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7 Comments
California Home Sales: 43% Year Over Year Increase!
You lost me right there, and that was just the first sentence. It's not hard to show an increase in home sales if you keep revising the previous month's number down each month later. The fact that you never refute this and even seem to go along saying that "California is bucking [this] trend" tells me that you, like many others here have pointed out, have no idea what you are talking about.
California Home Sales: 43% Year Over Year Increase!
You lost me right there, and that was just the first sentence. It's not hard to show an increase in home sales if you keep revising the previous month's number down each month later. The fact that you never refute this and even seem to go along saying that "California is bucking [this] trend" tells me that you, like many others here have pointed out, have no idea what you are talking about.
Why Subprime Loss Estimates Are Still Too High
2 Homes For Price Of 1 Ripoff
How Long Until the Housing Market Recovers?
Berkshire Hathaway's Derivative Play
Did he sell at-the-money or out-the-money puts? I'm not sure, and I can't find it. If he sold either of those types of puts, then I agree that more than likely, he's got a good thing going, especially while being able to invest the premia freely. Still, it's speculative by definition as you have tail-risk. Not that I believe "financial Armageddon" is occurring soon, but it has happened in the past that the indices decrease in 10-20 years. It's possible insurance companies would need to hedge at levels below the current market levels because of the inherent tail-risk of their business, but Berkshire's main business is also insurance, so who knows? Buffett no doubt has something up his sleeve that will make him and a lot of other people richer.
Berkshire Hathaway's Derivative Play
As for the merit of the argument or statement, whichever it may be, I'm not totally convinced that this move is purely speculative on Buffett's part as that would be totally out of character to use these derivatives for that purpose. It does seem like he's in effect doubling up risk on the surface, but it all depends on what he uses the premia for. Maybe he's looking to venture hard into the utilities business.