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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: carranza2 who wrote (82318)	10/22/2008 8:36:04 AM
From: dybdahl	Respond to of 94695

The sum of contracts is not the same as notional value. The more conditions and restrictions you build into a contract, the less "summable" it becomes. If the context-relevant conditions and requirements are similar, it makes sense to sum them. For an individual trader, you can make sums of all the contracts. That makes perfectly sense, because the sum tells something about the consequences for the trader, if things go up and down. However, as we all seem to agree, derivatives don't provide the same value to society, as the sum of all the notional values of all the contracts. So what do you actually get, when you sum all the contracts? Simple: You count the same thing over and over again, and you count matter and anti-matter as double-matter. The only derivatives that I have seen blow up during the last couple of months, caused no damage outside the financial sector. The damage to U.S. economy is different than the damage to Europe. Actually, the damage is different in each european country.