I believe Ben Stein's bullishness on RQI predated a column where he admitted that he misread and misunderstood the financial crisis.
Not surprising. Even Buffet says he didn't understand the CDOs and CDSs.
But in Buffet's case, he understood them enough to call them financial weapons of mass destruction. I believe he understood them more than he let on, but didn't want to waste his time justifying the rationale for not liking them.
Buffet has a lot of CDS in his portfolio. So, not understanding them hasn't stopped him.
Incidentally, there are plenty derivatives traders out there who perfectly understand CDS (CDOs are not the same thing as they simply ABS). Buffet does not specialize in derivatives, he's a Graham & Dodd fundamental analysis guy and that's pretty much all he's good at. Most derivatives traders can run fast and tight circles around him all day long. He really is being honest that he doesn't truly understand derivatives. Too much calculus. The derivatives desks that trade them employ Math & Physics Ph.D.s to model these things. Buffet is good at what he does, but his math skills are more limited than a mathematician's.