Be It Resolved: Shares are Derivatives

I want to warn people about another derivatives sub-market, one that gets far less attention than the purportedly $36-trillion market (or whatever the current claimed number is) for credit default swaps. It is something called "shares".

You may not have heard of them, so here is a description:

A share is itself a derivative, composed of several underylings: capital value changes, dividends, an option that it might be taken over upping the price, and a set of entertaining variable tax consequences, since dividends and capital growth/lose are taxes quite differently from each other and for different classes of investor.

[via Wilmott]

Sneaky of capital markets regulators to be trying to trick us into going from safe credit default swaps over to tricky derivatives like shares. Those things sound nasty.