Re: Finally some good news

On Apr 18, 7:27 am, Vladimir Makarenko <vmak...@xxxxxxxxx> wrote:
ostap_bender_1...@xxxxxxxxxxx wrote:
On Apr 17, 11:10 pm, Vladimir Makarenko <vmak...@xxxxxxxxx> wrote:
ostap_bender_1...@xxxxxxxxxxx wrote:
On Apr 17, 8:48 pm, Vladimir Makarenko <vmak...@xxxxxxxxx> wrote:
Barnim wrote:
Uzytkownik <ostap_bender_1...@xxxxxxxxxxx> napisal w wiadomosci
news:0db32df0-9992-4bd9-a17b-8156e3564adc@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
On Apr 12, 2:23 pm, "Barnim" <Bar...@xxxxxxxx> wrote:
Uzytkownik "MTRPT" <Mir.Topol...@xxxxxx> napisal w
wiadomoscinews:1c49aea7-7c20-404d-b1dd-47d10f85c49a@xxxxxxxxxxxxxxxxxxxxxxxxxx
om...
Derivatives trading crackdown begins
Banks start talks on bringing order to chaotic derivatives market for
credit default swaps
http://www.guardian.co.uk/global/2009/apr/07/derivatives-trading-crac...
Just few words are enough to identify an ignorant.
For example?
----
You are only an old uninteresting russian zombie and basically
I shouldn't be paying any attention to you.
You are an evil man of evil race and worth nothing to me.
Nevertheles, for the education and the benefit of the Readers...
1. Composition of derivatives trading market:
   70% interest rates swaps
   10% credit derivatives, where CDS share is 98%
   10% options
   10% commodities, futures and future contracts
   As you can see, CDS segment takes just ~10% value
   of the derivative market.
   Any regulations pertaining to just 10% of the market can't
   be termed 'market crackdown' or something...
 2. CDS trading is now, simply put, plain dead.
    Nobody actively trades in it.
   You can of course introduce new regulations for a market,
   but it is hardly any good news, as the harm has been done,
   is not spilling over (no active trading), and loses sustained
   won't be undone by new rules regulating trading yet to come.
3. Most of the recent regulations regarding securities trading
    has been plain stupid - see short selling laughing stock.
As you can see, indeed just a few words are sometimes all
what's needed to identify an ignorant.
Barnim
Now - the above is really dumb. One tire of a car may be said to be 5%
of it.
Lose it and then try to ride the car.
The same goes for CDS share of the derivative market.
I don't even mention leverage ratio,etc.
At least we now know who were the geniuses barnims who worked all the
"math" which pushed the world economy off the cliff.
Is/was Barnim really a financial quant?
In any case, I agree: the math of derivatives is extremely removed
from reality. Market derivatives virtually always assume a Brownian
motion, usually with pre-fixed "historical" volatility.  This works OK
in normal times but explodes in your face in the times of trouble and
"volatile", almost discontinuous volatilities. The spectacular
explosions of almost all math-driven funds like  Long-Term Capital
Management and DEShaw attest to that. Almost 10 years before DEShaw’s
self-destruction, a friend of mine likened their strategy as “picking
up dimes in front of an oncoming freight train”).
Credit derivatives are even worse, as the credit market is too thin/
illiquid for pricing to begin with. On top of it, there is no one
agreed upon common model (as is, say, in european stock/bond options)
There are dozens of different ones, often mutually contradictory. Most
of them relies on totally irrelevant and unrelaible historical data
for calibration.
In general, the use of hisotrical data is an invitation for trouble.
It says that tomorrow will be exactly as volatile/risky/unrisky as
yesterday.
The derivative market is a gamble

Absolutely. Almost all derivatives have no value, other than pure
betting.

and the only way to muzzle it is to
tax it as gambling profits. Then the damn thing will be left where it
belongs.

Aren't gambling profits taxed at the same rate as all other income?
And can't you deduct gambling losses?

Depends on country.


How about the country you and I pay our taxes to?
.

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