watch?v=cBHv2G1a-wo[/media]



So my question, what do you know about the derivatives market, what is it??

[quote name='The_Bear' date='07 September 2009 - 07:04 PM' timestamp='1252375464' post='18292']

Its exactly like the principle of representation.



In representation, it doesn't matter what each person thinks, but the representative has to represent their 'district' and the general status of their district.



The problem becomes that the representatives aren't necessarily good representatives; but they may be kept afloat by the good politicians, the ones who actually are quality politicians - so for every Barack Obama there are two more yvette clark's, who can't effectively advocate a position in their own words....thus they fail their constituents.

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In derivative funds, it doesn't matter what each person does, but the derivative needs to represent their 'market' and the general status of their 'market'.



The problem becomes that the dervatives aren't necessarily good derivatives; sometimes they aren't based on real wealth, but perceived wealth, or 'debt wealth', or future wealth - so while some may actually contain good dollars, there are two more derivatives that contain bad dollars, and don't actually represent real money....thus they are not adequate representatives for the market.



Just as the crappy representatives need to latch on to the strong representatives and the good name of the system to maintain their good name and status, so do the crappy derivatives need to latch on to the strong derivatives and the good name of the financial system to maintain their profitability and status.

[/quote]

Where did you get this horse shit from. I don't even know what your trying to say.



I am talking derivatives in the financial markets.

[quote name='michaelr' date='07 September 2009 - 10:07 PM' timestamp='1252375649' post='18294']

Where did you get this horse shit from. I don't even know what your trying to say.



[/quote]





Did he not throw enough expletives about Obama in his post?

[quote name='The_Bear' date='07 September 2009 - 07:09 PM' timestamp='1252375767' post='18296']

A 'derivative' is a representative of a 'market'.

A 'representative' is a representative of a 'district'.



Get it now?

[/quote]

I thought that is what you were saying, but that is wrong. I will let the question remain for a day or two, then answer it if no one else did.



I do have to ask, where did you get this understanding from? Got a book title or something?

[quote name='Inkslinger' date='07 September 2009 - 07:09 PM' timestamp='1252375765' post='18295']

Did he not throw enough expletives about Obama in his post?

[/quote]

Are you going to troll me all night?

[quote name='The_Bear' date='07 September 2009 - 07:22 PM' timestamp='1252376556' post='18303']

Mmmm nope my brain.

I would seriously like to understand the structural difference between a representative and a derivative.

[/quote]

Simple, you cant sell a representative, and where they and derivatives are concerned is the difference in, oh lets see, there are no comparisons that I can think of. I will let the question linger for a bit.