Financial Pearl Harbor Necklace Harbor Necklace

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What happens when you write $40 billion of equity index puts and the market tanks? Probably nothing, for another 14-18 years. According to the derivates disclosure section from Warren Buffett's Berkshire Hathaway's June 2008 10-Q, the Oracle of O sold approximately $40 billion worth of index put options between 2005 and 1Q 2008, receiving nearly $5 billion in premium. This morning on CNBC, O Cubed told Becky Quick that a financial-themed Pearl Harbor would occur if the Fed did nothing. Sounds like someone who wrote a bunch of index puts recently to DB. (Granted, indexes would have to be below 2007 levels in 14-18 years for him to have to take losses.)
Though many are psyched at the idea of Buffett diving into bed with Blankfein, is this the best idea right now? "Value plays" in financials have destroyed more than a few smart investors in the last 6 months and The Big O didn't even consult with the Charlie Munger on this one, much less his favorite girl at Scores (Very) West. (She is his usual confidant on such matters, you know.) To this pessimism, the Oracle of O would probably say "When people are greedy, be fearful. When they are fearful, be greedy." But he is also prone to give advice on nipple clamps and genital piercing, so your mileage may vary.


Financial Advisor Facing Some Legal Troubles

1. A class-action lawsuit by investors. 2. Murder via bomb charges. Brian Malley, 55, is charged with first-degree murder in the death of Victoria Shachtay, a disabled mother who died in November 2011 when an explosive package was delivered to her home in Innisfail, Alta. Malley, who worked for Assante Wealth Management, is accused of sending that package. Malley now faces allegations he lost an estimated $50 million for dozens of clients. The claims are contained in a lawsuit filed this week in Red Deer Court of Queen's Bench. "This was their retirement savings," said Rob Armstrong, one of lawyers behind the lawsuit. "The allegations are that Mr. Malley was placing them in very speculative and high risk investments and losing money." The statement of claim suggests Malley's conduct was "high-handed, malicious and highly reprehensible." The document further alleges that Malley "acted in his own best interests which were in conflict with the interests of his client class members." The lawsuit claims that Malley invested in equities that were riskier than what his clients may have wanted and made frequent trades within a short time-frame to earn more commissions. $80M lawsuit filed against financial advisor accused of murder [CBC]