Buffet Slams Derivatives Markets

Discussion in 'Wall St. News' started by The Greeks, May 8, 2007.

  1. Also hypocritical given the enormous notional value of derivatives he holds directly and indirectly...
  2. S2007S


    im way ahead of Buffet...


    Registered: Aug 2006
    Posts: 3369

    03-19-07 04:38 PM

    Anyone know when this will start to unwind???

    Along with the private equity sector...

    I think this is the next huge problem that is going to be more serious than the dot.com bust and the subprime mortgage fallout combined.

    Too many are over-leveraged.

    Edit/Delete • Quote • Complain
  3. virgin


    The Warren Buffet of ET :p
  4. maxpi


    The 1929 crash involved some horrendous over leveraging. From what I read people could buy some stock with lots of leverage, take physical possession of the certificates and deposit them in a bank, then borrow on them to buy more stock with leverage.

    The Orange County California treasury and Barings Bank were both damaged by derivative investments that went way wrong, there may be other examples.

    There may be an overall saving grace in that derivatives are uncorrelated.
  5. Buffet's last statement regarding derivatives:

    I hold 65 options positions and manage them all personally.

    Or something to that effect. I'll try to find it.:)
  6. Looks like a question to me.
  7. Right, it was an unsecured repo.
  8. Arnie


    Don't count on it. They may not be correlated, but in a big downturn ALL asset classes could drop.
  9. The counterparty risk is the huge problem. Look at the investors who took the other (winning) side of the subprime cds market. It hard to be a crisis hunter as Taleb would say when you can't collect. No wonder everyone wants to write insurance.
    #10     May 8, 2007