Derivatives are financial weapons of mass destruction.

Distributive justice isn't taking from a risk taker who earned honorably, it is keeping his probability of losing it very high.

Whenever you create anything, you take a risk. And that includes your life. It may work out, it may not. It may be well received, it may not be. . . .
It's always a risk to take action. It might not work, it might blow up in your face, you might lose money, you might fail. No one may get it.

But that's not the only risk. There's another risk: the risk of not trying it.

How is not trying a risk? You risk settling and continuing in the same direction in the same way, wondering about other paths and possibilities, believing that this is as good as it gets while discontent gnaws away at your soul.

...fear doesn't go away.

Traders risk the bank’s capital: they literally bet the bank, at least up to their limits. If they win then they get a share of the winnings. If they lose, then the bank picks up the loss. Traders might lose their jobs but the money at risk is not their own, it’s all OPM – other people’s money. What if the losses threaten the bank’s survival? Most banks are now ‘too big to fail’ and they can count on government support. Regulators are wary about ‘systemic risk’, and no regulator with an eye to their place in history wants the banking system to be flushed down the toilet on their watch. Traders can always play the systemic risk trump card. It is the ultimate in capitalism – the privatization of gains, the socialization of losses.

There is the risk you cannot afford to take, [and] there is the risk you cannot afford not to take. PETER DRUCKER

Remember: If you don’t find risk, risk will find you.

Our portfolio was more of a Roach Motel-stocks came in and never left. This was exciting.

Risk arises as investor behaviour alters the market. Investors bid up assets, accelerating into the present appreciation that otherwise would have occurred in the future, and thus lowering prospective returns. The ultimate irony lies in the fact that the reward for taking incremental risk shrinks as more people move to take it.

In truth, a good chunk of activity in derivative markets is driven by speculation. Part of it is obscured by semantics; the boundary between speculation and investment is always hazy. If you lost money you speculated. If you made money you were investing. Or was it the other way around?

It was the year of the derivative. From last spring on, as if a blockade of ice had suddenly given way, bad news about these exotic financial innovations started to flow, and victims, corporate and public alike, began to wash ashore. In the wake of billions of dollars in losses since then, opinions about these new-age instruments have drastically hardened. “Derivatives,” observes Richard Syron, chairman of the American Stock Exchange, which trades the species called puts and calls. “That’s the 11-letter four-letter word.”
The word’s elevation to pejorative status is probably justified, but not simply because wild market swings turned many derivatives players into big losers last year. What magnified those losses and sent a troubling message to regulators was disturbing instances of managerial blindness, desperate behavior, even outright fraud.

Risk is the ultimate differentiator. I have always had a deep and complex relationship with it. I am not a reckless person, but taking risks is really the only way to consistently achieve above-average returns — in life as well as in investments. My father proved that when he left Poland. I am probably more comfortable with risk than most people. That’s because I do as much as I can to understand it. To me, risk-taking rests on the ability to see all the variables and then identify the ones that will make or break you.

Effort only fully releases its reward after a person refuses to quit.

Markets are fundamentally volatile. No way around it. Your prolem is not in the math. There is no math to get you out of having to experience uncertainty.