Muzie's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/63258/comments http://seekingalpha.com/article/119902-why-spy-could-be-20-30-higher-by-2010?source=feed#comment-385087 385087 Thu, 12 Feb 2009 02:24:33 -0500 http://seekingalpha.com/article/112561-there-is-no-household-debt-crisis?source=feed#comment-342105 342105
Then why oh why, I wonder, do you still read this website everyday? If the market is such a blatant lie, then you would be well advised to stop sinking more time into reading or commenting about it.]]> Tue, 30 Dec 2008 22:49:44 -0500
Then why oh why, I wonder, do you still read this website everyday? If the market is such a blatant lie, then you would be well advised to stop sinking more time into reading or commenting about it.]]> http://seekingalpha.com/article/112450-2009-expecting-a-massive-rally?source=feed#comment-342085 342085
The "suckers" by definition are supposed to be the majority, not the minority.

Bears are way over-confident in themselves. I would love nothing more than to have a "non-sucker" rally, just to remind the bears that nobody is omnipotent and humility in the markets is always a virtue.]]> Tue, 30 Dec 2008 22:27:56 -0500
The "suckers" by definition are supposed to be the majority, not the minority.

Bears are way over-confident in themselves. I would love nothing more than to have a "non-sucker" rally, just to remind the bears that nobody is omnipotent and humility in the markets is always a virtue.]]> http://seekingalpha.com/article/112367-nine-reasons-this-recession-is-welcome?source=feed#comment-340921 340921
Huh, wrong. Having saved 50% of my salary for years, I fit in the "frugal profile".

There's only so many places to put saved money, and if one saves his money away one realizes he is only running in place if that money isn't invested.

Those who didn't save are way ahead. The majority of those who did save over the last decade have at some point put much of their savings in stocks.

Those who haven't saved know full well it if far better to lose 100% of somebody else's money than to lose 40% of your own.... As a "frugal" person I certainly do not feel I have the upper hand at this point.]]> Mon, 29 Dec 2008 19:01:52 -0500
Huh, wrong. Having saved 50% of my salary for years, I fit in the "frugal profile".

There's only so many places to put saved money, and if one saves his money away one realizes he is only running in place if that money isn't invested.

Those who didn't save are way ahead. The majority of those who did save over the last decade have at some point put much of their savings in stocks.

Those who haven't saved know full well it if far better to lose 100% of somebody else's money than to lose 40% of your own.... As a "frugal" person I certainly do not feel I have the upper hand at this point.]]> http://seekingalpha.com/article/112362-market-calls-i-got-right-and-wrong-in-2008?source=feed#comment-340069 340069
The very fact that the paper is worthless when the company is worthless implies the proxy relationship is alive and well.

> Have you ever purchased a stock that eventually went private
> at a price below what you paid for it? If you purchase Berkshire
> at $4000 a share and it is worth $5,000 a share based on intrinsic
> value, but Buffet wants to take it private at $3750, where do you
> stand now?

No, I never have, though I can't see what the price "I" paid for a stock has to do with the value of a company when it goes private. Though I have never heard of a company going private at a price below the CURRENT price of the stock, and in fact most companies going private will offer a significant premium on the current stock price. But you do make a good point: if you are the only one who "knows" the correct intrinsic value of a stock, then you may never profit from it as that information may never propagate to future buyers. It is unlikely that only one person would know about material information about a stock, and in fact once those buyers have committed themselves, it is usually very much in their interest to propagate what they knew so that new buyers may now see what wasn't widely known before (thus causing the price to rise).

There are no guarantees in markets - and I suspect in fact some dividend & bond buyers will sadly discover that bonds don't actually "guarantee" the stream of returns in the end.

> Where are all the investors that sold off as this market tanked and
> when are they going to get back in the market, that is the question.

That is a good question. As the value of the US dollar has risen, perhaps some have simply gone fully in cash? If these have truly given up on stocks, then they will not come back. If they are mostly "big boys" as you say (I think reality is a bit more in shades of grey than you imply), then it's these guys job to make a return no matter what, which to me implies it is in their own interest to come back sooner or later. Nobody wants to be the first to dip its toes back in, but being the last to come back is just as horrible for these managers.

On Dec 28 09:03 AM long_on_oil wrote:

> Stocks are pieces of paper and that is all they are. If a company
> goes bankrupt have you ever known a common stock holder that made
> a cent. Have you ever purchased a stock that eventually went private
> at a price below what you paid for it? If you purchase Berkshire
> at $4000 a share and it is worth $5,000 a share based on intrinsic
> value, but Buffet wants to take it private at $3750, where do you
> stand now? The lawyers will make a fortune but you will give up
> your shares at $3750. Share prices are set by the big boys and
> the little guys like us just hope to buy and sell at the right points.
>
> The only way you are guaranteed any kind of return on your investment
> at all is to buy stocks that pay dividends. The dividend places
> a bottom on the stock and you are protected to a point. Even dividends
> get cut so that does not guarantee you will make a gain.
> Companies with a long history of paying and increasing dividends
> are by far the best way to go for the average buy and hold investor.
> At least you are getting a known return on your investment. Any
> good site has a screener program which helps you find these stocks.
>
> These last 6 months have taught us that fundamentals have been thrown
> out the window. We all know stocks that are currently selling at
> 2 to 5 times next years earnings. With interest rates at 4% stocks
> have historically sold as high as 25X earnings (based on growth).
>
> Where are all the investors that sold off as this market tanked and
> when are they going to get back in the market, that is the question.]]> Sun, 28 Dec 2008 21:55:19 -0500
The very fact that the paper is worthless when the company is worthless implies the proxy relationship is alive and well.

> Have you ever purchased a stock that eventually went private
> at a price below what you paid for it? If you purchase Berkshire
> at $4000 a share and it is worth $5,000 a share based on intrinsic
> value, but Buffet wants to take it private at $3750, where do you
> stand now?

No, I never have, though I can't see what the price "I" paid for a stock has to do with the value of a company when it goes private. Though I have never heard of a company going private at a price below the CURRENT price of the stock, and in fact most companies going private will offer a significant premium on the current stock price. But you do make a good point: if you are the only one who "knows" the correct intrinsic value of a stock, then you may never profit from it as that information may never propagate to future buyers. It is unlikely that only one person would know about material information about a stock, and in fact once those buyers have committed themselves, it is usually very much in their interest to propagate what they knew so that new buyers may now see what wasn't widely known before (thus causing the price to rise).

There are no guarantees in markets - and I suspect in fact some dividend & bond buyers will sadly discover that bonds don't actually "guarantee" the stream of returns in the end.

> Where are all the investors that sold off as this market tanked and
> when are they going to get back in the market, that is the question.

That is a good question. As the value of the US dollar has risen, perhaps some have simply gone fully in cash? If these have truly given up on stocks, then they will not come back. If they are mostly "big boys" as you say (I think reality is a bit more in shades of grey than you imply), then it's these guys job to make a return no matter what, which to me implies it is in their own interest to come back sooner or later. Nobody wants to be the first to dip its toes back in, but being the last to come back is just as horrible for these managers.

On Dec 28 09:03 AM long_on_oil wrote:

> Stocks are pieces of paper and that is all they are. If a company
> goes bankrupt have you ever known a common stock holder that made
> a cent. Have you ever purchased a stock that eventually went private
> at a price below what you paid for it? If you purchase Berkshire
> at $4000 a share and it is worth $5,000 a share based on intrinsic
> value, but Buffet wants to take it private at $3750, where do you
> stand now? The lawyers will make a fortune but you will give up
> your shares at $3750. Share prices are set by the big boys and
> the little guys like us just hope to buy and sell at the right points.
>
> The only way you are guaranteed any kind of return on your investment
> at all is to buy stocks that pay dividends. The dividend places
> a bottom on the stock and you are protected to a point. Even dividends
> get cut so that does not guarantee you will make a gain.
> Companies with a long history of paying and increasing dividends
> are by far the best way to go for the average buy and hold investor.
> At least you are getting a known return on your investment. Any
> good site has a screener program which helps you find these stocks.
>
> These last 6 months have taught us that fundamentals have been thrown
> out the window. We all know stocks that are currently selling at
> 2 to 5 times next years earnings. With interest rates at 4% stocks
> have historically sold as high as 25X earnings (based on growth).
>
> Where are all the investors that sold off as this market tanked and
> when are they going to get back in the market, that is the question.]]> http://seekingalpha.com/article/112362-market-calls-i-got-right-and-wrong-in-2008?source=feed#comment-340062 340062
I can't really respond to the rest of your comment as it appears heavily based on a subjective opinion that indicates that you believe you single-handedly know what millions of market participants (and millions of current non-participants) will do in the near-term future.

On Dec 27 04:13 PM freddyv wrote:

> "Yet, strong forces from the market crash deflate all stocks and
> your stock is still quoted 25% lower than your buy price as a result.
> Now, tell me, was your investment decision a good one or not?"

>
>
> The decision was NOT good if you should have known the market as
> a whole was overvalued. IMO, everyone investing in the market should
> first of all understand where we are in long-term and short-term
> history. If we are well in to a period of excess and a generational
> correction is due then you should know and you should blame no one
> else for thinking it will be different this time.
>
> We are in a secular bear market. It may go up a bit. This is a called
> a sucker's rally and if you're astute you can profit from them but
> the market as a whole has years and thousands of Dow points to go
> before we have all been taught a lesson, so conserve your capital
> and be ready when some real investing opportunities arise.
>
> --Fred Voetsch]]> Sun, 28 Dec 2008 21:38:55 -0500
I can't really respond to the rest of your comment as it appears heavily based on a subjective opinion that indicates that you believe you single-handedly know what millions of market participants (and millions of current non-participants) will do in the near-term future.

On Dec 27 04:13 PM freddyv wrote:

> "Yet, strong forces from the market crash deflate all stocks and
> your stock is still quoted 25% lower than your buy price as a result.
> Now, tell me, was your investment decision a good one or not?"

>
>
> The decision was NOT good if you should have known the market as
> a whole was overvalued. IMO, everyone investing in the market should
> first of all understand where we are in long-term and short-term
> history. If we are well in to a period of excess and a generational
> correction is due then you should know and you should blame no one
> else for thinking it will be different this time.
>
> We are in a secular bear market. It may go up a bit. This is a called
> a sucker's rally and if you're astute you can profit from them but
> the market as a whole has years and thousands of Dow points to go
> before we have all been taught a lesson, so conserve your capital
> and be ready when some real investing opportunities arise.
>
> --Fred Voetsch]]> http://seekingalpha.com/article/112362-market-calls-i-got-right-and-wrong-in-2008?source=feed#comment-339407 339407
I have given some though to this, and frankly, focusing mainly on the buying decision makes sense.

Only when you are a market participant considering a buy are you in full control. Only at that time can you make an assessment of what that investment is worth in your view, add some margin of safety, and commit (or not) to exchange cash for your investment.

Everything that happens after reflects what others think of the investment, but doesn't necessarily tell you anything about if your initial buy was foolish or not.

A company is available for sale at a stock price X on a certain day. You deem this undervalued and buy the stock. The company consequently increases earnings by 50%. Yet, strong forces from the market crash deflate all stocks and your stock is still quoted 25% lower than your buy price as a result. Now, tell me, was your investment decision a good one or not?

Some would argue that you lost money, it was a bad call, and move on. Well, what if the market goes up and down 25% everyday, are you wrong one day and right the next? What kind of charade would that be?

There is truth that selling is just as important as buying, but when taken to the limit one can see that using day-to-day price quotes as a measure of success in investments is of limited use - unless, of course, one sees stocks as random pieces of paper completely untied to their respective companies. In that case I could understand why someone with no knowledge of the underlying companies would get heavily influenced by whatever other people are screaming on the markets everyday.]]> Sat, 27 Dec 2008 15:34:02 -0500
I have given some though to this, and frankly, focusing mainly on the buying decision makes sense.

Only when you are a market participant considering a buy are you in full control. Only at that time can you make an assessment of what that investment is worth in your view, add some margin of safety, and commit (or not) to exchange cash for your investment.

Everything that happens after reflects what others think of the investment, but doesn't necessarily tell you anything about if your initial buy was foolish or not.

A company is available for sale at a stock price X on a certain day. You deem this undervalued and buy the stock. The company consequently increases earnings by 50%. Yet, strong forces from the market crash deflate all stocks and your stock is still quoted 25% lower than your buy price as a result. Now, tell me, was your investment decision a good one or not?

Some would argue that you lost money, it was a bad call, and move on. Well, what if the market goes up and down 25% everyday, are you wrong one day and right the next? What kind of charade would that be?

There is truth that selling is just as important as buying, but when taken to the limit one can see that using day-to-day price quotes as a measure of success in investments is of limited use - unless, of course, one sees stocks as random pieces of paper completely untied to their respective companies. In that case I could understand why someone with no knowledge of the underlying companies would get heavily influenced by whatever other people are screaming on the markets everyday.]]> http://seekingalpha.com/article/112186-enlightening-the-gold-bugs?source=feed#comment-339397 339397
All money is by "faith", including gold. Can't anyone see this? "Intrinsic" value of gold? What's that? Gold is worth x$ only because the buyer has "faith" that a future buyer will engage in the same belief system as the original buyer, and pay the same price or higher. It's the same thing as a fiat system expect the supply is supposely quasi-fixed.

Why gold bugs get so excited about what is supposed to be a neutral investment s beyond me. With supply fixed, only demand should affect gold.

In a depression, gold will lose its value like everything else as demand decreases.

In an inflation scare, gold will gain value, yet all things will increase in value, including stocks whose cost inputs are very low or fixed.]]> Sat, 27 Dec 2008 15:07:29 -0500
All money is by "faith", including gold. Can't anyone see this? "Intrinsic" value of gold? What's that? Gold is worth x$ only because the buyer has "faith" that a future buyer will engage in the same belief system as the original buyer, and pay the same price or higher. It's the same thing as a fiat system expect the supply is supposely quasi-fixed.

Why gold bugs get so excited about what is supposed to be a neutral investment s beyond me. With supply fixed, only demand should affect gold.

In a depression, gold will lose its value like everything else as demand decreases.

In an inflation scare, gold will gain value, yet all things will increase in value, including stocks whose cost inputs are very low or fixed.]]> http://seekingalpha.com/article/111208-great-depression-not-imminent-but-inevitable?source=feed#comment-333421 333421
"One reason many of us have lost so much money is the reluctance on the part of government and finance spokesmen to tell the truth in bad times."

Right. I'm sure you would have lost a whole lot less money if the government had come up one day and said "ok, things are bad, you all should sell now before things get worse.".]]> Thu, 18 Dec 2008 16:36:22 -0500
"One reason many of us have lost so much money is the reluctance on the part of government and finance spokesmen to tell the truth in bad times."

Right. I'm sure you would have lost a whole lot less money if the government had come up one day and said "ok, things are bad, you all should sell now before things get worse.".]]> http://seekingalpha.com/article/111208-great-depression-not-imminent-but-inevitable?source=feed#comment-333420 333420
"One reason many of us have lost so much money is the reluctance on the part of government and finance spokesmen to tell the truth in bad times."

Right. I'm sure you would have lost a whole lot less money if the government had come up one day and said "ok, things are bad, you all should sell now before things get worse.".]]> Thu, 18 Dec 2008 16:36:22 -0500
"One reason many of us have lost so much money is the reluctance on the part of government and finance spokesmen to tell the truth in bad times."

Right. I'm sure you would have lost a whole lot less money if the government had come up one day and said "ok, things are bad, you all should sell now before things get worse.".]]> http://seekingalpha.com/article/109796-give-me-three-reasons-to-stay-in-this-market?source=feed#comment-324778 324778
Answer: Six.

Question: How many weeks in the last two months alone did the S&P's low to high range exceed 8%?

Answer: Eight, with several of the weeks actually walking the most of the range more than once in that week.]]> Tue, 09 Dec 2008 13:04:52 -0500
Answer: Six.

Question: How many weeks in the last two months alone did the S&P's low to high range exceed 8%?

Answer: Eight, with several of the weeks actually walking the most of the range more than once in that week.]]> http://seekingalpha.com/article/109400-is-it-time-to-buy-gold?source=feed#comment-322147 322147 "

Haha! Gotta love the internet! Some people here probably in their mid 20s or 30s trying to teach a 78 year old lessons about the Great Depression! Sorry Pop, looks like the young shots here think if they would have lived in the GD, they would have done way better than everybody, right? heh.

Keep it up!]]> Fri, 05 Dec 2008 18:32:30 -0500 "

Haha! Gotta love the internet! Some people here probably in their mid 20s or 30s trying to teach a 78 year old lessons about the Great Depression! Sorry Pop, looks like the young shots here think if they would have lived in the GD, they would have done way better than everybody, right? heh.

Keep it up!]]> http://seekingalpha.com/article/109415-the-end-of-excess?source=feed#comment-322145 322145
"Last night I ate at a very expensive new downtown restaurant; it was packed."

Wait, so everybody else but YOU in that restaurant is living an escapist dream and can't afford to be there, right? Oh, wait, you probably just went there for "journalistic" reasons.

Maybe the new "excess" is now every Joe Schmoe believes their neighbor is an evil ex-hedge fund do-nothing who possibly can't have worked for the cash they actually use to pay for what they consume. Of course, everybody thinks "I can afford what I consume, but the neighbors are obviously living WAY beyond their means, right?". After all we've all peeked in their bank accounts.

Some of us actually pay for what we consume, you know, and earn the cash to pay for it with actual work, thank you very much.]]> Fri, 05 Dec 2008 18:26:23 -0500
"Last night I ate at a very expensive new downtown restaurant; it was packed."

Wait, so everybody else but YOU in that restaurant is living an escapist dream and can't afford to be there, right? Oh, wait, you probably just went there for "journalistic" reasons.

Maybe the new "excess" is now every Joe Schmoe believes their neighbor is an evil ex-hedge fund do-nothing who possibly can't have worked for the cash they actually use to pay for what they consume. Of course, everybody thinks "I can afford what I consume, but the neighbors are obviously living WAY beyond their means, right?". After all we've all peeked in their bank accounts.

Some of us actually pay for what we consume, you know, and earn the cash to pay for it with actual work, thank you very much.]]> http://seekingalpha.com/article/109414-bleeding-in-the-labor-market?source=feed#comment-321881 321881
I read journalists for facts not speculation, is what you don't seem to get. I think the readership is smart enough to figure out for themselves that the little squiggly line looks headed down, we don't need you to enlighten us to that fact.

Still doesn't change the fact right here, right now, this is the 41st worst drop, not the worst ever.

This does shape up to be one of the worst recessions in a long time... But it also looks like it'll be the one most aggressively fought by the government ever, with an absolute tsunami of money.

I honestly am not sure which side will win... though by nature I would rather bet on my fellow man than against.]]> Fri, 05 Dec 2008 13:31:57 -0500
I read journalists for facts not speculation, is what you don't seem to get. I think the readership is smart enough to figure out for themselves that the little squiggly line looks headed down, we don't need you to enlighten us to that fact.

Still doesn't change the fact right here, right now, this is the 41st worst drop, not the worst ever.

This does shape up to be one of the worst recessions in a long time... But it also looks like it'll be the one most aggressively fought by the government ever, with an absolute tsunami of money.

I honestly am not sure which side will win... though by nature I would rather bet on my fellow man than against.]]> http://seekingalpha.com/article/108921-good-times-bad-times-same-strategy-required?source=feed#comment-321064 321064
I would agree that right now if the articles aren't a) short-term and b) preferably, but not necessarily, bearish, most readers don't even bother.

It is surprising how so little of anything really new has happened in the last two months, and how violently the markets reacts either way.]]> Thu, 04 Dec 2008 16:01:08 -0500
I would agree that right now if the articles aren't a) short-term and b) preferably, but not necessarily, bearish, most readers don't even bother.

It is surprising how so little of anything really new has happened in the last two months, and how violently the markets reacts either way.]]> http://seekingalpha.com/article/108983-analysts-are-bullish-on-gold-should-you-be-worried?source=feed#comment-321021 321021
Let's see how this gold trade works out. The entire world expects gold to go up it seems.]]> Thu, 04 Dec 2008 14:36:27 -0500
Let's see how this gold trade works out. The entire world expects gold to go up it seems.]]> http://seekingalpha.com/article/107858-take-two-should-be-a-bigger-acquisition-target?source=feed#comment-315101 315101
ERTS underperformed TTWO by quite a bit in the last month so they are in less of a position to do the buyout now. It's anyone's guess if ATVI would be interested.]]> Tue, 25 Nov 2008 19:42:46 -0500
ERTS underperformed TTWO by quite a bit in the last month so they are in less of a position to do the buyout now. It's anyone's guess if ATVI would be interested.]]> http://seekingalpha.com/article/107638-citi-s-share-price-problem?source=feed#comment-314094 314094
Felix, you write good articles most of the time.

This statement you just made implies you believes that the stock price going too low implies it will cause the company to go bankrupt. Call me old-fashioned, I thought it was always the other way around.

Am I missing something in your reasoning here? It's one thing to say a low stock price indicates uncertainty about a company's prospects, it another entirely to see a low stock price actually becomes the cause for those low prospects.]]> Mon, 24 Nov 2008 18:33:24 -0500
Felix, you write good articles most of the time.

This statement you just made implies you believes that the stock price going too low implies it will cause the company to go bankrupt. Call me old-fashioned, I thought it was always the other way around.

Am I missing something in your reasoning here? It's one thing to say a low stock price indicates uncertainty about a company's prospects, it another entirely to see a low stock price actually becomes the cause for those low prospects.]]> http://seekingalpha.com/article/107568-value-investors-stay-strong-and-follow-warren-buffett?source=feed#comment-314086 314086
Duh.

1) "37 Billion" is if the entire stock market goes to zero. You're being facetious here. If you think that's going to happen, then maybe you should just move on and not follow the stock market. It won't exist.
2) The puts are not in ten years. SEC documents say fifteen to twenty years.
3) BRK has cashed in 5B$ of premiums from the puts. The loss must exceed that amount before being a true loss.
4) Calculate the value of this "potential" 30B$ loss twenty years from now when accounting for inflation. Calculate that the 5B$ premium that is now is now in Buffet's hands can be put into Treasuries or CDs or invested and yield a non-negative return, mitigating any "loss". Finally establish how significant this 30B$ loss would be in a Berkshire's cash flow twenty years in the future.

"how does one assess the "value" of that?..."

There are ways and I've shown you some. That questions suggests to me it is you, not Buffet, who is out of his element here. ]]> Mon, 24 Nov 2008 18:26:38 -0500
Duh.

1) "37 Billion" is if the entire stock market goes to zero. You're being facetious here. If you think that's going to happen, then maybe you should just move on and not follow the stock market. It won't exist.
2) The puts are not in ten years. SEC documents say fifteen to twenty years.
3) BRK has cashed in 5B$ of premiums from the puts. The loss must exceed that amount before being a true loss.
4) Calculate the value of this "potential" 30B$ loss twenty years from now when accounting for inflation. Calculate that the 5B$ premium that is now is now in Buffet's hands can be put into Treasuries or CDs or invested and yield a non-negative return, mitigating any "loss". Finally establish how significant this 30B$ loss would be in a Berkshire's cash flow twenty years in the future.

"how does one assess the "value" of that?..."

There are ways and I've shown you some. That questions suggests to me it is you, not Buffet, who is out of his element here. ]]> http://seekingalpha.com/article/107415-buffett-serving-free-lunch?source=feed#comment-313362 313362
Hmm, no, apparently, you don't. As it's been stated a million times before, the puts are non-exercisable before expiration. Please look up "non-exercisable" in a dictionary. Buffet got the premiums, and he doesn't pay up until the options expire (15 years from now).

Looks like it needs to be broken down in little bitesize pieces. for you. The flow of cash:

- Buffet engages in contracts with counterparty.
- Buffet receives premiums = cash flows to BRK.
- Market tanks. Contracts are quoted at a higher value on open market. Counterparty offers to sell contracts at higher ask. Cash flows to counterparty.
- Other counterparties engage in trade, exchanging cash. BRK does not trade its own contract.

Get it?

Your spurious argument about "the market may not be higher twenty years from now" is irrelevant. The market is down now, not twenty years. When the market is still at S&P 1200 twenty years you can come back here and strut your stuff - but it has NOTHING to do with the current decline.

Did you really expect Buffet to engage in these contracts at a twenty-year low and they would NEVER get in the money for twenty years??? You must be some kind of magician - whenever I write options, most of them do end up being in-the-money at least momentarily, ESPECIALLY long-dated ones.

Anyone who studies the markets expects the market will crash at some point over a twenty year period - always has, always will. And in fact crashing early on when the puts have just been written is actally the least detrimental to the reported losses, because the delta on them is low as the time value is quite high.]]> Mon, 24 Nov 2008 03:00:53 -0500
Hmm, no, apparently, you don't. As it's been stated a million times before, the puts are non-exercisable before expiration. Please look up "non-exercisable" in a dictionary. Buffet got the premiums, and he doesn't pay up until the options expire (15 years from now).

Looks like it needs to be broken down in little bitesize pieces. for you. The flow of cash:

- Buffet engages in contracts with counterparty.
- Buffet receives premiums = cash flows to BRK.
- Market tanks. Contracts are quoted at a higher value on open market. Counterparty offers to sell contracts at higher ask. Cash flows to counterparty.
- Other counterparties engage in trade, exchanging cash. BRK does not trade its own contract.

Get it?

Your spurious argument about "the market may not be higher twenty years from now" is irrelevant. The market is down now, not twenty years. When the market is still at S&P 1200 twenty years you can come back here and strut your stuff - but it has NOTHING to do with the current decline.

Did you really expect Buffet to engage in these contracts at a twenty-year low and they would NEVER get in the money for twenty years??? You must be some kind of magician - whenever I write options, most of them do end up being in-the-money at least momentarily, ESPECIALLY long-dated ones.

Anyone who studies the markets expects the market will crash at some point over a twenty year period - always has, always will. And in fact crashing early on when the puts have just been written is actally the least detrimental to the reported losses, because the delta on them is low as the time value is quite high.]]> http://seekingalpha.com/article/107372-berkshire-hathaway-s-peculiar-volatility-numbers?source=feed#comment-312202 312202 Fri, 21 Nov 2008 21:02:54 -0500 http://seekingalpha.com/article/107372-berkshire-hathaway-s-peculiar-volatility-numbers?source=feed#comment-312201 312201 "

And this is where I'm lost as to why this affectes any of the company's valuation at this point. We're talking imaginary dollars here no? Even if these are marked to market, shouldn't these outflow be discounted twnety years in the future, making them rather muted?]]> Fri, 21 Nov 2008 21:00:50 -0500 "

And this is where I'm lost as to why this affectes any of the company's valuation at this point. We're talking imaginary dollars here no? Even if these are marked to market, shouldn't these outflow be discounted twnety years in the future, making them rather muted?]]> http://seekingalpha.com/article/107334-s-p-set-to-launch-new-indexes-of-condo-prices?source=feed#comment-312192 312192 Fri, 21 Nov 2008 20:28:10 -0500 http://seekingalpha.com/article/107341-buffett-s-gamble-40-billion-bet-on-volatility?source=feed#comment-312115 312115
There's no "bath" taken because he's not going to trade in or out of them. Your "bath" is simply he could have written off those same puts for more money now then before. That's like saying he's taking a "bath" because he could have bought a rising stock for the lowest possible price but instead bought it 10$ more while turning down a profit.

You wake up!]]> Fri, 21 Nov 2008 17:34:42 -0500
There's no "bath" taken because he's not going to trade in or out of them. Your "bath" is simply he could have written off those same puts for more money now then before. That's like saying he's taking a "bath" because he could have bought a rising stock for the lowest possible price but instead bought it 10$ more while turning down a profit.

You wake up!]]> http://seekingalpha.com/article/107364-citigroup-the-end-draws-near?source=feed#comment-312106 312106
It's ridiculous how these writers operator:
a) look at stock market
b) jot down list of biggest gainers and losers
c) cross-reference with archives to see if you can find old bits of informations to throw around
d) write doomsday article

Good job, smartass. But you're going to have to do better than say "It's dead and I don't know quite exactly why in details it's dying right now but the stock is down 50% so there you go".]]> Fri, 21 Nov 2008 17:23:36 -0500
It's ridiculous how these writers operator:
a) look at stock market
b) jot down list of biggest gainers and losers
c) cross-reference with archives to see if you can find old bits of informations to throw around
d) write doomsday article

Good job, smartass. But you're going to have to do better than say "It's dead and I don't know quite exactly why in details it's dying right now but the stock is down 50% so there you go".]]> http://seekingalpha.com/article/107297-can-you-see-apple-under-60?source=feed#comment-311912 311912
Ya isn't that funny logic, heh.

Unfortunately that's the way the MARKET seems to think. Aka. "If I crash so hard that people tremble in their homes, maybe I can trigger the depression by myself".]]> Fri, 21 Nov 2008 13:38:14 -0500
Ya isn't that funny logic, heh.

Unfortunately that's the way the MARKET seems to think. Aka. "If I crash so hard that people tremble in their homes, maybe I can trigger the depression by myself".]]> http://seekingalpha.com/article/107314-google-has-more-room-to-fall-merriman?source=feed#comment-311787 311787 Fri, 21 Nov 2008 11:39:57 -0500 http://seekingalpha.com/article/106957-exploiting-the-downside-of-the-markets?source=feed#comment-311440 311440
"Hello silly longs! Mark here, folks, hey who do these losses feel? Bad huh? Well, psst, let me whisper in your ear. See, it doesn't have to be that way. You can look like a genius like me, and make money too! Just short everything! It's easy! It always works! "Short & Hold" baby! Here's 4 stock tips to get you started - I did a lot of research on these. Here's my investment thesis, I'll write it doesn on this piece of napking: "Short these stocks because Cramer liked them at some point before". That's it! Just go run through those old Cramer tapes, short it all, that's all you need!

Why be a sucker when you can make easy money like me!"]]> Fri, 21 Nov 2008 03:25:48 -0500
"Hello silly longs! Mark here, folks, hey who do these losses feel? Bad huh? Well, psst, let me whisper in your ear. See, it doesn't have to be that way. You can look like a genius like me, and make money too! Just short everything! It's easy! It always works! "Short & Hold" baby! Here's 4 stock tips to get you started - I did a lot of research on these. Here's my investment thesis, I'll write it doesn on this piece of napking: "Short these stocks because Cramer liked them at some point before". That's it! Just go run through those old Cramer tapes, short it all, that's all you need!

Why be a sucker when you can make easy money like me!"]]> http://seekingalpha.com/article/107113-ugly?source=feed#comment-311244 311244
Gah. Let me rephase that.

I'd wager you really don't have any hard data to know you're going to get fired from you're job but you're preparing for it]]> Thu, 20 Nov 2008 19:07:00 -0500
Gah. Let me rephase that.

I'd wager you really don't have any hard data to know you're going to get fired from you're job but you're preparing for it]]> http://seekingalpha.com/article/107113-ugly?source=feed#comment-311243 311243
Re-read your comments and yuo will know why the stock market falls endlessly.

I'd wager you really don't have any hard data to know you're going to know you're job but you're preparing for it. Everybody's doing the same thing.

Perception becomes reality, and what was a small snowball becomes an avalanche only through mass hysteria.]]> Thu, 20 Nov 2008 19:06:23 -0500
Re-read your comments and yuo will know why the stock market falls endlessly.

I'd wager you really don't have any hard data to know you're going to know you're job but you're preparing for it. Everybody's doing the same thing.

Perception becomes reality, and what was a small snowball becomes an avalanche only through mass hysteria.]]>