By Greg Jensen
I would wager that before 2007 most mainstream investors had not even heard the word “derivative” other than as a dismissive description of a song or movie. During the financial crisis, however, the word was everywhere, usually with scare quotes. There were articles, seemingly every day, claiming that derivatives were the problem. They were bad things, designed to take investor’s money away and further enrich the fat cats on Wall Street. They were inherently flawed and always had been doomed. They should be banned. Market insiders put on their “wry smile” face and muttered “This too shall pass…” to themselves. Overreaction usually looks ridiculous with hindsight.