Nassim Taleb: Ask Me Anything

Discussion in 'Options' started by Pekelo, Jun 29, 2017.

  1. newwurldmn

    newwurldmn

    That's the art.
     
    #81     Jul 2, 2017
  2. ironchef

    ironchef

    Can you do the same?

    Not trying to challenge you, just want to know if they are unique.

    Regards,
     
    #82     Jul 2, 2017

  3. Taleb is a smart guy , but apparently has never absorbed the one truth about markets.

    Timing is everything.

    Except for the other truth that stealing from the public is also a good way to make money.
     
    #83     Jul 3, 2017
  4. My guess is the knowledgeable ones like Buffett wisely going away before crash through keeping maximum cash, while some brave ones would still want to dive in the markets for making good money!




    November 6 2016

    Warren Buffett is sitting on more cash than ever, almost $US85 billion of it
    http://www.smh.com.au/business/mark...lmost-us85-billion-of-it-20161106-gsj0nr.html
     
    Last edited: Jul 3, 2017
    #84     Jul 3, 2017
  5. srinir

    srinir

    http://www.etf.com/publications/jou...les/23019-risk-budget-indexes.html?nopaging=1

    Main criterion of CPPI and modified CPPI in this case is protection of capital. This is similar to other tail hedge strategies but much cheaper.
     
    #85     Jul 3, 2017
  6. Pekelo

    Pekelo

    So he missed a 14% rally?
     
    #86     Jul 3, 2017
  7. AFAIK, he may be wrong for that position at that time by losing opportunity, but people can see his investment style, willing to keep a lot of cash, rather than any smart hedging.

    His cash can be very useful if any company later requires his help of cash, just like the banks historically.

    Much much better than merely 14%!

    http://www.marketwatch.com/story/wa...s-5-billion-bet-on-bank-of-america-2017-06-30

    How Buffett is set to make a cool $12 billion profit on a Bank of America wager
    By Tomi Kilgore

    Published: July 1, 2017

    700 million Bank of America shares would be worth $17 billion at current prices, and make Buffett the largest shareholder

    [​IMG]

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    Last edited: Jul 3, 2017
    #87     Jul 3, 2017
  8. newwurldmn

    newwurldmn



    Berkshires Returns (as measured by Book Value Per Share) are up 110% since Jan 1, 2010. The SPX price index is up 111%. Berkshire's Book Value will be based solely on earnings growth and accumulation. The SPX return is driven by earnings growth, earnings accumulation and several turns of multiple expansion. Berkshires Stock is up 150% over the same period. So with 85 billion in cash he's still doing better than the SPX.
     
    #88     Jul 3, 2017
  9. newwurldmn

    newwurldmn

    No I can't. The only way to do it is to predict through models when a crash is extremely unlikely to happen (and not buy tails then) or to shift pnl around in the distribution (take extreme losses at -5% to fund massive gains at -10%).

    Like I said before, I think their returns are suspect and I would wager institutions only invest with them because they have done a good job of marketing themselves as the "hedge" to their hedgefund portfolio.
     
    #89     Jul 3, 2017
    ironchef likes this.
  10. I guess another good reason that Berkshire holds so much cash is because there were a lot of fairly cheap options with the banks shares when buying their stocks.

    Just unsure whether those options are still pending for exercise.

    That means if the banks he owns options can perform better than SPX, his performance now should be better than the SPX, while still holding a lot of cash that could be later used for exercising the options if he wishes to.

    Unless the markets offer him other better opportunities than those banks options he now owns.

    The picture of SPX outperforming Berkshire because holding too much cash can be quite incomplete. Even the SPX looks like outperforming all the banks he own. Don't forget the bank options were acquired at fairly cheap cost at prices few years ago.


    Holding cash+options VS holding 100% stocks

    http://www.nasdaq.com/article/buffetts-strategy-to-make-millions-without-buying-stock-cm466409
    Buffett's Strategy To Make Millions Without Buying Stock
    April 17, 2015,
     
    Last edited: Jul 3, 2017
    #90     Jul 3, 2017