Warren Buffett：Berkshire Hathaway 2002 Letter, Additional Excerpt 2

If, for example, you are either long or short an S&P 500 futures contract, you are a party to a very simple derivatives transaction – with your gain or loss derived from movements in the index. Derivatives contracts are of varying duration (running sometimes to 20 or more years) and their value is often tied to several variables. Unless derivatives contracts are collateralized or guaranteed, their ultimate value also depends on the creditworthiness of the counterparties to them. In the meantime, though, before a contract is settled, the counterparties record profits and losses – often huge in amount – in their current earnings statements without so much as a penny changing hands.

Source： https://www.berkshirehathaway.com/letters/2002pdf.pdf
Locator：2002 Chairman's Letter, additional excerpt 2 · Verified：2026-10-19 · Verification：Short excerpt

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