Today I received  a Summary Prospectus for an investment  made some months ago.   I was never told that I was  buying a fund partly consisting of derivatives (or maybe I didn’t read the yawn-inducing small print – quite possible) .  Since the financial services people didn’t understand derivatives  and derivatives nearly sank the economy, what am I doing with the wretched things?  This is what the brochure says;  who would invest after reading it?:

Derivatives Risk

Derivatives are subject to certain risks, including the risk that the value of the derivative may not correlate with the value of the underlying security,rate, or index in the manner anticipated by portfolio management.  Derivatives may be more sensitive to changes in economic or market conditions and may become illiquid.  Derivatives are subject to leverage risk, which may increase the Fund’s volatility, and counterparty risk, which means that the counterparty may fail to perform it obligations under the derivative contract .

The moral seems to be that the financial services industry has learned nothing from their debacle.  A short while ago a worker in financial “services” told me indignantly that if the American and British government continued to regulate the financial industry in the current manner, everyone would move to Dubai.  I would suggest instead the Empty Quarter of the Arabian desert, half an hours drive away.

Allowing for the current rate of inflation a rational Epicurean should consider keeping the money under the mattress.