-
Dividend Mailing List
-
Tech Stocks Mailing List
Recent Comments
- Crude Oil Is Not Yet in the Clear Despite OPEC’s Cut - Investing Information Online on Crude Oil Is Not Yet in the Clear Despite OPEC’s Cut
- ispeculatornew on 2 New Trades ($GOOG, $EBAY, $FB, $PYPL)
- Ken on 2 New Trades ($GOOG, $EBAY, $FB, $PYPL)
- Ken on 2 New Trades ($TRIP, $TWTR, $AMZN, $NFLX)
- ispeculatornew on 2 New Trades ($TRIP, $TWTR, $AMZN, $NFLX)
Archives
- April 2018
- December 2017
- November 2017
- October 2017
- September 2017
- August 2017
- July 2017
- June 2017
- May 2017
- April 2017
- March 2017
- February 2017
- January 2017
- December 2016
- November 2016
- October 2016
- September 2016
- August 2016
- July 2016
- June 2016
- May 2016
- April 2016
- March 2016
- February 2016
- January 2016
- December 2015
- November 2015
- October 2015
- September 2015
- May 2015
- April 2015
- March 2015
- February 2015
- January 2015
- December 2014
- November 2014
- October 2014
- September 2014
- August 2014
- July 2014
- June 2014
- May 2014
- April 2014
- March 2014
- February 2014
- January 2014
- December 2013
- November 2013
- October 2013
- September 2013
- August 2013
- July 2013
- June 2013
- May 2013
- April 2013
- March 2013
- February 2013
- January 2013
- December 2012
- November 2012
- October 2012
- September 2012
- August 2012
- July 2012
- June 2012
- May 2012
- April 2012
- March 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- May 2011
- April 2011
- March 2011
- February 2011
- January 2011
- December 2010
- November 2010
- October 2010
- September 2010
- August 2010
- July 2010
- June 2010
- May 2010
- April 2010
- March 2010
- February 2010
- January 2010
- December 2009
- November 2009
- October 2009
- September 2009
- August 2009
- July 2009
- June 2009
- May 2009
- April 2009
- March 2009
- February 2009
- January 2009
- December 2008
- November 2008
- October 2008
- September 2008
- August 2008
- July 2008
- June 2008
- May 2008
- April 2008
- March 2008
- February 2008
- January 2008
- December 2007
- November 2007
- August 2007
- July 2007
- June 2007
- May 2007
- April 2007
- March 2007
- February 2007
- January 2007
- December 2006
Financial Resources
Long/Short Positions
No Comments
No comments yet.
RSS feed for comments on this post.
Sorry, the comment form is closed at this time.
Investing in products you do not understand….
Date posted: 05.25.2009 (5:00 am) | Write a Comment (0 Comments)
-Obviously, there should be regulation that explains clearly the risks involved before taking such contracts. Often, companies that want to hedge are clearly not specialised in finance and so understanding these contracts can prove to be quite a challenge.
-But also, how is it possible that these companies or individuals have signed contracts without understanding them completely
And to a certain extent, it is easy to imagine how companies can be fooled. Think about a fisherman that is costs in CAD$ and sells his inventory in the US. He will have a FX risk and might meet with his banker to offset this risk. Chances are that this fisherman does not have a deep knowledge of derivative products and that he might sign a contract that he is told will resolve his problem… and who could blame him?
That was bad but I figured that it was at least partially the investors fault for they signed up for these contracts.
But you might have heard about P2P, in this case Peer to Peer lending. This offers the possibility of investors and lenders doing business with less participants in the middle. And when a group of small visitors lend 5000$ to a student that has provided his credit history, motivations and plan for a business idea or for grad school, you can imagine that they have a good idea what the creditors are going up for. But now, with credit markets somewhat frozen, some banks are starting to unload these frozen assets through such P2P networks. This to me, sounds dangerous. If multi-billion banks have been saying for months now how difficult (i.e. impossible) it is to value such loans, that are often a group of loans on hundreds and thousands of lenders grouped together. There just seems to be no way for investors to know who they are lending to, and then how could you possibly sign up for that? But as these are geared towards mainstream investors, I have no doubt they will find a few people that will be more than happy to offer money since they will be receiving higer interest rates…doesn’t that sound almost criminal???
If you liked this post, you can consider subscribing to our free newsletters hereThis entry was posted on Monday, May 25th, 2009 at 5:00 am and is filed under Commentary. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.