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<p>[QUOTE=&quot;medoraman, post: 1506523, member: 26302&quot;]TECHNICALLY a mutual fund is a derivative, but you are using that fact to cloud the story. It is NOT the same as most derivatives, are not traded as a derivative, are legally protected assets from most lawsuits, etc, you have legal protection from the prospectus, and a very LARGE percentage of funds AREN&#039;T invested at the discretion of the fund manager. Index funds aren&#039;t allowed to invest in anything but the index, in direct proportion to the index its tracking.</p><p><br /></p><p>I just think your points about mutual funds are extremely misleading. Now, if we wish to have a conversation about the shortcomings of mutual funds, I can do that, but they are not the points you are trying to make.</p><p><br /></p><p>I really don&#039;t see any &quot;derivative bubble&quot;. Remember these are zero sum games. They could be settled tomorrow for zero net cash outlay, it would just be a matter of who had to pay and who got money from all of the relationships. $1.4 quadrillion will NEVER be needed to settle these derivatives. </p><p><br /></p><p>Let&#039;s say all of us here are billionaires. You and I believe the Euro is going opposite directions, so we hedge $1 billion against each other. I have second thoughts so take the opposite contract with Cloud. You change your mind as well, and so does Cloud, so you both take opposite sides as well. Now, we all have zero liability regardless of what happens with the Euro, but technically until expiration there are now $6 billion more derivatizes out there. How much cash will be needed to settle? None.</p><p><br /></p><p>So, now how do you feel about this &quot;derivative bubble&quot;?[/QUOTE]</p><p><br /></p>

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