Wild Financial Markets

"Wall Street, instead of appreciating the true worth of companies has become a gambling casino."

Inder Dhillon

San Jose California

Kudos to time for focusing public attention on a potential threat to the stability of the world's financial markets: the wild growth of derivatives ((COVER STORIES, April 11)). These complex new investment instruments have become so esoteric that only those who live in cyberspace can possibly fathom them. Since most of us inhabit the real world, we're fortunate that there are reporters who can alert us earthlings to the danger. Properly used, derivatives can lessen volatility. But $14 trillion floating around the world unaccounted for could lead to a financial meltdown. Congressional oversight is needed.

Lewis Jaffe

Greensburg, Pennsylvania

The suggestion that there is somehow less risk in "real" investments than in "surreal" derivative products defies logic. The implication that there is some sort of "crisis" lurking in the wings is similarly bogus. You have only to look at recent history to see there is no market that has a monopoly on risk or fails to appeal to human greed. What is troublesome is the notion that we must be protected from ourselves and cannot bear the consequences of our individual decisions. The last thing we need is ill-informed legislators decreeing some misguided form of capitalism in which people can take risks but are bailed out by the rest of the populace if things go wrong.

James C.F. MeVay

Old Greenwich, Connecticut

We have gone from trading in pretend corporations to trading in parallel time lines. Derivative speculation will make many people rich -- mainly the data cowboys. The rest of us are on the road to big losses. Again.

Karen Darrough

St. Peters, Missouri

AOL: Gamelon

While the brave new world of derivatives gives investors and regulators pause to consider the consequences of the proliferation of these little-understood instruments, their use as a vehicle for risk transference is well documented. Investors are risk averse. They require a market rate of return for the risk they are willing to assume. A portfolio that includes a diversified mix of derivative products (futures and options) can produce higher return with lower risk than the same portfolio composed solely of stocks and bonds.

Preston B. Appleby, Senior Vice President

Chesapeake Capital Corp.

Manakin-Sabot, Virginia

Why are astronomers searching in space for black holes when they need look no further than the financial derivatives market on Wall Street? That is the nearest end-of-the-world scenario. Governments had better get their act together to control this unbridled orgy of greed and speculation. If the bubble bursts and hundreds of millions lose their life savings and jobs, taxpayers and investors won't choose to put future generations in debt to pay off this financial scandal, which will make the cost of the savings and loan rip-off look like petty cash.

Rex Thompson

Monaco