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PostPosted: September 28 16, 4:43 pm 
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darjeeling sipping elite
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Michael wrote:
Wall Street doesn't just help provide liquidity to the market. It can help hedge risk as well*.

*I'm sure some of you are going to laugh at that one, but it can be true



Oh boy.


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PostPosted: September 29 16, 6:51 am 
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Michael wrote:
Wall Street doesn't just help provide liquidity to the market. It can help hedge risk as well*.

*I'm sure some of you are going to laugh at that one, but it can be true

It is true. It can build a jenga tower so confusing and huge that no one will pull the next piece because if it falls, we all fall.

Wall Street and our military are our trump cards that tell the world if we're [expletive], you're all [expletive].

Really comforting stuff, that.


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PostPosted: September 29 16, 7:44 am 
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Can. Can be true. Isn't, but can be.


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PostPosted: September 29 16, 7:50 am 
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What are the main gripes about Wall Street? Is it:

1. That the execs of companies that are traded are corrupt?
2. The Street is controlled by corrupt entities (eg, hedge funds, fat cats, the elite bankers, etc)?
3. Fees paid by individuals to the financial institutions who manage money are too high?
4. Wall Street has too much power over politics?
5. ?

Obviously there is a lot of money controlled/invested in the markets. The general theme of the companies on the market, though, is that they are solid companies worthy of investment. Not to say they are all good, but it's not tough to find companies that need the liquidity provided by the market and in turn put that capital to good use.

I'd agree with point 4 above. We cover it ad nauseum wrt lobbyists controlling politicians. I don't think execs are corrupt regarding point 1, but they do, overall, want what is best for their companies which a lot of the time invovles lobbyists. The powers that be (2) are certainly capable of corruption and there are many cases of this, but they are not necessarily a problem someone with a 401k needs to concern themselves. And, 3 I would argue is correct, though not a major concern of mine though perhaps it is something more people should be aware of.


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PostPosted: September 29 16, 7:52 am 
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Michael wrote:
Wall Street doesn't just help provide liquidity to the market. It can help hedge risk as well*.

*I'm sure some of you are going to laugh at that one, but it can be true

What risk and for whom are you speaking? Serious question. Not trying to be a smart alec.


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PostPosted: September 29 16, 8:23 am 
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AWvsCBsteeeerike3 wrote:
Michael wrote:
Wall Street doesn't just help provide liquidity to the market. It can help hedge risk as well*.

*I'm sure some of you are going to laugh at that one, but it can be true

What risk and for whom are you speaking? Serious question. Not trying to be a smart alec.


I appreciate the non-snarky question.

An example would be If you're company that is sensitive to fuel costs you could buy derivative to hedge price fluctuation risk. Additionally, if that energy contract is standardized on an open market there should be excellent price discovery. If the contract is centrally cleared the risk of defualt is extremely low.

I get that "wall street" is synonymous with evil greed and there have been problems. I have a lot of problems with it as well. My only point is providing liquidity to the market isn't its only funtion. I do believe there are other positives.


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PostPosted: September 29 16, 8:29 am 
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Michael, I think you would agree that the function you refer to has been perverted in the extreme repeatedly. I think.


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PostPosted: September 29 16, 8:36 am 
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Those low expectations


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PostPosted: September 29 16, 8:54 am 
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Michael wrote:
AWvsCBsteeeerike3 wrote:
Michael wrote:
Wall Street doesn't just help provide liquidity to the market. It can help hedge risk as well*.

*I'm sure some of you are going to laugh at that one, but it can be true

What risk and for whom are you speaking? Serious question. Not trying to be a smart alec.


I appreciate the non-snarky question.

An example would be If you're company that is sensitive to fuel costs you could buy derivative to hedge price fluctuation risk. Additionally, if that energy contract is standardized on an open market there should be excellent price discovery. If the contract is centrally cleared the risk of defualt is extremely low.

I get that "wall street" is synonymous with evil greed and there have been problems. I have a lot of problems with it as well. My only point is providing liquidity to the market isn't its only funtion. I do believe there are other positives.


Thanks. Definitely agree. Funny you give that example as there's in a company in Alton, IL that 100% does exactly what you say. There's a guy whose sole job it is to figure out the exact hedge to take on all their fuel purchases and then factor that into all their prices. It's not just a purchase price * 1.x = sell price. It's purchase price*1.x + Hedge cost/gallon = sell price.


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PostPosted: September 29 16, 9:05 am 
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Michael wrote:
AWvsCBsteeeerike3 wrote:
Michael wrote:
Wall Street doesn't just help provide liquidity to the market. It can help hedge risk as well*.

*I'm sure some of you are going to laugh at that one, but it can be true

What risk and for whom are you speaking? Serious question. Not trying to be a smart alec.


I appreciate the non-snarky question.

An example would be If you're company that is sensitive to fuel costs you could buy derivative to hedge price fluctuation risk. Additionally, if that energy contract is standardized on an open market there should be excellent price discovery. If the contract is centrally cleared the risk of defualt is extremely low.

I get that "wall street" is synonymous with evil greed and there have been problems. I have a lot of problems with it as well. My only point is providing liquidity to the market isn't its only funtion. I do believe there are other positives.


Yes, in addition to loaning people money, sometimes they can also help people and businesses hedge risk. I'm not saying they don't provide *any* value. I'm saying the value they add does not justify the level of power and prestige they have in our current economy. Being a banker, even at a big firm, used to be a boring job.

Who is most important?
1) the engineers working on the next 3D printer
2) the investors that own 3D printing stock
3) the banking outfit that brokered the IPO of that 3D printing company

Despite all the rah rah going on about STEM right now, which one of those 3 groups do you think has the most compensation, power, and prestige right now? And why is that?


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