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By Mr. Curmudgeon:
President Obama’s favorite billionaire, “Oracle of Omaha” Warrant Buffett, is doing quite well, thank you very much. His holding company Berkshire Hathaway saw profits rise 45% in 2012. How, you ask, is Obama’s favorite billionaire doing so well at the same time America’s economy collapses under the weight of hope and change? By investing in that collapse, that’s how.
“The largest portion of the [Berkshire Hathaway] portfolio is a series of equity-index puts, with a notional value of $33 billion, that are tied to the performance of four stock indexes reflecting the performance of markets in Europe, Asia and the U.S.,” reports the Dow Jones Business News.
For the benefit of Obama voters that may stumble upon this article, I include a definition of the term “put” from the “For Dummies” website on trading options: “Put options are bets that the price of the underlying asset [stocks or bonds] is going to fall [in value]. Puts are excellent trading instruments when you’re trying to guard against losses in stock futures contracts, or commodities that you already own.” In other words, Buffett profits as global markets plunge.
The average American’s investment knowledge comes from their participation in 401(k) programs offered by their employer. If that 401(k) invests in stock, the hope is, over time, the value of that stock will rise. If the market falls, so does the value of that 401(k).
Wall Street’s big investors aren’t willing to risk their money on the notion that markets only go up, so they hedge their bets. A portion of their portfolio is reserved for put options that rise as stocks or bonds fall in value. Investment firms that specialize in this practice are called “hedge funds.”
Warren Buffett is using profits made on falling markets to buy struggling companies to add to his empire. Oh, and Obama’s favorite billionaire has an added revenue stream … other people’s money.
Have you heard of the Geico insurance company? Buffett owns it. Geico’s spokesman is a cute gecko that speaks with a cute English accent. The animated shill prompts Americans to provide Obama’s favorite billionaire a constant revenue stream that his company then invests.
According to Dow Jones, “Mr. Buffett long has appreciated the insurance business because he can invest customer premiums until funds are needed to pay claims – sometimes using the money for years before the claims come due. Mr. Buffett calls these funds ‘float,’ and he reported Friday that the pool of funds rose to about $73 billion from $70.6 billion a year earlier.” So, all you Geico customers should be extra careful while plying the nation’s highways … Obama’s favorite billionaire needs you and your vehicles in one piece if he is to remain profitable.
Just in passing, as of 3 p.m. Friday, investors purchased 1,786,950 calls (options betting on a rosy economic future). Buffett-like investors, on the other hand, purchased 2,112,937 puts (options betting against that same future), according to the Chicago Board Options Exchange.
The Obama media tells us America’s economy is recovering and that employment is up. So why is Obama’s favorite billionaire betting against Obama’s “transformation” of America?
Economist John Maynard Keynes said, “Successful investing is anticipating the anticipations of others.” Warren Buffett, Obama’s favorite billionaire, is anticipating America’s economic decline … and profiting handsomely from all that Obama-induced misery.