|
PureBytes Links
Trading Reference Links
|
1. Futures trading is a valid adjunct to stock investing. Hedging stocks
can be done in the futures arena. Speculators add liquidity to the mix.
Price discovery is a valid futures benefit. You should note that the S&P
500 Futures contract usually leads every stock index.
2. Futures contracts do not expire worthless (you're thinking of
options). The vast majority of futures contracts are offset (closed)
prior to expiration, and not delivered.
3. A stock splits because the company's board of directors feels that
the price is getting too high for the average investor. Thus, the stock
splits to readjust market price. The mechanism in itself does not cause
appreciation of value; as always, public perception plays a large role
in stock valuation.
4. If you consider that stock splits are made for marketing reasons,
then realize that: the S&P futures contract was recently halved in value
to make it more accessible to smaller traders (functional equivalent of
a stock split). Also, new contracts on similar underlyings are
frequently brought out for the same reason; examples include the E-Mini
S&P futures contract and many of the offerings of the Mid-Am exchange.
5. I'm not sure what you mean by insider trading. Stocks are frequent
vehicles for such abuse, as company insiders have early access to
valuable information. In the futures arena, most traders are on equal
footing with respect to the fundamentals that move futures markets:
weather, government reports, etc.
Allan
_____________________________________________________
WJame17842 wrote:
>
> Stock investors create ownership in a company, which can be short term or long
> and take advantage of price appreciation and avoid paying taxes until the
> stocks are sold, whereas futures expire in the short term and often the
> contracts expire worthless, but a profit can be made with the proper analysis
> and timing of entry and exit points. Stock prices fall and rise just like
> futures, but stocks can split and appreciate even futher. CSCO for example, a
> 1991 IPO, has split six times since
> the company went public. I've been in the market since 1990 trading stocks and
> I've never heard of a future splitting, although I am studying the futures
> arena and follow certain commodities, but I have no intention of trading this
> arena until I finish 12 months of paper trading. But I can sayone thing I
> dislike about the futures market is that insider information is somewhat legal
> and that is totally unethical behavior where money is concerned !
|