Hi "Not so Fuzzy",
My own personal feeling is that there is a difference between investing (no matter what the price does you still own something that generates income) and gambling (a zero sum game where in order for you to make money someone else must lose and the only one who makes money overall is the house). This applies to options and other derivatives.
An interesting point to ponder.
If one digs deep in all human endeavors he discovers that much of everything "we" do comes down to just that: an apparent “zero-sum-game”. . .someone is "losing" in order for the other to "win”. Look at all the things "we" make and sell. . . much of it appears to be absolutely useless junk that people buy because they have money to burn or desire with a passion, like people desire a piece of carbon in a ring or on a chain. . .This particularly counts for "fake" elephant tusks. . .not to speak of the real ones for which people are prepared to die!
Why do we need 300 different types of cars while many people are on the verge of starvation? Why indeed do we need cars that cost 1 million Euro and can hit 350 km/h? Why are people on welfare not taken care of better so that their lives would become a little less miserable? . . .I am not, of course, talking about welfare Holland. . “we” on welfare here can do quite well surviving in comfort. . . if we do not buy to many things we do not need that is. . .We even get subsidies to pay the rent of our house, and when we get sick there is cheap health care, although some people still complain. . .of course, as “cheap” is also relative.
Why is poker on-line so popular now? The Champion goes home with a stack of 4 million dollars. . .or 2.793296089 million euro . . and it appears no more than a zero-sum-game.
I suppose games, like poker, are a form of human endeavor of the sort in which the lions got a fair chance in Rome to eat Christians, among others. . .a lion could possibly have lost a fight. . .the word "fair" can be interpreted as you like. . .we do that all the time anyway. Is it fair that Warren Buffet and David Trump and other have so much dough and the people in the gutter have noting?
Can you imagine a world in which what we call zero-sum-games are eliminated? This beggs the question: "Is a 'zero-sum-game' by definition an example of an evil game of "the games people play" or is it an necessary element in human survival?
Suppose you want to build a new home in a different place and want to buy a piece of land there to build a house on it but you are not yet sure you can sell the house you already have, so you take an option on the land purchase and in the end you can't go through with the deal. .You loose the money: the land owner takes it from you and sells the land to another. . .a zero-sum-game it was. . .wouldn't you say? No product was manufactured! . . .no process got improved! . . . not a human or a beast got fed after everything was said and done! . . .some wheels have been spinning and nobody went anywhere? Right?
It’s just a thought that struck me(some time ago already): Possibly the people that win the money in a "zero-sum-game" are more effective in doing something useful with it than the guy that lost it. . maybe. . .just maybe, that is the very process that makes the world a functional place for everyone to survive on, or at least may make it possible to make the world a better place live on in the end, rather than just a place where life could not develop in the first place.
When the lion feeds, why is it not a loss to the world that his prey died for it?
I have concluded that investing is a fundamental human endeavor for making things grow better or creating something by which we can live more efficiently, and that is better than dying: without investing the human race would die out. . .many animals invest time and effort for surviving the winter. . in fact that appears to be all they do. . .invest to survive. . .for people it is no different.
Derivatives of any kind are simply part of the things we make in order to play games we play and these games are not intrinsically zero-sum-games. . .no more or no less than making a knife or a gun is intrinsically bad. . .it would help us surviving a winter.
Derivatives are just tools and not in themselves bad but using them in an evil way one makes the game he plays an evil game.
Back to my renewed efforts in derivative investing at this moment: I am particularly ineffective in doing something useful with money I earn. . . I have always spend it in ways most people consider foolish. . .so, it is a good thing to do as I do it as others that take the money away from me, as I play the games I play, are maybe, just maybe, more capable to putting it to work effectively and so protect the human race from extinction
I am just doing all this to survive!
