| This whole article is terrible: > derivative in finance is a bet on the rate of change of the value of a stock No. At least no more than an equity is also based on the change in value of the company. At best it is just a terrible way to describe it. It is a derivative because it derives it's value from the underlying. You can get rid of the "rate" part and it would be more correct. > The New York Stock Exchange is a company that maintains a database that is a one-stop shop for people who want to trade stocks and other fancy financial instruments. Don't even know where to begin with how misleading that is. > that is a reflection of a section of the stock market performing “well”, in the sense of investors making money4 on their stock investments. Not really. It is the value of the companies going up. I'm sure many are losing money too in both a real sense and a "I shouldn't have have sold" opportunity cost regret. > Depending on what the Fed’s interest rate is, you could conceivably buy a bond off of somebody for lesser than the principal. Nope. The feds target overnight rate has very little to do with how bonds outside the very short end, and nothing to do with the long end most people would be buying. > It’s a zero-sum game, because there are always winners and losers in the stock market. Not really. While each individual trade is zero sum, the collection of them creates more efficient capital flows and helps they health of the market in a very general sense. Without the traders, the market would dry up and nobody would make any money from it. |