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--- In realtraders@xxxx, bruce.larson@xxxx wrote:
> I have no idea where you're coming from. I just gave you an
example for the bonds. Put $100,000 in the money market, buy one
bond contract. Or buy $100,000 worth of long term treasuries.
that's the difference? The answer is you can be more nimble owning
bond futures.
**** I would not disagree. Futures are liquid, transparent and offer
nearly 24 hour trading.
> As for having to become a farmer in lieu of investing in soybeans
is akin to becoming a computer consultant instead of buying tech
stocks? What kind of statement is that?
***** How long are you going to hold onto the beans? Would it be
better to be a farmer holding cash getting paid by the government if
the price goes down, or hold futures if you had an investment
philosophy rather than a trading philosophy. But the point was not
whether it was a better investment to be in futures or the cash
commodity, the point was whether it was an appropriate investment for
a child.
> If one's view of the world were that we are beginning a long
lasting p/e contraction, the dollar was going to decline in value and
capital flows would favor commodities, what in the world is wrong
with buying soybean futures, hedging your dollar exposure with
currency futures, or even selling some index futures every now and
then? Just because stocks have offered superior returns over the
past 20 years, is hardly any reason to believe they will continue to
do so. Just ask a Japanese investor.
***** Please let us know how it turns out when you do it.
> I always thought the futures market was developed to allow everyone
> to hedge their exposure and minimize their risk. I'd much rather
own a few soybean futures in my portfolio than some tech stock. As
Norm said, there will always be soybeans tomorrow. You just never
know about those tech stocks.
***** Someone investing in soybeans as opposed to tech stocks is not
hedging. They may be reducing their risk, but they are probably not
minimizing it. One does not eliminate risk, they only manage it.
The futures markets let all participants manage their risk, whether
they are risk seeking speculators or risk reducing hedgers.
Regards,
John J. Lothian
Disclosure: Futures trading involves financial risk, lots of it!
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