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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (5254)	12/12/2001 10:41:04 PM
From: SliderOnTheBlack	Read Replies (1) \| Respond to of 36161

Derivatives ? contraryinvestor.com The problem with derivatives is the lack of respect for history & the absence of factoring for "rogue wave events" in their model. ...nothing was learned from LTCM. JP Morgan/Chase - "Too big to fail ?" (check out the CHART for - Derivatives Credit Exposure As % Of Risk Based Capital) ... we may get to find out.

To: Knighty Tin who wrote (5254)	12/13/2001 10:12:35 AM
From: yard_man	Respond to of 36161

I think that is a very good analogy ...

To: Knighty Tin who wrote (5254)	12/13/2001 12:17:31 PM
From: pater tenebrarum	Read Replies (1) \| Respond to of 36161

KT, that's exactly the problem. and furthermore, since many derivatives strategies involve dynamic hedging, they also involve the implicit assumption that counterparties will always be available willing to take the other side of these trades. that is however not true, as LTCM has shown. in fact, it is precisely during those times of systemic stress when it is most important that counterparties providing liquidity can be found that those counterparties are least likely to be willing to provide it. preprogrammed disaster.