Wow, finally we are getting closer to a model. So far your model does not account for a few significant things, but at least it begins looking like a model. So here are next steps.
You forget that he received money NOW. And by investing that money for 10 years, you can also make "many times" the money you received. OK, maybe not many times, but at 10% cumulative about 2.5X (15% - 4X). That's the beauty of selling super long term put. So how about accounting for that? It is like insurance float, which may or may not be costless.
And giving a single example of Japanese market does not make for any kind of general model. You'd have to show what percentage of time this occurs. It IS like insuring against hurricanes. If you claim that Florida gets 3 hurricanes a year, which occurred once in the last century, this is not a model I'd use. So let's look how often markets were lower in 10 years time and by how much. Of course, you can argue that "this time it's different", but I won't buy it. Market was not generally overvalued in 2007. That's why so many value investors got bitten by losses of getting in too early. But if you say that general predictions do not apply, at least then we know where we disagree.
After you account for these two things, you can start arguing whether this is speculative.
Regarding Buffett's current losses, they are irrelevant. They are no more real than any decline in a stock price. He does not have to pay now and he does not even need to post collateral. So your argument based on them is pure strawman. |
