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Buffett - past his time?

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Warren Buffett wouldnt be Warren Buffett and Berkshire Hathaway wouldnt be $90,000 a share if Buffett didnt get involved in the derivatives market.

Share holders just want the good times.
Unlike Buffett they dont look at the possibility of hard times and even now with it staring them in the face they still think that Buffett should be beyond and above that which everyone else is a part of.

Fickle lot.

Yet they will look at Buffett to guide them through.
If he does --- well he will be back on the mantle piece and you'll be buying books on surviving the recession "The Buffett Way"


I seem to remember one Donald Trump facing imminent Bankruptcy---doing JUST that!

Its business--BIG business and Buffett is right there being judged by the minows
 
Warren Buffett is past his prime. He is 76 for goodness sake!

I doubt WB would contemplate selling one of his beloved businesses just because he was worried about an economic downturn. He manages to look through those cycles. He is sitting on so much cash now because he did forsee much of this downturn.

His insurance business is a global leader and incredibly strong. He has made a majority of his money through insurance. Insurance allows him to borrow money at no cost and invest it.

His derivative contracts are low risk, long term bets that will make berkshire plenty in years to come. He has not used derivatives to leverage Berkshire's positions in any way (the weapons of mass financial destruction) but the contracts he has written are subject to mark-to-market accounting which will cause volitility in asset values and earnings as a result.

You can bet against him if you want but you would have to be very sure because he hasn't under performed for 45 years.
 
76

A chicken.

More business savvy than 10 academics a third of his age.
How lucky share holders are that he still has such enormous passion.

Rupert Murdoch is another.
We need MORE people with this vast amount of experience not less.
 
truevalue said:
His derivative contracts are low risk,
Click to expand...
nonsense. This is a VERY low reward and very high risk.
just how is that low risk

His sold puts to get some premium while exposing Berkshire to far greater losses. This is not a low risk trade
 
tech/a said:
76

A chicken.

More business savvy than 10 academics a third of his age.
How lucky share holders are that he still has such enormous passion.

Rupert Murdoch is another.
We need MORE people with this vast amount of experience not less.
Click to expand...

I agree.

Tech perhaps one day you can inspire en mass.
 
Trembling Hand said:
nonsense. This is a VERY low reward and very high risk.
just how is that low risk

His sold puts to get some premium while exposing Berkshire to far greater losses. This is not a low risk trade
Click to expand...

You got some inside knowledge of his positions?

Buffett is famous for being completely risk averse. He would never write a contract unless he felt sure offered massive upside with very small downside.

If you write a put on the market being lower than it is today in 15 years how is that high risk? I would write that contract any day of the week.
 
truevalue said:
If you write a put on the market being lower than it is today in 15 years how is that high risk? I would write that contract any day of the week.
Click to expand...

Are you kidding me?? So you can forecast 15 years into the future and know whats going to happen?

In 1990 the Internet was virtually only a concept, look at what it did to the indexes. Disruptive technology makes it impossible to forecast with conviction that far in advance
 

Yeah!! do you understand the payout diagram for selling puts??

A small and CAPPED reward now for unlimited potential losses till expiry.


LOL. seen a 20 year chart of the Nikkei??
 
Trembling Hand said:
Yeah!! do you understand the payout diagram for selling puts??

LOL. seen a 20 year chart of the Nikkei??
Click to expand...

Oh here you are TH - was wondering where the market depth on the SPI had disappeared to...

Yeah, it's amazing how people are taught that these extremely high risk strategies are low risk...

I guess the only thing is if he was planning to buy the stock any way - he might lose a bit less by starting off with short puts, but also wouldn't make so much if his stock took off to the upside.
 
Trembling Hand said:
Yeah!! do you understand the payout diagram for selling puts??

A small and CAPPED reward now for unlimited potential losses till expiry.


LOL. seen a 20 year chart of the Nikkei??
Click to expand...

Dont forget he gets to invest that premium at no cost for 15 years, he is not subject to margin calls, and the holder of the put cannot put it to him anytime in the next 15 years he can only exercise the put at expiry.

I didn't say it was risk free but history and the odds would heavily favour it.

His insurance business is all about taking on this sort of risk (in may different forms) and he has showen that he can price the risks very well and make plenty of money from it.
 

Hahahahaha.

now you walked right into it. Companies such as his trade their Balance sheet. With this one transaction he has knocked 6 bil at least off it. That's a bad trade just on that alone. And you are saying this is good.


+ there is talk of the holders wanting guarantees of capital against the puts!!
 
I think Buffett made a reasonable bet, but low probability of losing is not quite the same as low risk.
 

Where do you get $6 billion from?

He took $5 billion in premium and has $35billion risk if the four stock indecies go to zero.

Maybe if he was taking 30 second bets like you guys you would say it was a bad trade but he is has a 10+ year time horizon and from a liquidity perspective there is no risk until the contract is exercised.

I know long term investing is hard to understand for some but we are not all judged by the short-term emotional outpourings of the stockmarket.
 

...and on that note, I think we all ought to respect an investor of tramendous achievements like Warren Buffett.
 

He better bet that things return to 'normal' then, but then again he probably won't be around to deal with the consequences?

 
Trembling Hand said:
+ there is talk of the holders wanting guarantees of capital against the puts!!
Click to expand...

Well they should have asked for that before the contracts were written. Plus if they had asked for this, the price of the contract would have been higher or not be written at all.
 
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