Swiss Re & Market downs and ups

I tried to talk to my better half about what smart investors like Warren Buffett would have done before and during the large market up and down swings in the last few days. She was bored and completely uninterested so I am resorted to blog about it here. (smile)

What smart investors like Warren Buffett had done long before the recent market madness was to study in detail some of the really good and solid companies around the world. And they wait. They wait until the prices are right and they swing their bats.

Of course, Buffett can be wrong. But I think Buffett knows a thing or two about the reinsurance business when he decided to take a 3 percent stake in Swiss Re and also 20.0% of its property and casualty portfolio (taking both the risk and also the premium) for the next five years. (smile)

Here are some news on Buffett’s investment in Swiss Re,

• Buffett Assures Swiss Re - Forbes
• Warren Buffett snaps up stake in Swiss Re - Telegraph UK
• [above links via CNBC]
• Buffett snaps up 3 per cent stake in struggling reinsurance firm Swiss Re - The Independent - Here is a quote, “The deal consolidates Mr Buffett’s position as one of the most important powerbrokers in the insurance industry, a position he has been hoping to bolster further as the credit crisis plays out. […] Buffett has repeatedly warned of the dangers of complex credit derivatives, whose value he questioned. Their collapse has threatened to engulf parts of the insurance industry, specifically the so-called monoline insurers, which expanded aggressively by selling protection against defaults on mortgage derivatives. With many monoline insurers fighting for survival, Mr Buffett set up a rival monoline insurer last month.“

P.S. One of these days, I might want to talk about the psychology of the Hong Kong media and investing public especially those that followed billionaire investors like 四 叔 the so-called 股 神 “stock-market god” of Hong Kong who was predicting new highs weeks ago. 四 叔 is, of course, no where to be seen now. Sadly, the media found it convenient to create an authority like 四 叔 the “stock-market god” to sell some newspapers or magazines.