ustaad

Explaining the Berkshire Share Price

Felix - Your point is well taken. There are multiple ways to analyze an investment and a good investor should use multiple models to evaluate potential investments (to borrow a Munger favorite). Ultimately, the point of all investment is to buy something for less than it's worth using a range or probabilistic outcomes. (For that reason, I love the current share price)

Now, the CDS market could be on to something here. It could simply be a case of someone spreading the risk of BRK as a counterparty to others. I think the price (and underlying probability of default) could be useful if these levels persist or if the name of parties becomes known (or really their motivation).

I disagree with you that Berkshire is a much riskier investment that a few months ago. A number of risks have already materialzed and have impacted competitors much more leaving BRK in a position to cherry pick some amazing opportunities. I think this is rear view driving at its best.

paultaut - Can you substantiate your assertion that Buffet's index puts are a time bomb waiting to explode. He has covered this in pretty gory detail in the recent report and his logic made sense to me. Wondering if you could fill the rest of us in here on why you consider this dangerous.