View Full Version : latest derivatives warning (w. buffet)

03-04-2003, 04:02 AM

03-04-2003, 04:29 AM
Actually I find the whole derivatives industry if you will fascinating. Derivatives are used to hedge and there are certain ones that are simple and popular. With that said I'm quite certain that there are those who are getting serioulsy hornswaggled. The Long Term Capital Management debacle was brought on by the use of derivatives. The good news is that a lot of lessons were learned from this fiasco. Probably not enough though. Many rumors that Citigroup and JP Morgan have potential problems with derivatives. JP Morgan is rumored to have serious problems with derivatives if Gold gets above $400. I have no idea if it's true.

03-04-2003, 08:22 AM
/forums/images/icons/wink.gif among gold bugs; morgan and goldman sachs both have kept price of gold down and benefitted, but are finding it harder to cover their leases, so to speak..lol..gl /forums/images/icons/tongue.gif

03-04-2003, 09:38 AM
yeah it looks like rumors are true if w.b. comes out like this.

03-04-2003, 10:37 AM
What I want to know is where's the conspiracy part

03-04-2003, 10:39 AM
tom covered it:

'Many rumors that Citigroup and JP Morgan have potential problems with derivatives. JP Morgan is rumored to have serious problems with derivatives if Gold gets above $400. '

03-04-2003, 12:33 PM
What does exposure or overexposure to risk have to do with conspiracy? brad you are disappointing me;-) I want to know how this is tied into a New World Order plot;-)

03-04-2003, 12:47 PM
well seriously look it up. GATA or something i think.

the central banks have double count their gold reserves and sell/ lease gold to suppress price of gold and stuff which is tied into derivatives.

theres big lawsuits from gold producers and everything.

search the web or google newsgroups itll all pop up.

gold price manipulation, something like that.

03-04-2003, 01:28 PM
gee wiz i just went to gata.org and there it is. gold ant trust action comittee.

03-04-2003, 02:18 PM
It really doesn't mean jack. All Warren said was that he doesn't understand the risk exposure of banks with respect to their derivatives holdings. But let's assume that his worst fears are true. maybe one or two multinational banks or insurance companies collapse. Don't worry. It would make some big headlines in the press but it wouldn't be anything more than a blip on the radar screen of economic activity. There is more than enough free capital floating around to step in and fill the void left by a JP Morgan. Very little wealth creation potential is destroyed when a big bank or hedge fund gets in trouble. It's merely a redistribution of resources.

People like Warren Buffet don't like the derivative risk because it creates uncertainty. Since Warren is rich as hell and is successful with the status quo, he is fearful of anything that might shock the current system. But for people like you and me it wouldn't matter that much. In fact it might just create some opporunities.

Mark Heide
03-04-2003, 11:58 PM

I just wanted to provide a link if anyone is interested to Buffets stock list based on Robert Hagstrom's The Warren Buffett Way strategy:


You will see that there are only 18 stocks that you should buy using this strategy. But, I would skip some of the ones with P/Es above 20. Since, Bush will start his full blown war in a few weeks, you might want to wait for some bargains.

Another fact about this economy that is different is the high prices of stocks. The reason why I say the prices are high is traditionally in down markets most P/Es have hit 10 when panic had set in and everyone was selling. It didn't happen with the "dot.com" bubble. But, for the past three years I've noticed a kind of wave pattern. What I mean by this is that the stocks will go down, then some good news comes, but they never reach the point they were previously at the previous year. I expect some sell off once the war is full blown, and I predict that because of the three different major factions of citizens in Iraq, that it will take at least several years to get a transitional government started. You can debate the amount of time it will take.

Good Luck