Warren Buffett Credit Default Swaps

Berkshire Hathaway is a top firm in the world. The company ranks among the top 5 biggest companies in the world. Warren Buffett heads Berkshire Hathaway. Buffett is among the wealthiest people in the world with a net worth of about $80 billion. He is just below Amazon boss Jeff Bezos and Microsoft founder Bill Gates. Buffett joined the firm in the 1960s and has since then worked very hard to make the firm a leading company on the globe. The firm has vast investments in various industries. With a net worth of over $400 billion, the company is genuinely huge. The success of the firm can, however, be attributed to Warren Buffett who has led the firm with wisdom enabling it to make significant investments.

Warren Berkshire has made decisions that have helped the company pick only the best investments opportunities. The firm does not rush to make any investments. They just take investments which promise to be lucrative but which come at a cost that is convenient. According to Warren Buffett, the major challenge facing business today is that many ideas are overpriced. Buffet believes, if a plan is overpriced, the company will stay out and wait for another opportunity.

One of the challenges that Berkshire had to deal with recently has been the big credit-default swaps. The swaps have hit an all-time high. The swaps are trading at very high levels which can only be compared to failing companies yet Berkshire is among the best companies on the globe. The swaps increase, however, has been attributed to the fear that Berkshire might lose big on derivatives, municipal debts and high yield corporate bonds. According to CEO Warren Buffett, there are two sides to this coin, the company may reap, or it may suffer losses also. In his newsletter to the shareholders, Buffet, however, gave hope that even if it gets worse with contracts, the company will at least break-even.

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