Derivex

[Free Loader]

Rolf,

Don't think I mean anything underhanded by using the term "vested interest". You have a vested interest in being a member of the MIAA because it is important to your business. Its the same source of motivation for the lenders.

I just raise an eyebrow at an industry body that is tasked to equitably represent both lender and broker who frequently have competing agendas (eg. current hot topic: rates of payment on upfront and trailing commissions).

I digress. This thread is about Derivex and I look forward to Derivex becoming a member of the MIAA, if only just to see how it does stir up the banks.

Cheers,
FL

 

[nat r]

If you borrow in another currency and don't hedge the risk then all you are doing is gambling. ....that is not a valid or sustainable model to fund a business or lending program.

If this is how Derivex (or anyone else) suggests they are fundng themself then there is no way any rating agency will give them even the lowest rating.

 

[Sunfish]

Of course, it is different this time.


You made a rather bold statement. What is the purpose of hedging in your humble opinion?

P.S. Nat R put it very sharply and correctly – “If you borrow in USD or Yen and don't hedge your currency risk you should be commited to the nearest mental institution. “

When Warren Buffett buys tons of silver he is selling USD. He could then go to the futures market and hedge against dollar movements but his thoughts on the futures market being "toxic" are well known.

On US chat sites and in the economic newsletters, it is accepted that the USD is in diabolical trouble and choosing a currency to "park" your dollars is a perennial topic. The looney, aussie and kiwi dollars are favourites. Any Yank who bought these currencies 18mths ago would be 40% ahead already. Why, if you're pessimistic about your currency, would you hedge? Hedging is for commerce (including banks) who want a guaranteed exchange rate some time in the future.

As for “If you borrow in USD or Yen and don't hedge your currency risk you should be commited to the nearest mental institution." I will simply disagree about it's relevence to traders and speculators who, I believe, are the target group to fund Derivex.

And do you believe it is time to declare your interest? Mine is simple: I own a vending run and borrow for investment.

Thommo

 

[nat r]

Thommo...I'm sorry but you really don't know what you are talking about....but to be fair i no nothing about vending machines either. (the differnce is I choose not to comment on them and then claim that I'm an expert)

 

[Sunfish]

If you borrow in another currency and don't hedge the risk then all you are doing is gambling. ....that is not a valid or sustainable model to fund a business or lending program.

If this is how Derivex (or anyone else) suggests they are fundng themself then there is no way any rating agency will give them even the lowest rating.

Absolute rubbish! When the Bank of London sold many (I think hundreds) tons of gold @ US$275/oz they then invested the receipts in interest bearing securities, mainly US Treasuries and held these as foreign reserves. HAD they hedged they not now be down billions of pounds but the only people who are unaware of the disaster are the Pommy voters.

Even today over 40% of US Gov paper is being bought by foreigners who do not believe they are gambling. Millions of people buy currencies every day, not all of them "short term speculators". This purchase may well be a hedge against the risk of a falling currency. So, could it be that investors with Derivex are following your advice and hedging against the fall of the once mighty USD?

Thommo

 

[nat r]

Thommo...do you wish to borrow a bigger shovel ?

 

[Sunfish]

Thommo...I'm sorry but you really don't know what you are talking about....but to be fair i no nothing about vending machines either. (the differnce is I choose not to comment on them and then claim that I'm an expert)

Nat I don't know why you say I don't know what I'm talking about. I think I do, but I will cease and desist this circular argument and await your declaration of interest.

Thommo

 

[nat r]

I work in structured finance and prior to that I worked in currency/interest rate/commodty markets as a trader (both here and OS)...I have never worked in the vending machine market or any vending machine related industries.

I have from time to time bought a kit kat and/or can of coke from a vending machine.

 

[Mikhaila]

...

And do you believe it is time to declare your interest? Mine is simple: I own a vending run and borrow for investment.

Thommo

I don’t understand what type of interest declaration you are asking for. In relation to Derivex I have no vested interest in it or any other potentially competitor to it.

 

[Sunfish]

I don’t understand what type of interest declaration you are asking for. In relation to Derivex I have no vested interest in it or any other potentially competitor to it.

Thanks, that is what I asked and which Nat is yet to state clearly.

 

[nat r]

As I stated above, I work in structured finance, not mortage lending and how can anybody work for a competitor of Derivex???....as far as I know there are no other zero intererest mortage lenders.


BTW....your ideas relating to trading/cross currency exposure etc are all wrong....in fact dangerously wrong and should have a disclaimer on them (other than your user name !)

 

[Sunfish]

As I stated above, I work in structured finance, not mortage lending and how can anybody work for a competitor of Derivex???....as far as I know there are no other zero intererest mortage lenders.


BTW....your ideas relating to trading/cross currency exposure etc are all wrong....in fact dangerously wrong and should have a disclaimer on them (other than your user name !)

From my post #134

All this truly In My Humble Opinion only.

Thommo

qualifies as a disclaimer. Where are yours to your dangerously reactionary posts?

Thommo

 

[XBenX]

Anybody that knows how to work a financial calculator will be able to confirm that the product does not work...future value and present value are two concepts in finance that are omnipresent...there is no way around them.

Again Ive held off on this issue for a while as I still have not done enough analysis of the issues... however

Assuming you can work out the NPV of the derivex investment - the amount of variables - including different time periods would make the calc pretty messy - you have obviously come to a negative result.

What I dont understand is how you have come to this result and what discount rate are you using...

I would love to understand... so I could discount derivex - the impacts of IFHL being a legitimate product scare me... (in both a good and bad way)

The way I see it atm is still as I posted weeks ago -

http://www.somersoft.com/forums/showthread.php?p=127252&highlight=annuity#post127252

To make that post a little more clear.

If D borrows $100m @ an outrageous 20% the interest bill would be $25m

So Income = $0 Expenses = $20m

It then lends that $100m the income stream (just like an annuity would be by us property investors) returns both an income and capital component BOTH of which can be included as income for the purposes of getting further loans.

So just at the investor who follows Steves cashbond strategy the qn for me is can D outperform their cost of funds... if yes IMHO they have a legitimate strategy.

I do not know the costs of the initial funds so Im unable to pass comment on whether they can or not.

Nat - I must be missing something could you please let me know what.

 

[Sunfish]

I'm not sure that "humble opinion" and "completly wrong opinion" are the same.

At least there is no humbleness (sic) in your posts.

Why do you never answer my questions?

I have asked your interest in Derivex and why it is the only subject you have an interest in on SS and I got the disingenuous reply that you couldn't be in competition with Derivex because you are not in Interest Free Loans. I'm sure you are regularly asked to declare interest in your line of work and I bet you never give a smart-arsed reply like that.

I also asked about disclaimers. Merely being "conventional, conservative" does not make you automatically correct.

Sigh! Thommo

 

[JamesGG]

Nat R,

I and others have learnt the hard way, and those with more common sense have realised it from the outset:

Insulting other members of this forum, is not the best way to go about gaining credibility and getting your point across.

Cheers

James.

 

[nat r]

JamesGG..... I agree...lets hope Thommo takes up your good advice.

Natalie

 

[Jamie]

I will say it again.....the Derivex story is pure fantasy and does not work.

Nat,

Does this mean you dont believe people applying for funds will receive them at all, or that settlement funds will be made available to applicants but Derivex will go belly-up soon after?

Jamie

 

[nat r]

jamie...the former

 

[quiggles]

If that's the case, nat_r, then I'm risking $275 for a potentially massive gain (don't forget, the conduit fee can come out of the loan). If they don't front with the money the loan doesn't settle (obviously) and the word will quickly get out. At that stage they're cactus.

 

[always_learning]

Quiggles, have you had a legal review ITFL documents? can the loan be called in? (hypothetically speaking, I dont think they will be able to write commerically significant levels of home loans)