These quotes are on the subject of derivatives in general and the underlying financial assets on which they are based.
Man Does Not Live By Stocks and Bonds Alone.
Clinging to your stocks and bonds.
Definition of Equity: Mysterious kind of money that everybody is always claiming belongs to you even though you never actually see it.
Futures markets are designed to permit trading among strangers, as against other markets which permit only trading among friends.
I use derivatives - you got a problem with that?
You will be amazed at how much common sense you'll have to drop in order to understand this business.
I started to look at the stock market but got really confused by 3,000 - 4,000 stocks - this was before personal computers - and I knew there was something called the futures market lurking out there, but I thought it might be illegal or immoral.
Wall Street has always been a workplace with a high coincidence of occupational hazards and these days the perils range from OPEC to computer viruses to the Chicago Board of Trade.
We must avoid the temptation to demonize derivatives, which are a vital tool in modern financial markets. They are so useful in managing risk that if they didn't exist, we would surely have to invent them.
And he won't be down on Wall Street in the morning.
The key to understanding derivatives is a deeper understanding of all that's underlying.
It's not like I'm some junk bond. I'm a triple-A bond that produces high yields. You know what you're getting with this bond. It's safe and its returns ar astonomical.
You're into derivatives whether you like it or not. Your adjustable rate mortgage is a derivative. You got a deal on a loan that was cheaper at any time than a fixed-rate mortgage. In return you're taking a risk. Your risk is that the amount of interest you'll pay in the future will be decided from a formula involving the prime rate, T-bills, and the chairman of Chase Manhattan's boxer shorts waistband size. In this case, the underlying commodity is banker fat.
Anytime is a good time to invest in the stock market . . . Whether the stock market is breaking new records or laying an egg, today is still the best time to invest.
Frank, let me make this real clear to you. I don't like ordering my food in foreign languages, and I wouldn't know a damned stock option if it jumped up and clamped me right on the balls . . . Where you're going, the only option will be top or bottom bunk.
Family is more than a concept. I have kids, not derivatives. My weekends are sacred. I came into this life with nothing. I don't intend to leave the same way.
Advertisement for Mass Mutual Financial Group
Wall Street Journal, May 26, 2000
The nice thing about working on Wall Street as opposed to in academic life is that when you lack inspiration you can do lots of useful things that require only time, not genius.
Emanuel Derman
The Journal of Derivatives, Winter 2000, p. 61
You can think of a derivative as a mixture of its consituent underliers
much as a cake is a mixture of eggs, flour, and milk in carefully specified
proportions. The derivative's model provides a recipe for the mixture, one whose
ingredients' quantities vary with time.
Emanuel Derman
Risk, July, 2001, p. 48.
. . . Wall Street relies on "stock analysts." These are people who do research on companies and then, no matter what they find, even if the company has burned to the ground, enthusiastically recommend that investors buy the stock. They are just a bunch of cockeyed optimists, those stock analysts. When the Titanic was in its death throes, with the propellers sticking straight up into the air, there was a stock analyst clinging to the railing asking people around him where he could buy a ticket for the return trip.
Dave Barry
February 3, 2002
Enron stock was rated as 'Can't Miss' until it became clear that
the company was in desperate trouble, at which point analysts lowered the rating
to 'Sure Thing.' Only when Enron went completely under did a few bold analysts
demote its stock to the lowest possible Wall Street analyst rating, 'Hot Buy.'
Dave Barry
February 3, 2002
This industry has reinvented itself in the last 30 years more than Madonna.
Richard Sandor
Futures
Fall Special Issue 2005, p. 8
Futures markets are an accurate representation of consensus opinion, but if we pool all our ignorance, we do not get wisdom from it.
Jim Bianco
The Wall Street Journal, March 11, 2006
Page B3.
A senior derivatives trader, interviewed recently by Risk, was asked how he thought the derivatives market would develop over the next five years. His response was a spin on an old joke - each desk will comprise a sophisticated trading model, a trader, and a dog. The model will make all the trading decisions; the trader acts as a back-up in case the model crashes; and the dog is trained to bite the trader if he or she tries to touch the model in any other circumstance.
Nick Sawyer
Risk, September 2006, p. 6
Last updated: January 9, 2011