helplessobserver

Buffett's Big Rail Buy: What It Means for Berkshire Shareholders

This buy shows Buffett only buys high quality first rate companies that have quality earnings. The new split B shares will be traded actively.

Buffett Buys Burlington, Does 50-1 Split at Berkshire

As an old ex railroad employee I find Buffett knows his railroads. The combination of the Northern Pacific, Burlington and Santa Fe makes up the greatest railroad empire in world history. All routes are complementary and in the Western US where growth will occur. These assets will generate profits when others are long in their graves.

Buffett's Secret Weapon: Derivatives

I have not seen the terms for these puts anywhere, or their adjustment described above. The only thing I know is you sell put premium at market lows, not market highs. As a holder of the B shares I hope this transaction is a winner.

Berkshire Decreases Moody's Stake: Smart Investing or Payback?

This looks like another Buffet misstep, sleeping at the switch instead of sniffing out the price trend a long time ago. This combined with selling index puts at the top of the market(when premiums are low)makes me wonder what's going on out in Omaha.

Goldman Sachs Pays Off Feds and Buffett

I own the B shares and am not a happy camper as I am still losing about $1k per share. I wonder if giving shares to the Gates Foundation is providing overhead supply pressure? Most charities want cash to squander vice investments so they cash out. With such low volume unloading a few thousand shares each day can put a lid on the price.

Berkshire Hathaway’s Portfolio Rebounds Strongly

I bought a one half position in the B shares last year and watched them plummet to 2100 dollars a share. I am now buying carefully the next one half around the 3000 level. Evidently the put strike prices are a carefully guarded secret as I have not seen them anywhere in the financial press. In put option trading you try to sell the options when the market is hitting lows and premiums are high. From what i can tell Buffet and Munger got a "senior moment" and wrote the puts when the market was near a high. At least they got European style options and a long time frame before exercise.

Buffett's Bank Buys Beat Back Downgrade

Little by little BRK's shopping for discounted goods will have to be reflected in its share price. Its GE and GS stakes will earn Bernie Madoff type returns of at least 10% or more per year. While I always thought you wrote "puts" when the market is rising somehow things got foggy in Omaha and they wrote at the top of the market. High premiums, no collateral requirements and a long time frame were obvious decision factors.

Unwinding AIG’s Derivatives Exposure: Loomis and Buffett

In the coming financial "emergency" all swap derivatives contract settlements will be handled like the Tulip Bubble option. All contracts will simply revert to their initial conditions where premiums will be returned to buyers and collateral will be returned to the sellers and all contracts are cancelled. A super Force Majur will be declared.

How Do Berkshire Hathaway Companies Keep AAA Rating?

It looks like the Eagle hit the ground while scooping up road kill. Now aloft he is repairing the damage and is thinking about new opportunities vs pouncing on them. Eventually his 10 - 15 percent deals will put BRK's returns equal if not better than the best ponzi schemer.

The Real Reason Behind Berkshire's Exploding CDS Spreads

User 305 has it right, who will pay the insurance proceeds if BRK is out of business? Over the years I watched one form after another of "insurance" fail as Wall Street seeks high profits and low risks. In the 50-60s it was the nifty fifty, a set of stocks that only went up. In the 80s it was even dumber with "portfolio insurance" that crashed with the 1987 market decline. Now it is the CDS that spreads the risk around to unreliable counter parties who simply will not or cannot pay the cash. And we pay the world's highest salaries to those who dream up these schemes - boy are we dumb.

What Can We Learn from Buffett's Recent Put Sales?

Jason has it right. Right now 24 U.S. Trident submarines prowl the oceans each equipped with 24 model D missile each with 5 nuclear packages with 500 kilotons of TNT explosives equivalent. 500 kilotons obliterate everything within a radius of 100 miles of ground zero. Crew training is incessant, practicing the D missile launch following receipt of an authorized EAM(emergency action message).

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

Buffett knows long term market trends. The current secular bear market which began in 2000 will end around 2018. At that time the SP will breakout above the old high of about 1542 and the puts will expire worthless. In the meantime we will have several bull market rallies within this secular bear that will challenge but not break thru the old SP 500 high. Having European style options the holders are locked in until 2018 or so. If you do not think secular bears have a long life, look at the secular bear that ran from 1966 to 1981. Five time the DJIA top of about 1000 was challenged only to fall back to the 500 - 1000 range channel. With the economic mess we have now it will take until 2018 for a new day for investors to appear.

Lessons from the Madoff Scandal: Deciding Which Funds Are Worth an Investment

Buffett knows markets. The secular bear we are in will run to 2018, the puts will lose time premium and vaporize in a new secular bull we will be in at their expiration. Meanwhile GS and GE will be paying 10% on the premium he collected. All the Madoff scandal proves is easy come, easy go. Few of those rich investors worked for their money otherwise they would have invested it with care. Also feeder funds getting 2 and 20 is simply stupid any way you look at it.

Memo to Warren: AmEx Preferred at 15%, Warrants at $12

As a long time reader of Barron's I have found most of their writings on investments a less than top notch. As permabulls they see very little or no evil. Only Alan Ableson seems willing to call a spade a spade, but his voice is smothered by the other writers. If I ran Barron's most of their analysts would be out looking for jobs.

Breaking the Back of Buffett

Buffet knows we are in a secular bear market that is eight years old. In Oct 07 the first of a cyclical bull market with this secular bear peaked out near 1500 on the SP. Now secular bears, like secular bulls, run 18 to 20 years, so in 2018 a new secular bull will be running and the $4.5B of SP puts will expire worthless. Buffet is writing puts when the premiums are fat. He put part of that premium in either GS or GE at 10% for a cool $500 million year dividend for BRK shareholders.