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Feeling Like It's 1999


JEast

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Insurers suck b/c they can't earn anything on their float in this environment. Insurers suck b/c they're gonna take mark-to-market losses on their portfolios as interest rates rise.

 

I don't even know man. Does anyone seriously care about any of this? Some insurers are baller and most are mediocre or suck. Is it really that complicated if you're holding for 10+ years?

 

Huh?

 

It's like I always say; you can't go wrong with free clothes.

 

Sometimes folks overthink things in the context of the HERE and the NOW, instead of focusing on the underlying truths of the world.

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Insurers suck b/c they can't earn anything on their float in this environment. Insurers suck b/c they're gonna take mark-to-market losses on their portfolios as interest rates rise.

 

I don't even know man. Does anyone seriously care about any of this? Some insurers are baller and most are mediocre or suck. Is it really that complicated if you're holding for 10+ years?

 

Huh?

 

Huh? +1

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Insurers suck b/c they can't earn anything on their float in this environment. Insurers suck b/c they're gonna take mark-to-market losses on their portfolios as interest rates rise.

 

I don't even know man. Does anyone seriously care about any of this? Some insurers are baller and most are mediocre or suck. Is it really that complicated if you're holding for 10+ years?

 

Huh?

 

It's like I always say; you can't go wrong with free clothes.

 

Sometimes folks overthink things in the context of the HERE and the NOW, instead of focusing on the underlying truths of the world.

 

Ah!  +1!

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Progressive is playing the premium game really well. Net premiums written to Surplus is expanding at 2.5-1 for new policies. They are using surplus to pay dividends + buy back stock (selling at 10-12 PE).

 

Chubbs has combined underwriting in the mid 80s to low 90s (except one fluke year @102). I still think a profitable underwriter will make $$$ regardless. They have most of their book in bonds.

 

Most insurance companies have mark-to-market securities so evaluating companies based on "book value" is complicated. I've really stuck to those  two, as management is on point.

 

 

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What do you think of AIG?  Peter Hancock is slowly cutting cost and improving CR.  While the stock is depressed, they are repurchasing stock hand over fist which is creating tremendous shareholder value. 

 

Tks,

S

 

Progressive is playing the premium game really well. Net premiums written to Surplus is expanding at 2.5-1 for new policies. They are using surplus to pay dividends + buy back stock (selling at 10-12 PE).

 

Chubbs has combined underwriting in the mid 80s to low 90s (except one fluke year @102). I still think a profitable underwriter will make $$$ regardless. They have most of their book in bonds.

 

Most insurance companies have mark-to-market securities so evaluating companies based on "book value" is complicated. I've really stuck to those  two, as management is on point.

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AIG looks very good on paper. I haven't really dug deep into them though.

 

My buddy at Marsh (MMC) said they are very solid and will likely return to normal. They still have a decently good name in the insurance business.

 

As it is now, I would personally put it on the "too hard to evaluate-pass." I probably would have hopped unto them in the low 30s, but alas my mind was elsewhere

 

Balance sheet is as black-box as it comes.

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Free clothes!  Make that free anything!

 

I honestly can't find anything that is truly cheap on an absolute basis.  The ideas tossed to me tend to be reaches and often high risk which I will pass on.  Patience, although difficult, will pay. 

 

When China busts, a lot will unravel.  It is the linchpin.

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Free clothes!  Make that free anything!

 

I honestly can't find anything that is truly cheap on an absolute basis.  The ideas tossed to me tend to be reaches and often high risk which I will pass on.  Patience, although difficult, will pay. 

 

When China busts, a lot will unravel.  It is the linchpin.

 

Yeah. A casino society?

 

Cool Off Wall Street's Casino Game

By Warren E. Buffett

POSTED: December 08, 1986

http://articles.philly.com/1986-12-08/news/26067455_1_wall-street-mugger-speculators

 

 

 

China Margin Lending: Extreme Edition

 

http://blogs.wsj.com/moneybeat/2015/04/21/china-margin-lending-extreme-edition/

 

 

 

Mr. Buffett on the Stock Market The most celebrated of investors says stocks can't possibly meet the public's expectations. As for the Internet? He notes how few people got rich from two other transforming industries, auto and aviation.

(FORTUNE Magazine)

By Warren Buffett; Carol Loomis

November 22, 1999

 

http://archive.fortune.com/magazines/fortune/fortune_archive/1999/11/22/269071/index.htm

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I also feel like the markets are way overvalued.  I don't know about 1999, because back then, the bubble was mostly in the Nasdaq.  It was completely ludicrous, and I remember telling everyone back then to pull out of the markets, and to not leave their safe haven fortune 500 tech jobs for the start ups. 

 

Nowadays, I don't really see that.  What I do see is a high probability for a mean reversion event in equities.  The signs are everywhere.  We've already seen commodities pop.  The next big thing to go is the bond market.  When interest rates rise, the equities markets will tank.  We've already seen over 10-15% drops in equities when QEx was about to end.  Last Nov, when speculation of interest rates were going to rise happened, equities tanked by 10% before the Fed came in with dovish language--basically a rescue.  When they do increase rates, I think markets are going to tank hard.

 

Also, you have a lot of people talk about the lack of value in the markets, and some people even blatantly saying that markets look pricey.  The Fed's new chairman even said this recently, but bit her tongue as to not stir markets.  Buffett has even come out and said there is a dearth of value in the markets, and before he died, Irving Kahn said the same thing.  I've been hearing a lot of notable value investors say that there are barely anything worth buying nowadays. 

 

If one looks for more evidence, we all know about CAPE, Tobin's Q, GDP to Total Market Cap, all of which are near all time highs.  Interest rates are at an all time low, profit margins at near all time highs, corporate buy backs are insanely high (which makes me think that we're reaching market tops as the "dumb money" is misallocating capital), valuations in tech do not make sense (SnapChat, Uber, Facebook, etc...) somewhat like the dot com bubble valuations.  Also, this is second in line with the longest running bull market, and we haven't had a recession in the current business cycle and we're well over due for one.  All in all, everything points to a large mean reversion event coming down the pike.  My bet is sometime within the next two years.  Going all cash wouldn't be a bad bet right now.  That's what I'm doing.

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JEast,

 

Was Mobius ever a very good investor (value or otherwise)?

 

The oldest US-based fund I could find that he manages is TEDMX. That one has almost always trailed the benchmark (and it virtually loses the same during down markets).

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Gencor squeaks by as a net-net w/a market cap of 94MM- 97MM in cash/short-term investments, A/R roughly equal to A/P + hidden real estate assets of around 50MM that is been carried on book for 7.2MM. I'd still wait a little longer before picking up shares, there is a lady who inherited shares from her husband (roughly 10% of company) and is slowly selling it off. You probably can pick it up cheaper as she liquidates.

 

National Western Life Insurance is selling at 1/2 Tangible Book, growing at 8% per year, zero debt.

 

Both are owner-operated and have share structures that make it tough for outsiders to gain control.

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