The case of Derivatives

Derivative Securities have greatly changed the landscape of the Investment markets. It is without doubt that these investment tools have enhanced the returns on investments and as well as increasing productivity of many basic and non-basic commodities. These can be viewed as an alternative form of insurance.

However the recent upheaval in the financial markets has meant that the underlying parameters and factors need to be explored and understood deeply. As a direct result sound mathematical methods of analysis and evaluation need to be enhanced or developed in order to meet the new changes in the global investment markets and patterns. It is also of paramount significance that different markets might require different methods of analysis or point to particular adjustments being made to the existing models depending on market fundamentals.

I believe that Financial Mathematics is also very important in the area of research. With the recent developments in globalisation new market trends are being discovered and a number of markets are emerging that require experts who establish the market fundamentals across all boundaries and subsequently develop relevant models or update the existing ones. It is also important as it can be used to predict or measure the impacts of different paradigm shifts in the markets.

Zimbabwe is lagging behind such levels of investment tools and analysis and hence not many derivatives or derivatives based products are being developed. It is particularly saddenning as some countries are fogging ahead in this new are of finance in Africa, something akin to the lagging behind of England during the Newtonian period when they refused other schools of thought contrary to Newtons publications.

Current trends

The current times in zimbabwe present two conflicting realities to those who might be involved or plan to eventually be involved in business. Those who are used to the orthodox means of doing business might find it hard to make any meaningful profits. Current market fundamentals would point to strong investment tendencies as wel as taking long positions for the eventual self correction of the Zimbabwean economy which will eventually happen.

Stock investments and property markets have over taken any other short term forms of investments. Ordinary procedures or projects are the ones that are really popular these days as they present methods of earning cash as well as maintaining the high liquidity which is necessary in our economy. Projects such as candle making, peanut butter making, woodwork etc have increasingly become popular to the populace. These present direct liquidity whch nis necessary in the daily dealings in foreign currency.