To a large extent, due to its derivatives involvement, twenty-five years ago, Orange County California became the largest municipality in U.S. history ever to file for bankruptcy. Warren Buffett’s partner Charlie Munger stated that saying that accounting for derivatives in America is a sewer is an insult to sewage.
We have previously mentioned that the most important thing to learn from our fearless, intrepid investor’s loss of $US10,990.00 in her “fun” portfolio over a year is not to write covered calls on individual securities. She bought Novavax (NVAX) to write covered calls on and as the stock declined, she lost much more than she received in premium income.
