Bloomberg must be on the green shoot pipe, there is just no way Berkshire is not marking their stocks to market, they must have been referring to private equity they hold
What's bullshit is your "analysis" despite your ignorance of the terms of the derivatives contracts... your $ delta guesstimate was bullshit too -- off by over an order of magnitude which you still didn't see even after I told you it was way too high. Four indexes are involved and you have NO IDEA how Berkshire's exposure is weighted among them, how many contracts there are on each index, the strike prices, when each contract was written and expires, etc. Nor do the indexes move in lockstep and then there's the impact of exchange rates. Many moving parts and a lot you're not privy to but don't let that stand in your way. Why don't you call Berkshire and set them straight?
Simple question: if Buffett had *bought* $5 bill of puts when vol was 14% and the S&P was above 1500, just before the index collapsed to 666 in 18 months and vol soared, how would you have rated that trade entry? 1. Fucking awesome 2. Very good 3. Decent 4. So so 5. Poor 6. Very bad 7. Worst trade entry timing of all time Once you answer, just invert the rating and you will get an accurate assessment of Buffett's decision to sell the puts.
Your post reminds me of when Buffett had supposedly lost his touch during the dot com bubble and when poeple were saying Buffett was losing on Goldman. The premise of your question is flawed. This has FAR from played out, yet you speak of it as if it's a short term trade and with the benefit of hindsight. Berkshire wrote a number of put contracts on four equity indexes that will be settled on the contract expiration dates between September 2019 and January 2028. THOSE are the dates that matter. To lose the full contract amounts, each index would have to be at ZERO on the respective expiration dates. But even then, Berkshire would keep the almost $5 Billion in premiums they received upfront PLUS whatever they can earn on it over all that time and beyond. Bottom line: I believe that after this has played out, Berkshire will make money on these -- orders of magnitude more money than everyone who will ever post on ET will make from trading combined.
I was off less than $200MM on the MTM projected loss. Thread-bump waiting for the next shoe to drop in 2012. The BRK purchase accounting fiasco. SHORT BRKb, buy puts, sell R/Rs.
lol really? I had to necro this. A $8B write down occurred. Does that constitute real money? Berkshire ended June with $8.23 billion of paper losses and $37.48 billion of potential liabilities on the contracts.
What part of "paper losses" don't you understand, idiot? Your quote is from an August 2009 article but even then it was just paper losses. Buffett's only REALIZED gain or loss to date in the index puts is a $200+ million PROFIT, on top of more than $4 billion in premium he collected between 2004 and 2008 for writing the contracts that are still open.