Getting one over Warren Buffett

The oracle has spoken. Last week's BBC interview with Warren Buffett made for compelling watching, as much for finding out about the sage's living arrangements and lack of technology in his private office as for his views on how to run an investment portfolio.

For starters, there was his interesting take on the use of derivatives and those who trade them. He opines that if there were only 50 people on an island that grew rice, you would not choose the five cleverest to create a derivatives market and then pay them more than anyone else. And then he points out the downside of having such liquid stock markets is they become casinos for speculators, making some people focus on daily prices rather than longer-term value and turning the advantage of liquidity into a disadvantage. However, before we all go off and repent our sins, Buffett did poi...