Buffett called derivatives “time bomb”


The head of investment Fund Berkshire Hathaway annual meeting with shareholders in Omaha (Nebraska) responded to the question about derivative, which previously called “write-UPS of weapons of mass defeat”. This time he called derivatives “time bomb”.

Speaking of derivatives, Buffett cited the example of 11 September 2001 in the United States, when terrorist attacks were carried out in new York financial markets closed for a few days. When they were reopened, the cost of securities and derivativov has changed significantly, said the head of Berkshire. He referred to this as the “gap”.

“If there is a large cyber or nuclear, or biological attack in the country [then there is] a large gap — and you have a lot of problems,” he said, noting that after the markets open may have “large gaps in positions”. This situation can become a “time bomb”.

Buffett drew attention to the problem of valuation of derivatives. According to him, he knows at least one case where two companies were represented by one auditor and had one derivative contract between a. The accountant gave a different assessment of the same derivative.

Also at the meeting with shareholders, the head of Berkshire Hathaway — the Fund is the biggest investor in the Coca-Cola company said that the joy from consumption of carbonated drinks outweighs the health benefits from vegetables. “I made a choice to your 2.6 or 2.7 thousand calories a day, consuming things that bring me pleasure. Evidence, to convince me that I should live to be 100 years, suddenly turning on the water and broccoli, I don’t have,” said Buffett.

Buffett earlier told you about my addiction to Coca-Cola. “If I consume 2.7 thousand calories a day, a quarter of that is Coca-Cola. I drink at least five 12-uncivic [340 g] servings. I do it every day,” he said.

Additionally, Buffett noted that Berkshire Hathaway will continue to do my best at work, regardless of who wins the presidential election in the United States billionaire Donald trump and former Secretary of state Hillary Clinton. “If Donald trump or Hillary Clinton become President – and one of them probably will – I think Berkshire will continue to work well,” he said.