Buffett's Berkshire, meantime, fell sharply last week, as its class A shares dropped over $25,000, or 18%, to $113,100. Berkshire's equity portfolio, which stood at $69 billion on June 30, is falling in value, although it's ahead of the major averages this year. Berkshire has written, or sold, long-dated put options on some $40 billion of equity indexes, including the S&P 500. Those put sales, which amount to a bullish market bet, are deep in the red, although Berkshire doesn't have to post collateral against any paper losses. We estimate those puts could have cost Berkshire as much as $2 billion in the third quarter and several billion more dollars this quarter, with the S&P down over 20%. Berkshire ultimately may score with these puts if they expire worthless at maturity between 2019 and 2027. But the normally savvy Buffett made a mistake investing in financial derivatives, about which he has long warned. Berkshire had no comment.
The brutal market sell-off has stung even famed investors like Buffett, but patient investors stand to benefit, particularly if they choose well-capitalized companies with strong market positions whose stocks now trade at very depressed values.
The brutal market sell-off has stung even famed investors like Buffett, but patient investors stand to benefit, particularly if they choose well-capitalized companies with strong market positions whose stocks now trade at very depressed values.
