Futures has the advantage of imbedded leverage — you are posting a small percentage of the value of a contract for margin instead of actually borrowing to get more of something.
Dever included several insightful and amusing anecdotes regarding the irrationality of traditional investments and flawed analysis. My favorite — one I have heard before — is how people would not invest with his commodity fund because commodities are risky.
Diversification is the one true “Free Lunch” of investing. Of course, by definition, a diversified portfolio will underperform the best performing constituents of a portfolio.
Fear of futures trading is as irrational as a fear of fire. They both can burn you if abused, but provide enormous benefits when properly used.
Statistics do not reveal risk. As I state in the summary for this myth, “risk can only be determined by an understanding and evaluation of the return drivers underlying any given trading strategy.”
In the Introduction to Jackass Investing, I first introduce the concept of “Return Drivers” and explain how a return driver is “the primary underlying condition that drives the price of a market.”
Sandor, who created the first interest rates futures in the 1970s and later a market for carbon emissions, envisioned interest rate futures because he understood the basic purpose of futures and saw a need.
As is usually the case with Melamed, he just returned from a trip to China where he continues to attempt to plant the CME Group flag in that emerged economy and emerging global leader.
The most successful traders that I have interviewed — and I have interviewed a lot — take a long-term approach to trading and information.
This competition is an annual event and the number of schools that participate has grown each year - with 179 schools from 26 countries and over 320 teams competing in 2013.