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To: LPS5 who wrote (787)	8/25/2000 8:21:15 PM
From: Phil(bullrider)	Read Replies (2) \| Respond to of 1426

LPS5, I've heard of some really unique risk management and modeling programs, but an actual insurance policy? Interesting. I don't know much about the insurance business, but I have to believe that there's a reason why this hasn't been done yet. I am not in the insurance business either, but I can easily understand why an insurance company would not insure one against her/his own ignorance, or impulses. Can you only imagine what it would cost to insure one from trading losses? LOL Have fun, Phil

To: LPS5 who wrote (787)	8/26/2000 6:24:02 PM
From: Dan Duchardt	Read Replies (1) \| Respond to of 1426

LPS5, I don't know much about the insurance business, but I have to believe that there's a reason why this hasn't been done yet. No insurance expert here, but the fairly obvious reason is that buying and selling stock is nearly a zero sum gain (some people don't use the word "nearly"). The ratio of winning trades to losing trades has to be about 50/50. To cover the full loss for the losers, the winners would have to be spending at least half their profits on premiums, while the losers are increasing their losses by 50% in premiums netting them losses only half as big as with no insurance. A simple example: One trader makes 1000 and another loses 1000. Insurance has to pay the loser 1000, which they get by collecting 500 from the winner and 500 from the loser. The winner then has to spend that 500 to protect his next trade. That's a mighty hefty premium for what is being protected. It's a far cry from collecting life insurance premiums from a population of 40 year olds, the vast majority of which are expected to live to see 41. Maybe with a huge deductible so only catastrophic losses are covered it could work, but as others have said, there are ways to hedge to take care of that. Dan