03-13-2009, 08:48 AM
Okay, I've read the Wikipedia article on "Derivatives Market". Here is the link, again: http://en.wikipedia.org/wiki/Derivatives_market
In that article, the total value of the OTC derivatives market is $596 Trillion as of the end of 2007. Let me ask whether your assertion is true, i.e., that 5/6ths of the value of that market is gone, never to return. By way of comparison, my 457 fund has lost approximately 40% of it's value, compared to 2007 values. In reality, though, I haven't lost anything until I sell the underlying stock mutual funds while the prices are down. The price of the mutual funds is down, and the value of my portfolio is down, but I don't realize any loss at all until I sell the underlying stock mutual funds at a loss.
Likewise with my own real estate investments. Their value is down, perhaps quite a bit, but I don't realize any loss at all unless I sell while the market is down.
Is this apples and oranges, or is there any comparison between "$500 Trillion in bad debt" not being realized until somebody sells all that bad debt at a loss? What would it take for the value of the derivatives to rebound?
Please understand that I'm not being argumentative for the sake of an argument, nor am I being Pollyana-ish. I really want to understand this, and you seem to have a much better grasp than I do. The general economy, and the real estate market, in particular, may have a driving impact on the timing of our move to Puna. I'm headed that way as soon as I can get there, hopefully less than a year from now, but I may be delayed up to another year if the real estate market and my 457 doesn't rebound somewhat. I understand things may not get back to 2007 levels for maybe a very long time, but I don't necessarily need 2007 levels in my investments to retire securely.
Aloha! ;-)
In that article, the total value of the OTC derivatives market is $596 Trillion as of the end of 2007. Let me ask whether your assertion is true, i.e., that 5/6ths of the value of that market is gone, never to return. By way of comparison, my 457 fund has lost approximately 40% of it's value, compared to 2007 values. In reality, though, I haven't lost anything until I sell the underlying stock mutual funds while the prices are down. The price of the mutual funds is down, and the value of my portfolio is down, but I don't realize any loss at all until I sell the underlying stock mutual funds at a loss.
Likewise with my own real estate investments. Their value is down, perhaps quite a bit, but I don't realize any loss at all unless I sell while the market is down.
Is this apples and oranges, or is there any comparison between "$500 Trillion in bad debt" not being realized until somebody sells all that bad debt at a loss? What would it take for the value of the derivatives to rebound?
Please understand that I'm not being argumentative for the sake of an argument, nor am I being Pollyana-ish. I really want to understand this, and you seem to have a much better grasp than I do. The general economy, and the real estate market, in particular, may have a driving impact on the timing of our move to Puna. I'm headed that way as soon as I can get there, hopefully less than a year from now, but I may be delayed up to another year if the real estate market and my 457 doesn't rebound somewhat. I understand things may not get back to 2007 levels for maybe a very long time, but I don't necessarily need 2007 levels in my investments to retire securely.
Aloha! ;-)
Aloha! ;-)