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Derivatives ???


NEW YORK (Reuters) – Warren Buffett’s Berkshire Hathaway Inc said fourth-quarter profit surged, helped by derivatives bets tied to global stock markets, though operating profit fell 40 percent as the weakened economy weighed on several businesses.

Profit rose for a third straight quarter, and full-year profit increased 61 percent, as Berkshire rebounded from perhaps its worst year since Buffett took over in 1965.

“I was quite impressed with the results,” said Vahan Janjigian, author of the book “Even Buffett Isn’t Perfect.”

“It is clearly suffering from the economic recession we have been in, but compared with most other companies involved in similar businesses, it is doing quite well,” he added.

In his annual letter to Berkshire shareholders, Buffett admitted that Berkshire’s ability to outperform that benchmark “has shrunk dramatically,” and that “our future advantage, if any, will be a small fraction of our historical edge.”

Net worth per share, which measures assets minus liabilities and is a key metric for Buffett, rose 19.8 percent, compared with a 9.6 percent drop a year earlier.

Still that lagged a 26.5 percent gain including dividends for the Standard & Poor’s 500, the first time it trailed since 2004. Berkshire’s net worth per share is up 20.3 percent annually since 1965, while the S&P 500 is up 9.3 percent. Total book value rose to $131.1 billion from $109.27 billion.

full story link

http://www.reuters.com/article/idUSTRE61Q1IF20100227?loomia_ow=t0:s0:a49:g43:r5:c0.100000:b31169752:z0

Have helped warren buffet to come in with substantial profits as fourth-quarter profits surged, helped by derivatives bets tied to global stock markets, though operating profit fell 40 percent as the weakened economy weighed on several businesses.
Profit rose for a third straight quarter, and full-year profit increased 61 percent, as Berkshire rebounded from perhaps its worst year since Buffett took over in 1965.

 

Derivatives have been the driving force for the enormous profits enjoyed by the major banks in the US in the last quarter as well

Now we see even Buffet is using them!

But on real economic activity nothing doing we are still in the dole drums and the only way the banks are going to give an encore with regards to their profits going forward is to keep using even bigger and riskier Derivatives bets

In other words “Gambling” all over again!

They will have to engineer another bubble and the stock market in the obvious choice so expect a massive turn in the markets soon

Place your bets here now!

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