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

To: Mike M2 who wrote (17039)4/21/1998 11:27:00 PM
From: Simon  Respond to of 94695
 
<<< failed to adequately explain the risks.>>>

That's what they all say. A few companies got in trouble 2-3 yrs ago and they all claimed the same thing.

Moan and groan because U lost a couple bucks in the market and say your broker didn't explain the risks.

Run that by the SEC
HE HAW
:-)



To: Mike M2 who wrote (17039)4/21/1998 11:29:00 PM
From: Oeconomicus  Read Replies (1) | Respond to of 94695
 
w.e.m., I'm not arguing that there is no exposure to derivatives portfolios in US banks, but focusing on the volume of derivatives business rather than looking at the real risks, or for evidence of unbalanced portfolios or sloppy credit work on the counterparties seems rather like sensationalism. Big numbers make nice headlines.

I don't know the details of the Korea losses for JPM, but I'd like to if you have a link (couldn't find anything in JPM news, but do recall seeing something about this a few days ago).

FWIW, I think the risk of derivatives comes when corporate managers start thinking they are clever and make big bets on interest rates or currencies rather than simply using derivatives to hedge or to squeeze a few basis point off borrowing costs through arbitrage opportunities. I think it was P&G that did that a few years ago and then tried to sue Banker's Trust when they lost their bet.

Regards,
Bob



To: Mike M2 who wrote (17039)4/22/1998 9:24:00 AM
From: yard_man  Respond to of 94695
 
I think RD has a point that you can't look at the total amount of contracts to assess the danger, but on the other hand it doesn't take too many of the problems like you just mentioned to cause some serious problems. Key is internal checks and balances -- when they trust one or two guys that "know what they are doing" it could be another disaster in the making, ala Orange County.

If BK does come, some of these banks are going to wish they'd never heard of derivatives.


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