Warren Buffett & Charlie Munger Explain Options
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- Опубліковано 9 вер 2021
- Warren Buffett and Charlie Munger discuss stock options at the 2002 Berkshire Hathaway annual meeting.
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I love those one liners from Charlie. Amazing.
on June 3rd 2002 the S&P 500 closed at 1040,68 so Berkshire got 60 million.
Wow, these men are amazingly smart. Learned a lot about Options just in this few minutes lecture. Thanks for uploading this.
The IQs of these gentlemen (150+) protected Berkshire and themselves from losing money.
Mr munger needs to write a book... MR Mungers greatest 1 liners.. he has hundreds of them..
Try Poor Charlie’s Almanac
i don‘t know why but i only seem to understand 50% of what he is talking about.
pretty sure nobody is surprised
Because options is complicated and one has to read up a lot. One has to read up enough to the point that one can understand what these guys are saying. I stay away from it because I know it is risky and not for me. I have to say, I understood very little as I haven’t done my homework on it or read up on it. I did like the last one liner from Charlie.
Buffett lit
Its a gamble in other words
Love those guys!
I’m convinced that Berkshire Hathaway uses selling puts in order to get into most of their positions. Anyone else know for sure?
I know they did that for coca-cola at one time because Warren talked about it. But he also did say that they would have likely just been better off buying the stock directly.
@@leswhynin913 Thanks for the information.
They do purchase via short puts but they also write calls on certain positions.
@@_d0ser They write calls also? I had no clue.
No. You can't really do that with positions as big as theirs. They're in the reinsurance business, which mostly means they sell puts on the weather. I.E. A home insurance company might buy an insurance policy from Berkshire that pays out if a hurricane makes landfall in the US, and Berkshire uses their many stocks and bonds as collateral.
Black-Scholes values options as if the distribution of possible outcomes were Gaussian all the way to the tails, and these two old chuckle-ducks think they are hot stuff (I guess they are for the time) because they have an intuitive sense of what was even then called "fat tails", and one side fatter than the other, Warren talks about this specifically at 3:33
But this tail-value problem on options still exists today, leaving incredible values (high risk too, of course) at the farthest ends of the option chain, where the tails are likely mis-priced.
"Old chuckle ducks" remind me again friendo... how many billions do have again?
@@caseyduke6229 But but but…he studied options…and the tails….that’s what’s important…not the money 🤣
For me, what I particularly love about options is you know your downside so you don't have to risk more than you can take in exchange for a reasonable upside or returns. I really love options and working on becoming a much better options trader.
Of course, those two guys think they are hot stuff because they are hot stuff. If you have a framework of value, you are able to make a comparison between one system of value and another so of course you can determine which one is better and which one is not thereby able to make better decisions.
Black-Scholes gives you the value of an option according to their valuation but their valuation is not your valuation and their valuation may not be correct.
Remind of of the many successful books you've written on this subject, where you teach your courses, where you received your PhD, and what your investing educational channel is please as you sure seem a lot smarter than these poor, stupid, unsuccessful fools
Corruption💯💯💯
What? They just said why they aren't really into stock options.
@@samsonsoturian6013 Ronnie is just trying to be significant
@@thepianist7084The man on the left was a congressman's son, the one on the right was a lawyer. These 2 are as corrupt as you can possibly get