So you could trade interest rates, grains, securities futures all without much knowledge of the underlying. But not realizing that when you walked into the Nasdaq or SP500 pit people sometimes assigned trades to you without your knowledge, you could get screwed. Or not knowing who the players in the pit are, you could make money taking a position but not day trading.

This is maybe another version of local versus abstract risk. No local knowledge needed. All form, no content.

Definitely. When I learned futures trading formulas/modeling, the underlying doesn’t really matter much. It’s all expectations, volatility, and carrying cost, not fundamental differences in the actual underlining (even the way the term ‘underlying’ gets deployed betrays this).

I agree maybe, but what do you think the ‘core’ is here, and why 90 years with little change then 30 years of massive speculation?

One hypothesis is that it’s about marketing by the exchanges, to go after wealthy clients as potential speculators.

A second hypothesis is that financials began in 1974 with currencies, 1975 for GNMA futures, then 1981 for interest rates. It could be that the agricultural futures got a second look from finance people once they were mobilized around financials. As in, ‘hey, we could do the same shit with grain as with DMarks’ – so the diffusion boomerangs back on the agriculturals with a new model derived from the financials.

And maybe it’s just like the hybrid corn processes, in that the massive negative externalities happen later, and are not obvious from the beginning. That certainly is one fear about hybrid corn et al. (even with the familiar dismissal as doomsayers, that).