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Synthetic Finance, Market Rigging?

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posted on Sep, 5 2015 @ 01:51 AM
I came across a new term called synthetic finance and from what I can tell its market rigging. It also looks like it could be a new bubble forming but I have no idea what the hell I'm talking about so feel free to jump in at anytime and relay your knowledge.

Synthetic Investment

A synthetic investment simulates the return of an actual investment, but the return is actually created by using a combination of financial instruments, such as options contracts or an equity index and debt securities, rather than a single conventional investment.
For example, an investment firm might create a synthetic index that seeks to outperform a particular index by purchasing options contracts rather than the equities the actual index owns, and using the money it saves to buy cash equivalents or other debt securities to enhance its return on the derivatives.
Options spreads, structured products, and certain investments in real estate and guaranteed investment contracts can be described as synthetic products.
While they are artificial, they can play a legitimate role in an individual or institutional investor's portfolio as a way to reduce risk, increase diversification, enjoy a stronger return, or meet needs that conventional investments don't satisfy.
However, synthetic investments may carry added fees and add more complexity than you are comfortable dealing with.

And here is a company that is involved in synthetic, derivatives and securities trade..... feel free to dig into these ones and see what you find.

I won't even tell you how i discovered this company because i was investigating something else when i stumbled into this odd terminology.


tand firm and push forward.

The answer lies in the ability to continuously adapt while staying grounded in the solid core of proven experience.

That’s why SunGard is positioned at the very center of how finance and technology work today: We are the pivot point where a Silicon Valley approach meets finance to unleash your organization’s potential.

Ok.... whatever they are talking about...
edit on 9/5/2015 by onequestion because: (no reason given)

posted on Sep, 5 2015 @ 02:02 AM
a reply to: onequestion

"The answer lies in the ability to continuously adapt while staying grounded in the solid core of proven experience".

How does one adapt when one clearly isn't grounded on anything tangible in the first place except synthetic indexes, this just sounds like sheer fraud? Is it just another artificial means of keeping our current failed and fraudulent financial markets afloat?

I am also at a complete loss because not only the jargon - which can be looked up but the idea itself doesn't make sense? Can people loose their savings if they invest here far more easily than on legitimate stocks and shares? I am ignorant on this matter but it sounds too slickly clever.

posted on Sep, 5 2015 @ 02:13 AM
a reply to: Shiloh7
Yes exactly.

Look at all the circular reasoning.

posted on Sep, 5 2015 @ 02:50 AM
Reading some of this it just kind of went over my head. Maybe because I'm tired or I just didn't fully comprehend it; either way after a while of letting it sink in ( and my first post not going ). It seems like they just merely used the long about way of saying things rather than going straight to the point.

Although I'm sure by the time I wake up someone will have already had this dissected and laid out in bite size portions. :|

posted on Sep, 5 2015 @ 04:14 AM
a reply to: onequestion

I am truely lost there, what sort of marketing language is that. Some kind of alien financial system.

I am just complaing here because that article does not make any sense to begin with, even while your seeping some booze or not..hic
edit on 5-9-2015 by InnerPeace2012 because: (no reason given)

posted on Sep, 5 2015 @ 06:56 AM
a reply to: onequestion

They use a lot of big words that make us go, what?

The term "debt securities" is misleading. When you loan someone money the promise to pay is only "secure" as long as payments are made on the loan. Nowadays they combine the two words, Debt and Security, selling the debt as real money, placing the debt on a level with real securities like goods and assets.

The debt is a promise to pay, not actual tangible assets. But they sell the promise as real money nowadays, inventing money from nothing, using that false security as capital to secure even more loans. Its why the bubble is growing, and can't last forever.

Inventing money from thin air before it is realized is why the banks failed in 2008. They bundled bad loans (toxic mortgages) and sold them off to investors, fooling them into believing the loans were secure (debt securities). The same people that did this are still in charge at these banks that got bailed out and they are doing the same thing again.

posted on Sep, 5 2015 @ 07:05 AM
This might sound weird but I draw parallels between voting fraud and market rigging. It's happening at multiple levels by several players in increasingly complex moves. At the top the same phat kats run the show. They are the political and economic movers. At the bottom are gullible people buying the viability of their own selfish needs which are transient and illusory.
edit on 5-9-2015 by pl3bscheese because: (no reason given)

posted on Sep, 5 2015 @ 07:03 PM
a reply to: onequestion

Not a finance person, took a couple of classes and decided for all intents and purposes that 'finance' is a total fraud.
Based on someone's best guess and nothing real 'finance' as an industry purports to make money out of - well nothing....

It's boys (and a few girls) playing in a fantasy world without basis in reality -- but don't tell them that ... I upset my profs every time I asked for real 'basis' for any particular 'equation''s starting point. It was always 'somebody's guess'.

That said - I would say that these 'synthetic' instruments are a new 'tier' of 'money stream' built entirely out of 'instruments' that are based, not on something substantial like a mortgage with roots in reality (I'd question those as well), but on completely insubstantial ideas or beliefs.

It's all make believe. It's only our belief in 'finance' that gives it influence. It doesn't effect phsycial reality directly only though our 'fear driven' actions. Take a billion dollars out of the stock market - the actual assets represented are still there it's only the perception of 'value' that has changed.

Finance is a racket, a game played by the 'masters of the universe' only because we've drunk their koolaide. What did one author call 'wall street' .....'s the quote from Matt Taibbi in this piece on Munciple Finance:

This is the mentality that led Rolling Stone’s Matt Taibbi to call Goldman Sachs “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.

This analogy is applicable to any 'finance' organ.

Good article, BTW.

posted on Sep, 5 2015 @ 07:13 PM
a reply to: FyreByrd


I figured it was just another pyramids scheme.

It just so happens that billionaires can afford to hide their schemes better and hire better attorneys to navigate our overly complex legal system.

posted on Sep, 5 2015 @ 07:24 PM

originally posted by: onequestion
a reply to: FyreByrd


I figured it was just another pyramids scheme.

It just so happens that billionaires can afford to hide their schemes better and hire better attorneys to navigate our overly complex legal system.

And make up Words. Generally (not in all cases) men won't ask what something means - they will act as though they understand what someone is saying and that trait (in men and women) is what gets us into this kind of crap.

Every industry has it's own 'special' lingo - always ask WTF people are talking about especailly with 'finance' and 'insurance'. Nine times out of ten, the people trying to sell you a POS (piece of *&^&) won't be able to tell you because they don't know either..... run away.

posted on Sep, 9 2015 @ 09:05 PM
Ok, so what's going on here. You have the commodities market which fluctuates but then you also have derivatives which are a bet on the price in the future. Say oil is $100/barrel today and the predictions put it at $103 in 4 months. I can place an order for x barrels at $103 in 4 months time thinking the prediction is too low. If the price is less than $103 I lose but if oil is instead $110 I profit heavily.

These synthetic investments take this concept and make the fund up entirely of future bets. So a fund based on oil investment is building up bets on the future value, and not actually buying the physical commodity itself.

That's assuming I understood it correctly.

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