I don't really know what to think of this. On one hand, I highly respect Warren Buffett. He is, after all, the greatest investor of all time. But I do see some value in derivatives. They allow companies to limit their exposure to risk by spreading it around those willing to accept it. I think Buffett's concern is more that people speculate on derivatives. In my book, speculation is nothing more than gambling. It can have negative effects in any market because it can lead to bubbles and/or crashes. I guess time will tell if the Oracle of Omaha predicted this one correctly.
Check it out: A funny comic explaining the 2007-2008 Mortgage crisis.
