I was short out to Jan13. When able, I shorted the Jan13 synthetic (90-strike) and lost $5/share by Jan opex. I didn't re-enter. You stated REALIZED losses. BRK booked those MTM losses on the balance sheet to the tune of $7.5 billion... in a single quarter. They became realized when they offset income. The counter-party could not invoke assignment, which is what Buffett refers to in the AR, but that has no relevance to the PNL statement. They took a $7.5B loss. Realized in terms of GAAP accounting which reduced their NI to $6B.
Tilt. Tilt. Tilt. YOUR chicken little Berkshire trade. Still waiting on that shoe to drop Realized = closed = ~10% of the index puts for a $222 million PROFIT. Unrealized = remaining open contracts = paper losses which I've already said twice are reflected in earnings but the market cares so much that your trade was a loser, just like you.
Nah, you stated realized, not closed. They were realized. As in losses impacting the balance sheet to the tune of $8B. The shoe did drop, and after I posted that he would have to write it down, eventually. BRK has taken more losses in the quarterlies than profits as a result of the put shorts. You stated he would not report losses because he can hold to exp. You were wrong to the tune of $8B. You left the site for nearly two years as a result of the embarrassment.
Buffett's Berkshire: We goofed on derivative risks. http://www.reuters.com/article/ameri...22440720090813 NEW YORK, Aug 13 (Reuters) - Warren Buffett's Berkshire Hathaway Inc (BRKa.N)(BRKb.N) underestimated the risks of falling stock prices to its billions of dollars of derivatives bets, yet still believes it is valuing the contracts fairly. Berkshire revealed its error in a June 26 letter to the U.S. Securities and Exchange Commission, one of several pieces of correspondence with the regulator about the company's annual report, and made public on Thursday. It also agreed to SEC demands for more explanation on $1.8 billion of writedowns on stock investments, and $2.7 billion of auction-rate and other municipal debt holdings. On June 29, the SEC said it completed its review without further comment. The correspondence shows Omaha, Nebraska-based Berkshire, which has close to 80 businesses and ended June with more than $136 billion of stocks, bonds and cash, is struggling to comply with SEC requirements to disclose enough about its finances. This issue had surfaced in June 2008, when the regulator demanded "a more robust disclosure" of how the insurance and investment company values its derivatives. Buffett did provide some additional disclosure, in what he called "excruciating detail," in his annual shareholder letter in February. Berkshire, through Buffett's assistant Carrie Kizer, had no immediate comment. The derivatives contracts are tied to four equity indexes in the United States, Europe and Japan, and are a big reason Berkshire's earnings fell for six straight quarters. That string ended in the April-to-June period as stocks rebounded. In the June 26 letter, Berkshire's Chief Financial Officer Marc Hamburg told the SEC that last year's 30 percent to 45 percent declines in the equity indexes "are in excess of our volatility inputs." He nevertheless said Berkshire's expectations for stock market volatility are "reasonable" given the long-term nature of the contracts, which expire between 2018 and 2028. Berkshire ended June with $8.23 billion of losses and $37.48 billion of potential liabilities on the contracts. Buffett expects the contracts to be profitable and can invest upfront premiums as he wishes. This is one reason the world's second-richest person believes the contracts are unlike derivatives that are "financial weapons of mass destruction." The $1.8 billion of "other-than-temporary impair losses" in 2008 related mainly to 12 equity securities that "generally" lost 40 percent to 90 percent of what Berkshire had paid for them, Hamburg wrote on May 22. Berkshire did not write down six other securities that fell 20 percent to 40 percent, he said. Hamburg also wrote that Berkshire had reduced its stake in auction-rate and similar municipal debt to $2.7 billion at year end from $6.5 billion six months earlier, but that the credit crisis slowed the runoff in the fourth quarter. The auction-rate market seized up in February 2008 and has not recovered. Berkshire has said it does not plan to sell its auction-rate holdings at below face value and can hold them until they are auctioned off or redeemed.
You need professional help. This shows exactly what you "understand" about Berkshire and the only shoe that dropped was on your head because the market couldn't care less about the paper losses which BTW I never said wouldn't be reported. When all else fails, make up lies, right? You resurrected this thread FIVE YEARS AFTER MY LAST POST HERE when you thought it was safe because you made a total fool of yourself and you wanted to save face. Not just with the above failed trade and paper losses, but also because you were off by an order of magnitude on an options calculation which I could see just by looking at it but you still couldn't grasp even after I pointed it out to you: I'm not an expert in options like you pretend to be but I can tell this is wrong just by looking at it. http://www.elitetrader.com/vb/showthread.php?s=&postid=2516638#post2516638 But you stubbornly insisted you were right: The 1.6MM figure is accurate http://www.elitetrader.com/vb/showthread.php?s=&postid=2516712#post2516712 Then, AFTER I explained why it looked wrong AND Optioncoach also told you were wrong, you finally admitted it. http://www.elitetrader.com/vb/showthread.php?s=&postid=2517396#post2517396 Could you be any more of a loser?
lol you're wrong. I necro'd the thread in 2012, as atticus. You stated he was not risking $9B at 1135: http://www.elitetrader.com/vb/showpost.php?p=2516768&postcount=145 He wrote-down $8B based upon a MTM on SPX of between 1000 and 1100 and at his internal volatility marks. Only after the SEC started an investigation. Buffett had no business stating otherwise. He took the GAAP loss of $8B. You're fcuking bran-dead. I weep for your children.
lol only the final price matters yet he wrote-off $8B against earnings. Crumbling in the face of an SEC action. Wheeeeee. And yeah; he had it all wrong. Buffett committed fraud and numerous violations of fiduciary duty by not marking the position. He would've been fired by the board at any other public company. Charges should have been brought. Berkshire ended June with $8.23 billion of losses and $37.48 billion of potential liabilities on the contracts.
Here's my post that resulted in the letter. I posted this many months before the regulatory investigation. The guy pulled a fast one and was busted.
An aggressive valuation, favorable to the seller (LIBOR at 2%, vol under market), results in a marked-loss of $13,500,000,000 at a blended 15Y expiration. A vol at inception of 15%, and a vol at MTM of 30%. Buffett's MTM loss of $5.1B ($10B liability less $4.9 premium) assumes that his European puts are averaging a 10% vol with the SPX at 903. I nailed the eventual loss-statement nearly to the penny.