Nonetheless, they involve a lot of uncertainty and risk and in some markets, commodities being the obvious example since we're here in Chicago, most investors lose their money. Even in the tried and true equity markets, investors do not as a group get the returns of the index because there are transaction costs. While futures are a zero sum game, stocks are not a zero sum game, but both of them have transaction costs. So futures is quite like gambling in one sense in that there is some gain, minus the transaction cost and also given the way random numbers work, some people tend to lose a lot or win a lot. In other words, I know many people, including many of my friends in the securities industry, didn't want anything to do with this Commission because they didn't want to be seen as having anything to do with gambling.
Speculation serves an honorable function in capital markets and is regulated in a variety of ways.
I also would argue from personal experience that a lot of what is called hedging is speculation when you look at it closely. I think we can learn a lot. I'm delighted that we have a panel like this. I was working for Nick Brady, who was chairman of the commission that looked into it, the stock market crash, and the various proposals to put sand in the wheels and other things. It became clear that a great many important people in the securities market did not understand the risks involved in a lot of the new securities or even plain vanilla ones like futures and options, let alone derivatives, people who were running firms, people who were very important in Washington.