That doesn't really explain derivatives. u/corrbrick gives the definition, when the value is derived from something else.
A common derivative is the short sells, where you make an investment where you buy the contract that the value of what is invested is derived on some expected future value of that same stock.
Essentially derivatives were invented to mitigate risk. You buy a security that represents a portion of a bundle of mortgages with a known failure rate. If it fails at 2% but takes in 4% you've got a good investment. On paper anyway.
Yes, that's more specific to mortgage related derivatives. There are many different types, I'm not going to pretend expertise beyond what I've mentioned though.
Watch the movie The Big Short about the 2007-08 housing burst bubble-I submit ALL the banks listed will fail, because USA Inc is floating on fiat digital dollars. 😒
Excellent point. My comment didn't really take the other types of CDOs into consideration and might be a bit out-dated. What other types of CDO bombs do we have exploding up in this right now would be a good follow-up question. Any ideas?
Thanks, I really wasn't joking, I know there are shorts and you can do the opposite, but not a whole lot more.
My best guess on anything would relate to COMEX, but even then the only fuckery I can think is how the Euro, US, and other currencies seem to be shifting towards a 1:1:1 and that seems impossible without fuckery.
That doesn't really explain derivatives. u/corrbrick gives the definition, when the value is derived from something else.
A common derivative is the short sells, where you make an investment where you buy the contract that the value of what is invested is derived on some expected future value of that same stock.
Essentially derivatives were invented to mitigate risk. You buy a security that represents a portion of a bundle of mortgages with a known failure rate. If it fails at 2% but takes in 4% you've got a good investment. On paper anyway.
Yes, that's more specific to mortgage related derivatives. There are many different types, I'm not going to pretend expertise beyond what I've mentioned though.
Watch the movie The Big Short about the 2007-08 housing burst bubble-I submit ALL the banks listed will fail, because USA Inc is floating on fiat digital dollars. 😒
... USA inc. is bankrupt
Excellent point. My comment didn't really take the other types of CDOs into consideration and might be a bit out-dated. What other types of CDO bombs do we have exploding up in this right now would be a good follow-up question. Any ideas?
Thanks, I really wasn't joking, I know there are shorts and you can do the opposite, but not a whole lot more.
My best guess on anything would relate to COMEX, but even then the only fuckery I can think is how the Euro, US, and other currencies seem to be shifting towards a 1:1:1 and that seems impossible without fuckery.