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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Jurgis Bekepuris who wrote (29375)	12/21/2007 10:58:02 PM
From: Paul Senior	Read Replies (2) \| Respond to of 78475

The only difference with BRK/WSC is that you trust Buffett/Munger. Or trust their insurance rating expert. Nobody outside the company knows exactly what or how they have rated the long-tail insurance risks - those big risks - that they insure. We're all different. I'd rather have 1/4 percent of my assets in a group of under book-value insurance companies, than 5% in BRK. There's more safety in that imo, than in BRK that's near highs and that also has exposure to markets that are in difficulty (housing/construction). To the extent that somebody is investing a chunk of their assets, say 5% in something, then to say "if you don't know what insurer carries on their assets and if they reserve enough, you should not be investing in it," then if that's so, then my opinion is nobody should be investing in these companies, because nobody outside the company will ever know the assets well enough to actually and factually know if the company reserved enough. To me, it's the same as reading any 10k where they list all the potential bad things that could happen to the company. Somebody starts reading that stuff, they could be scared out of investing 5% in any company. Put another way, if you feel your circle of competence excludes insurance companies or specifically NWLIA, than okay, sure, don't invest in them or it. I feel my circle of competence does include insurance companies, so I am buying the ones that meet my criteria. Or - as regards NWLIA specifically - if you are convinced there's no margin of safety there for you - okay, pass on it. And as you say, since my exposure to NWLIA in my accounts would be smaller percentage than most, which is a way I control risk, I feel my margin of safety with NWLIA is adequate. It seems to have worked out to my satisfaction in the past six years that way.