This is interesting.
This is interesting.
I think its great! He probably would have been out picking up bargains anyway if the markets went into freefall, and this way he still gets to do that along with picking up income today.
I didn't take this as Buffet necessarily having confidence in the market...
All he is doing is saying if there is a free fall he is happy to pick the shares up at the reduced price. In exchange for this he is getting a premium paid today.
The only reason he is doing this is because he can't find any value in the market at current prices
Exactly TjOriginally Posted by TjamesX
It's all spin
sorry did it sound like I took it that he had confidence in the market? I didn't mean it that way, but then by the sounds of alot of replies I've been getting recently( including from mrs frink at home!) everyone is taking me the wrong way. Might be time to stop saying stuff frinkyOriginally Posted by TjamesX
On another note, it would be interesting to find out how much buying mr Buffet has been doing over the last few years in the U.S- I can't imagine it would have been a whole lot
No No, I was more commenting on the title of the thread...Originally Posted by professor_frink
phew, was beginning to think that I was losing my mind- I know what I'm saying, but it seems recently everyone else thinks I'm a loon(and they'd be patially right).
Still an enviable position he's in- billions upon billions of dollars lying around with nowhere to put it.
Here's an idea Mr Buffet- bloody give some to me!
I'll only blow half of it on crack and whisky
I read sumthing funny about Buffet the other day...
He was addressing BH investors about succession planning, since hes 75, and this has been on the minds of investors for years, i mean who can replace the master? (Maybe Charlie Munger but hes old too)
AT the end of his talk, he goes he'll be around for a few more years and doesnt plan on going anywhere (who does?!), and he wants to keep the job as the boss because he needs the money !!!!
Wow thanks, my guessOriginally Posted by Julia
Toronto Stock Exchange
Surely he has to bet Dow Jones wont free fall, cause if it did every index in the world woudl follow suit?
Buffett takes $19b bet on shares
Email Print Normal font Large font By Miles Weiss in New York
April 4, 2006
INVESTMENT guru Warren Buffett, struggling to find acquisitions big enough to boost Berkshire Hathaway's returns, is making a $US14 billion ($19.6 billion) bet global stockmarkets won't go into free fall.
Berkshire has sold a form of insurance to buyers wanting protection from a drop in "four major equity indices" over the next 15 to 20 years, according to a US Securities and Exchange Commission filing.
Instead of buying the individual shares, Mr Buffett is wagering that the indices - three of which are outside the US - won't tumble and force Berkshire to pay a claim.
The "long-duration equity index put contracts" are among the largest transactions Berkshire has disclosed and represent the kind of risk that Mr Buffett, the company's chief executive officer, is turning to as undervalued companies get harder to find.
Mr Buffett calls such investments, including stakes in oil derivatives, silver and zero-coupon bonds, "unconventional".
"They figured out a very interesting strategy that basically nobody else can do because of their size and long-duration capital," said David Winters of Wintergreen Advisers in Mountain Lakes, New Jersey. "Buffett and [sidekick Charlie] Munger have made the ultimate contrarian play here. They take a premium in today and they're willing to buy securities if markets really plunge," he said.
Mr Buffett, 75, has become the world's second-richest person largely by buying stocks he considered undervalued, such as Coca-Cola Co, Gillette, Wells Fargo and American Express, and holding them for years.
The stock-index contracts, derivatives that function like put options, increase Berkshire's risks from market losses. A 30 per cent decline in each of the indices last year would have led to a $US900 million pretax loss for the company, according to the March 7 SEC filing. Berkshire's "maximum exposure" was about $US14 billion at the end of last year, the filing said.
Berkshire didn't disclose which stock indices are covered under the contracts, how they're structured, who bought them or how much Berkshire was paid.
For Berkshire to lose the $US14 billion that the company says is at risk, all four indices covered by the puts would have to fall to zero, according to Gary Gastineau, managing director of ETF Consultants, a research firm in Summit, New Jersey. That's unlikely, given historical trends.
The S&P 500, the benchmark index for US stocks, has generated a positive return over any 25-year period since 1925, assuming dividends were included, according to a 2002 study by Ned Davis Research in Venice, Florida.
A company is worth the PV of all future cashflows (forecast EPS) discounted for time and risk, nothing more or less.
1/PE = ROI. Money in the bank is about 6% ROI or PE of 16, but risk free.
Risk = high debt, commodity price sensitivity etc
Originally Posted by nizar
I heard Gordon Gecko was going to replace him, Gecko and his right hand man Bud Fox
Note: I am not a Financial Adviser, nor are any of my posts intended to be financial advice, they merely express my own opinions
Warren says that USA will avoid a recession and Standard/Poor downgrade was an error.
I confidence and optimism that much different? What about reality?Billionaire Warren Buffett said Standard & Poor’s erred when it lowered the U.S. credit rating and reiterated his view that the economy will avoid its second recession in three years.
The U.S., which was cut Aug. 5 to AA+ from AAA at S&P, merits a “quadruple A” rating, Buffett, 80, said yesterday in an interview with Betty Liu at Bloomberg Television. The downgrade followed the biggest weekly selloff in U.S. stocks in 32 months, with the S&P 500 slumping 7.2 percent to its lowest level since November.
“Financial markets create their own dynamics, but I don’t think we’re facing a double dip recession,” said Buffett, chairman and chief executive officer of Omaha, Nebraska-based Berkshire Hathaway Inc. (BRK/A) “Clearly what stock markets do have is an effect on confidence, and this selloff can create a lack of confidence.”