BobHelm wrote:........ I believe that if someone cannot explain to an ordinary citizen how a 'scheme' is making money then it is undoubtedly fraudulent.......
I wouldn't go quite as far as saying the ordinary citizen for derivatives, but certainly all finance professionals.
From my own experiences in my former life as a finance director I had a number of bankers try to get me (and my company) interested in a number of sophisticated financial derivatives.
However not one of them was able to satisfactorily explain, in a way that I in turn would be able to explain to my board, how they worked and how they were to be of a guaranteed benefit to my group.
I did not have a resistance to derivatives per se, just to ones I could not understand and
in all honesty I can’t say that I ever thought they were fraudulent and a con - just that I wasn’t bright enough to understand them.As a consequence, as I didn’t understand them, I never bought into them.
However at the time I was quite happily using older simpler derivatives such as forward currency sales and purchases (which I understood extremely well).
