Re: hedging: good or bad?

[dhenwood@xxxxxxxxx (Doug Henwood)]

At 1:56 PM 4/18/95, pdavidso@xxxxxxxxxxxxxxxxxx wrote:

>Sorry Doug but I must have missed something. I do not understand what you
>mean when you say "thanks to 'selective hedging' people can speculate by
>doing nothing!" Please explain for dummies like me. Paul D.

If markets exist to hedge something, and the exposed player chooses not to
hedge because of a market judgment (e.g., not hedging D-mark exposure
because you think the DM will move in your favor), this is called selective
hedging in the trade, and is considered a backdoor form of speculation.

Doug

--

Doug Henwood
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