We've used derivatives for many, many years. I don't think derivatives are evil, per se, I think they are dangerous.
Interpretation
Derivatives can be useful in finance but also carry significant risks.
Warren Buffett highlights that while derivatives have been a part of financial markets for a long time and can serve useful purposes, they also have inherent dangers that can lead to significant financial instability. This statement reflects a cautious approach to complex financial instruments, suggesting that their power should be managed wisely.
In practice
In a discussion about investment strategies, one might quote Buffett to emphasize caution regarding derivatives.
I have no views as to where it will be, but the one thing I can tell you is it won't do anything between now and then except look at you. Whereas, you know, Coca-Cola (KO) will be making money, and I think Wells Fargo (WFC) will be making a lot of money and there will be a lot - and it's a lot - it's a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that.
If the world couldn't see your results, would you rather be thought of as the world's greatest investor but in reality have the world's worst record? Or be thought of as the world's worst investor when you were actually the best?
Cash never makes us happy, but it's better to have the money burning a hole in Berkshire's pocket than resting comfortably in someone else's.
I think you should read everything you can. In my case, by the age of 10, I'd read every book in the Omaha public library about investing, some twice. _x000D_ You need to fill your mind with various competing thoughts and decide which make sense.
The most common cause of low prices is pessimism - some times pervasive, some times specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It's optimism that is the enemy of the rational buyer.
Oneβs objective should be to get it right, get it quick, get it out and get it over. Your problem wonβt improve with age.
The borrowers will always be willing to take a great deal for themselves. Itβs up to the lenders to show restraint, and when they lose it, watch out.
We are all powerless as children, and money looms so powerfully... we don't grow up to claim our financial power until we look money directly in the eye, face our fears, and claim that power back.
Specie [gold and silver coin] is the most perfect medium because it will preserve its own level; because, having intrinsic and universal value, it can never die in our hands, and it is the surest resource of reliance in time of war.
Liquidity is a good proxy for relative net worth. You can't lie about cash, stocks, and bond values.
If you hope to have more money tomorrow than you have today, you've got to put a chunk of your assets into stocks. Sooner or later, a portfolio of stocks or stock mutual funds will turn out to be a lot more valuable than a portfolio of bonds or CDs or money-market funds.
When getting help with money, whether it is insurance, real estate or investments you should always look for a person with the heart of a teacher, not the heart of a salesman.
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