Credit default swaps on Berkshire Hathaway - the cost to insure its bonds - have soared to 535 basis points. Put another way, the market is placing a 60% chance that the world's greatest investor could default on his loans in the next five years.

Though Berkshire still has mountains of cash and a AAA credit rating, risky option positions and large stakes in financial companies (including American Express and Wells Fargo) are scaring investors away.

Berkshire has almost enough cash to pay its debt outright, so the market's skepticism is overdone. It's another sign of extreme fear towards stocks.

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