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I Bet You Can’t Guess What This Paragraph Is About

May 27, 2010

“Others, mostly in various forums, have demonized people who speculate in mythics, buying a bunch of mythics they believe will go up and stockpiling them for some time until they sell them off at a profit. The argument is that speculators are artificially increasing demand (and thus prices) and are doing so for selfish reasons. This argument is flawed. First, shortages occur because prices are too low. Speculators move prices to equilibrium more quickly. Second, speculators actually provide liquidity, because they are willing to sell their mythics when many players would prefer to keep them in their decks. Speculators actually help to obviate shortages.”

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3 Comments leave one →
  1. Joel permalink
    May 27, 2010 9:19 pm

    Sadly, I know exactly what that paragraph is about.

  2. Alexander permalink
    May 28, 2010 10:21 am

    So after recent regulations, hedge funds have devised a new type of derivative, right? Right?

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