Jake Berzon

Buffett's S&P 500 Puts: Big Blunder?

Buffett never ever said that he wants to time the market, but only that he was expecting very long term for markets to recover.

He sold very specialized long term puts. They can not be called until their "maturity" date. He sold them to people whose business needs indicated a need for such a hedge - an insurance on the stock market. With this transaction Buffett was definetly acting as a reinsurer and he doesn't expect that he will ever have to pay on this insurance.

Of course, as the stock market gyrates, the implied value of the puts he sold will be very volatile and will affect the value of his company's stock. However, those puts are not realistically marketable, so it makes no difference to Buffett what happens to their implied value until the date they can be called.

This was certainly a gutsy call on the part of Buffett. Even though I am sure that it will work out well for him, I could not see myself doing anything similar, which makes me respect the guy even more!

My Take on Fortune's Best Stocks for 2008

A reference date of 12/14 (when these companies were originally recommended) vs. 1/4 (when I looked to see if they were still attractively priced) makes a big difference.

My Take on Fortune's Best Stocks for 2008

There has not been a succession plan announced for Berkshire Hathaway as of the date that I did research on the company is the longer and more accurate statement.

I have no list for 2008, I simply look for opportunities to buy stocks in the companies that go "on sale" and than sell them, once they are trading at a fair price. You can easily see what my current favorites are simply by watching what I have bought and have not yet sold. As of this writing my personal portfolio consists of the following: BRC, CHN, CI, DD, ECA, EWJ, GCH, GLD, HELE, HW, JNJ, KCP, LUV, LVWD, NOVN, PDS, PNR, TRID, VLO, VVUS, WMT, BRKB, MOGA.

I would take exception to the comment that I do not do my homework and as proof to the contrary point out that while the performance of my portfolio significantly exceeded S&P500 last year, it has also held up exceptionally well as the market descended from it's October peak. If anyone is curious about the specifics, I'll be glad to email them.