Why it should be illegal to speculate using financial derivatives.

[Glaucus]

Not Worth the Gamble

On Monday, the U.S. Commodity Futures Trading Commission issued an order prohibiting the marketing of a new set of derivatives that would have enabled traders to bet on the winners of national elections. While these “political events contracts”—the latest development in the world of prediction markets—have their partisans, the CFTC’s order was based on fundamentally sound logic that should be applied more broadly. Financial instruments that serve primarily as a means of speculation rather than hedging should be banned, just as gambling is illegal in most contexts.

Not too long and well written. The basic gist is, speculating is really just a form of gambling and like all gambling the results are usually quite bad (if not for everyone, at least for someone). A great example of hedging vs speculating is buying life insurance for yourself vs buying life insurance for someone you don't even know. The latter is illegal in most countries, and in the ones where it's not, it usually adds to the murder statistics.

 

[cecilia]

I never gamble.