phat cat

Berkshire Hathaway Credit Risk, Index Puts Are Overblown Worries

It's so hard to convince people that backward looking is meaningless. The book "Black Swan" makes a great case that turkeys think they have the best life until the day they are sent to the butcher. There's no "god" of investing, and I think WB will agree that he can make mistakes.

Selling options will prove to be WB's biggest mistake. For someone who's criticized the derivatives market for so long, his massive scale put selling is perplexing. 4.5 billion at-the-money put premium received! Sold at the height of the market when volatility was the lowest! These European style options are always marked to market, margin calls are going to make poor WB sleepless. Not to mention the GS and GE investments he just made. Sorry to see WB in this state so late in his career...