Buffett on using stock options · Transcript · BuffettMungerGPT

WarrenCould you please comment on how you use stock options when trying to enter or exit a position in a public company? Usually, if you want to buy or sell a stock, you should buy or sell the stock. And using an option technique to buy a call on a stock instead of buying the stock outright with the idea that you get it a little cheaper that way means that about four times out of five you'll be right. And the fifth time, the stock will have moved earlier and you'll have missed the transaction you wanted to have. The amount of time spent at business schools, maybe it's a little less now, but teaching things like option pricing and that sort of thing, it's totally nonsense. I mean, you need two courses in a business school. One is how to value a business and from a standpoint of investments. How to value a business? And how to think about stock market fluctuations. But the idea that you would spend all of this time with formulas, but the problem, of course, is that the instructors know the formulas, and you don't when they come, and so they've got something to fill the time explaining to you. And, you know, it is no fun. If you, I mean, if you were teaching biblical studies, you know, and you could read three or four of the most important religious tones forward and backward in five different languages, you would hate to tell somebody that it all comes down. to the Ten Commandments. I mean, any damn fool can do that.