texalope

Buffett's Financial Bets

If muni bond insurance is so dangerous, why is Buffet selling it. He said 77% is in a second position and he's being careful. How can you be careful? He's humasn so maybe he's talking his book. After all, MBIA is about to start selling again.

The Financial Crisis: Getting the Best of Warren Buffett?

By the way, Buffet has made it clear the warrants were more or less a throw in by Goldman. They were not material to making the deal. He got a 10% yield in perpetuity on his investment unless Goldman decides to pay off the debt. In that case he'll get an additional year's worth of interest= 500 million, not chump change.I call that a very good deal, especially for a company that has cautioned future returns will not equal the past because their size and amount of capital functions as an anchor. Their ability to deploy large amounts of capital for outsized returns was limited. However, the worm has turned- financial events have presented opportunity and Buffet has sprung into action by deploying large amounts of capital for expected outsize returns.

The Financial Crisis: Getting the Best of Warren Buffett?

You clearly don't understand Buffet's modus operandi. In the super cat business they make large bets against the possibility of cataclysmic events. It's hard to quantify potential exposure and the probabilities but the business has proven to be exceptionally profitable. There are few companies capable of competing and consequently premiums can be steep. His bet on the future of the S&P Index is based on over 100 years of steady climb. It's foolish to extrapolate that current events are more than a temporary turn relative to the future. In the interim he's collected 5Billion in premiums to buy cheap assets that will likely be worth considerably more in the future. I wouldn't bet against Buffet's judgement in the longer term. It can prove hazardous to your wallet.