Though he claims to be unmoved by share price, it is hard to imagine that Buffett is totally ignoring the crazy ride that is Berkshire’s share price, or the constant drubbing the firm (and WB himself) keeps taking over the variety of “Financial Weapons of Mass Destruction” it has collected over the last several years. Bloomberg, gleeful as a grandfather telling war stories to the grandkids and pawning off that scar he got falling off the ladder changing the kitchen lightbulb while drunk as a war wound, isn’t missing this chance to retell the story, and is, therefore, on the case again:
Chief Executive Officer Warren Buffett’s increasing use of derivatives — contracts whose value is based on the performance of stocks or bonds or the outcome of a specific event. That Buffett once called derivatives “time bombs” doesn’t calm investors.
Berkshire held contracts with a combined notional value of $67.3 billion at year-end. While this figure is used mostly for reporting purposes and isn’t indicative of potential losses, it dwarfs the company’s $25.5 billion in cash.
Though not quite as bad as the sinkhole it fell into back in February, Berkshire is getting tagged again and, at least to the extent you can believe any reason financial journalism comes up with to describe stock movements, the Berkshire Puts seem as good a reason as any. Sort of.
We’ve managed to harp on the poor reporting surrounding the Berkshire Puts more than once before, so it should come as no surprise that these are no ordinary puts and that Berkshire’s exposure isn’t typical of options writers. In this connection, we think we can be forgiven for thinking the issue of Berkshire’s ratings is a bigger one than the options themselves.
Berkshire’s 31% Decline Spurred by Derivatives Buffett Derided [Bloomberg]
I am the CEO of a hedge fund. What is “value investing”?
@1 I am a back office professional. What are cross trades? and where can I get one?
@1 – FAIL
I am a Berkshire Hathaway shareholder. What is a “losing year”?
I think more often than not, any piece of “journalism” that has to dumb-down and explain the most basic concepts discussed therein, isn’t worth reading in the first place.
Also, why does anyone still listen/depend upon/trust anything the ratings agencies say?
Oh, that’s right, because they’re too lazy to do their own legwork. Not like that behavior has ever bitten investors in the ass before or anything…
I am not gay, I am Canadian.
I work for Moody’s, what is a rating?
That comment about the notional value of Berkshire’s puts is about as valid as this sentence:
While it is unlikely Bloomberg LP will have losses of $67.3 billion this year, that number would surely dwarf the company’s cash.
We actually PAY for Bloomberg news. We pay a LOT. Is it too much to ask for some intelligent, responsible reporting? Rather than just this salacious muckraking?
I am a linguist at MIT. What is notional?
All those comments are FAILFAILFAILFAILFAIL.
Crouching tiger hidden non-story.
Buffett doesn’t give a flying fuck what the gadflies think.
Bloomberg LP “news” is mostly crap and worse, the writing is plain bad.
Oogway was just a crazy old turtle after all
@5
Agreed.
Another typically lousy Bberg article. Although its users are supposed to be financial professionals, Bberg reporters are almost always totally clueless about even basic finance concepts. E.g., that the notional value of BRK’s derivatives relative to its cash is a meaninfgul comparison. This would be akin to comparing the population of the US to the amount of money it prints — ie totally meaningless.
Can it really be that there are no laid-off derivatives traders that can write?