Why Are Derivatives Called Weapons of Mass Destruction

#WarrenBuffet on #Derivatives. Warren Buffett, one of the world’s most storied #investors, has issued a warning about derivative #trading. A derivative is a #financial security with a value that is reliant upon or derived from an underlying asset or group of #assets. The derivative itself is a contract between two or more parties based upon the asset or assets. Its price is determined by fluctuations in the underlying asset. Common underlying instruments include #bonds, #commodities, #currencies, #interestrates, #market #indexes and #stocks. A #futures contract, for example, is a derivative because its value is affected by the #performance of the underlying contract.

Chairman and CEO Warren Buffett expressed his concern with derivatives, referring to them as “weapons of mass destruction. Warren Buffett has reaffirmed his view that they pose a threat to the #global #economy and #financial #markets. Warren Buffett and other pundits warn that the recent proliferation of financial derivatives have positioned global financial markets for disaster.

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Pramod Baviskar

Professional Market Trader And Owner Of Dalal Street Winners Advisory And Coaching Services. Working Since 2007 And Online Presence Since 2010. We Provide Highly Accurate And Professional 1 Entry And 1 Exit Future, Option, Commodity, Currency And Intraday Stock Tips On Whatsapp With Live Support And Follow Up.
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