He wasn't buying shares. Had he bought shares, the catastrophe might have been avoided. He was trading in derivatives, better known as junk bonds, which have no assets backing them. It is a gamble that an asset, currency, share, or other tangible will change in value at some future date, either up or down. The bettors never own the asset(s), they are simply gambling on the value of the asset in the future.a) They facilitated anonymity - It wasn’t obvious that he was buying the shares.
Thanks for “correcting” what didn’t need to be corrected. My point was that CFDs were advantageous because otherwise people could see that he was buying the shares.He wasn't buying shares. Had he bought shares, the catastrophe might have been avoided. He was trading in derivatives, better known as junk bonds, which have no assets backing them. It is a gamble that an asset, currency, share, or other tangible will change in value at some future date, either up or down. The bettors never own the asset(s), they are simply gambling on the value of the asset in the future.
A CFD is a bet on the value of the underlyings in the future. Underlyings are real things, CFDs and other junk bonds are bets on the values of underlyings, the ultimate problem gambler's/thrill seeker's high.
Junk bonds are not derivatives.Investopedia said:Junk bonds are bonds that carry a higher risk of default than most bonds issued by corporations and governments.
Exactly…they’re just bonds of a certain grade.Junk bonds are not derivatives.
Which parts?Thanks for “correcting” what didn’t need to be corrected. My point was that CFDs were advantageous because otherwise people could see that he was buying the shares.
Most of what you’ve written is completely wrong.
a cfd isn’t a junk bond , or any kind of bond.Which parts?
A contract for difference (CFD) is a popular form of derivative trading. CheckCFDs are not shares. CheckCFDs are derivatives. CheckTo trade in CFDs you don't need to own any shares, even those identified in the CFD. Check.CFDs have the same face value as a betting slip until the race is run and the winner and losers are declared. CheckA contract for difference (CFD) is a popular form of derivative trading. Check.Investors can use CFDs to make bets about whether or not the price of the underlying currency, precious metal, commodity, other asset, or security will rise or fall. CheckCFDs have no intrinsic value. CheckCFDs are junk bonds. Check
Where then and how did my original post go so very wrong, pray tell?
"Junk bond" is a generic term for all derivatives, instruments with no intrinsic value outside of the wishful thinking and star-gazing activities of their creators, holders, and traders.a cfd isn’t a junk bond , or any kind of bond.
And the the other poster was correct you didn’t correct anything he said.
A “junk bond” (aka a high-yield bond) is simply a below investment-grade corporate bond."Junk bond" is a generic term for all derivatives, instruments with no intrinsic value outside of the wishful thinking and star-gazing activities of their creators, holders, and traders.
CFDs are not "bonds"; end of. If by "generically" they are junk, you mean colloquially, you are merely observing a knee jerk judgement of the ignorant. Many derivatives are far from junk. The intrinsic value of a CFD is its current value relative to the market and indeed is what it could be closed out at (unlike a betting slip), albeit that could be negative."Junk bond" is a generic term for all derivatives, instruments with no intrinsic value outside of the wishful thinking and star-gazing activities of their creators, holders, and traders.
He didn't say specifically what I had said that was wrong other than the generic "Most of what you’ve written is completely wrong."
He wasn't buying shares, he was gambling on derivatives.My point was that CFDs were advantageous because otherwise people could see that he was buying the shares.
You don’t seem to understand this at all.He wasn't buying shares, he was gambling on derivatives.
Oh but I do!You don’t seem to understand this at all.
So he gambled on the future value of some tangible assets he didn't own using CFDs, which are derivatives.Sean Quinn thought that the value of Anglo Irish Bank was going to increase.
What's the difference between buying and EFFECTiVELY buying? Either he and his family bought the shares or he (and his family) didn't.He was EFFECTIVELY buying Anglo shares and borrowing to do using Contracts for Difference.
Until it came time to pay the piper and repay the loans for the CFDs, and the bill for the losses on the CFDs themselves, using the only assets he had which were Anglo shares, which Anglo couldn't afford to release to the market, as those sales devalued the whole kit and caboodle and Uncle Tom Cobley and all.This had some advantages: No stamp duty, CGT treatment, anonymity, and not having to front all of the money.
You don’t even seem to understand the meaning of the word “effectively”.Oh but I do!
So he gambled on the future value of some tangible assets he didn't own using CFDs, which are derivatives.
What's the difference between buying and EFFECTiVELY buying? Either he and his family bought the shares or he (and his family) didn't.
Until it came time to pay the piper and repay the loans for the CFDs, and the bill for the losses on the CFDs themselves, using the only assets he had which were Anglo shares, which Anglo couldn't afford to release to the market, as those sales devalued the whole kit and caboodle and Uncle Tom Cobley and all.
Simplez.
So EFFECTIVELY owning shares means not owning them, just close to owning them. Effectively. I'm glad that's been cleared up, effectively.The characteristics of the derivative make it close to owning the shares.
You still don’t get it.So EFFECTIVELY owning shares means not owning them, just close to owning them. Effectively. I'm glad that's been cleared up, effectively.
I'm using your definition so I'm not surprised you're astonished at my apparent lack of getting it. So maybe I EFFECTIVELY get it, like the guy who EFFECTIVELY owns the shares by not buying them and investing in a derivative instead.You still don’t get it.
Astonishing.
EFFECTIVELY.@mathepac are you standing by your calling CFDs junk bonds?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?