Comments on: Invest In Hurricanes http://www.pfadvice.com/2006/08/24/invest-in-hurricanes/ Bridging the gap between saving money and investing Wed, 15 Oct 2008 22:59:53 +0000 http://wordpress.org/?v=2.6.1 By: Matthew http://www.pfadvice.com/2006/08/24/invest-in-hurricanes/#comment-4997 Matthew Fri, 25 Aug 2006 02:17:42 +0000 http://www.pfadvice.com/?p=794#comment-4997 It's not gambling. Gambling is subset of risk where the cost of the wager is deliberately set above the expected value of the outcome. Futures markets aren't constructed that way. In fact, given superior actuarial data, it's perfectly reasonable (in theory) to identify and exploit deficencies in the market assessment of insurance risk. I doubt either you or I have access to such data, so it's a game that we should avoid. Nonetheless, derivatives and options have their place in the market. It’s not gambling. Gambling is subset of risk where the cost of the wager is deliberately set above the expected value of the outcome.

Futures markets aren’t constructed that way. In fact, given superior actuarial data, it’s perfectly reasonable (in theory) to identify and exploit deficencies in the market assessment of insurance risk.

I doubt either you or I have access to such data, so it’s a game that we should avoid. Nonetheless, derivatives and options have their place in the market.

]]> By: Mike http://www.pfadvice.com/2006/08/24/invest-in-hurricanes/#comment-4969 Mike Thu, 24 Aug 2006 15:37:30 +0000 http://www.pfadvice.com/?p=794#comment-4969 It even sounds like gambling -- whether the insurance claims will exceed a certain amount? That's not making money on the movement of underlying stocks/etc. -- that is purely, simply "gambling". I see this as just another way for the big-wigs to milk us money-producing cows for even more of our slave wages. Well, this cow will take his milk to Vegas long before I bet on some BS hurricane "hedge investment"!! It even sounds like gambling — whether the insurance claims will exceed a certain amount? That’s not making money on the movement of underlying stocks/etc. — that is purely, simply “gambling”.

I see this as just another way for the big-wigs to milk us money-producing cows for even more of our slave wages. Well, this cow will take his milk to Vegas long before I bet on some BS hurricane “hedge investment”!!

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