Quote:
Originally Posted by woj
"Investing" in derivatives is closer to going to a casino or buying insurance (which both are "investment" using broad definition) than what is meant by "investing" in a more traditional sense...
you both are right, just depends how broad of a definition of investing one wants to use...
typically though, good rule of thumb I think is, if you expect the benefit to be more than 1 year away = investment, otherwise not...
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Investing into derivates is investing, especially as there is no other word for it. Derivates are nowhere equal to gambling. As you mentioned insurances, derivates are used to bring certainty, safety. For example to lock future prices for oil, wheat, currencies, etc. (whether buying or selling), or to protect asset portfolios from negative market development. And derivates are used to speculation too.
As you can speculate or gamble with pretty much anything, it doesn't define the assets being investment or not.