plan or your personal stock portfolio has tanked over the last two years or so, knows that it’s because of the global financial crisis. It was triggered by the collapse of the housing market in the United States and magnified worldwide by the sale of complicated investments – some, myself included, would say risky bets of the type found in casinos and betting parlors – that Warren Buffett warned about in March 2003, and once labeled these derivative products as ‘financial weapons of mass destruction.’
The reason I’m bringing all this up is because I saw an interesting segment this evening by 60 Minutes’ Steve Kroft, in which he walks viewers through the fundamentals of these financial WMDs called Credit Default Swaps (CDS) which were the derivative products underlying the near collapse of the global financial markets. Ironically, these instruments are once again being structured and sold to investors as if . . . oh, what’s the point..?? Just check out the video.
Web Resources:
How to Understand the Derivatives Market