Never fully trust any exotic financial instruments

Buffett and Munger have been very consistent in criticizing the derivatives, catastrophic bonds, crypto, and any other type of financial “innovation”, and it can be seen in how they chose to run Berkshire Hathaway. The company has very little debt, and a big cushion of cash and investments, which has influenced the way Morningstar is managing its own balance sheet.

The whole skepticism that revolves around Wall Street’s creativity when it comes to new product development has wildly influenced our analysts throughout the years, especially when faced with the latest product offering from investment banks. As Buffett once said: “if you have been playing poker for more than half an hour and you still don’t know who the patsy is, then most definitely you’re the patsy.”