Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: MCsweet who wrote (33813)	3/16/2009 8:57:40 PM
From: Madharry	Read Replies (1) \| Respond to of 78958

the point i was trying to make was that even if the market were to drop another 70% over the next two years no one could exercise that put and force berkshire to pay up. Im just amazed that the rating agencies have any credibility remaining at this point. I sure wouldnt rely upon them for anything.

To: MCsweet who wrote (33813)	3/16/2009 11:37:41 PM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 78958

A naked put is about as speculative as it gets, even if it is long term. Actually it's not, especially when counterparty cannot force it to be delivered at any random date. Buffett wrote up a pretty detailed analysis if you cared to read. But I guess you won't believe him. So maybe it's time for doing some math analysis on your own to figure out the possible risks and rewards. Would be more worthwhile than parroting "common knowledge". ;) The only place where Buffett may have been wrong is not accounting for the cost of losing AAA rating. I.e. it may be that incremental cost of capital due to rating loss is bigger than the gain from the put. But then there is no guarantee that Berkshire would have held AAA even without the put. WFC/USB/AXP positions might have scared Fitch enough.