Derivatives: No Longer Used For Hedging But Exclusively For “Alpha Generation”

Maybe the pervasive ‘this time is always different’ meme has been perpetuated to the point that the market actually believes it, or maybe it’s just old fashioned greed, but whatever the case, market participants (and this means central banks, retail investors, and everyone in between) have an extraordinary inclination towards Einsteinian insanity.
Never mind, for instance, that the Fed’s attempts to ‘smooth out the business cycle’ (breaking it in the process) have everywhere and always served only to create bigger and bigger bubbles that have led, invariably, to crashes that are ever more spectacular/devastating – what we need is more intervention by central planners bankers. Forget the fact that throughout the course of human history, minting endless amounts of fiat currency always fails – in the words of new BOJ board member Yutaka Harada, ‘we just need to print more money.’
And certainly pay no attention (despite the tendency for these types of discrepancies to self-correct) to the divergence between the S&P and trivial things like the U. S. macro picture and/or forward earnings estimates…

… the U. S. economy is the cleanest dirty shirt and Jeremy Siegel is probably contemplating Dow 40K as we speak, so just hold your nose and buy.

This post was published at Zero Hedge on 02/14/2015 –.