Warren Buffet is a liberal and liberals lie.
“DERIVATIVES ARE FINANCIAL WEAPONS OF MASS DESTRUCTION.”
Berkshire Profit Advances 49% on Buffett’s Derivatives
But, I don’t feel strongly about it and what the heck do Warren and I know about it anyway.
Warren does know more than you. I can hear him laughing at you now.
Todd wrote, quite rudely I might add,
“Warren (Buffet) does know more than you. I can hear him laughing at you now.”
I am glad I can be a source of amusement to the old gentlemen. Really.
I bought 3 Berkshire shares in the mid 80’s for a little less than $3,000 total. Warren has returned an average on those puppies of around 24% until the Bush/Obama crash of 2007. Now he is squeaking out around 17%....still WTF better than any other investment I ever made including income producing real estate and farm land. Those returns are managed VC fund territory without the periodic suicide inducing reports…and it is liquid and saleable.
He can laugh his wrinkled old ass off at me as long as he keeps giving me results like that. Ho-Ho-Ho. I like that kind of liberal.
The old man, being right in 2002 about 2007, is again worried about derivatives.
In a recent Forbes interview…“What terribly worries him is that he simply doesn’t understand the massive derivatives position on the balance sheet of J.P. Morgan Chase .” Like many other financial experts Buffett can’t really figure out the financial health of JPM’s derivatives. It is impossible for anyone to divine the extent that JPM is profiting or losing money or the risks entailed in the identity of counterparties, the quality of the collateral used, and the amount of leverage employed.”
He continues….” Buffett flatly tells Forbes he refuses to write any long term derivatives contracts with anyone, recalling the trouble the nation of Kuwait faced many years ago when it could not collect on its derivatives contracts. Nor will he take positions in short term commercial paper for even a few weeks, as he wants to avoid getting stuck in a crisis where he won’t be able to collect the expected receivables from a counter-party. Buffett is adamantly risk averse to being dependent on substantial amounts of monetary receivables from any counter-party, apparently including J.P. Morgan.”
Then quiet old Charlie Munger chips in….” “Wall Street is addicted to derivatives trading like the masses are addicted to sports betting…..Both are counterproductive, but lucrative for their practitioners. You are talking about gambling…..The banks are just gambling parlors with huge odds in favor of the people running them.”
Now on the conservative side…..David Stockman (who has never made me any money yet, but I have just started to follow him) opines, “…..a terrifying $500 trillion derivative bomb threatens the entire world….. the great ticking time bomb is interest rate swaps....Who knows what’s lurking underneath the surface there?” http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/2/13_Stockman_-_$500_Trillion_Derivative_Bomb_Threatens_The_World.html
Stockman has lots more of like kind on his site at http://davidstockmanscontracorner.com/tag/derivatives-dealers/
You should really read quality analysis more, Todd. It is pretty dog gone amusing, too.
But like so sagely agreed, what the heck do I know, or Buffet, or Munger, or Stockman and none of us, I am sure, feel really strongly about it.