WSJ-Firm Makes Bold Bet on Falling Prices (FFH)

[Josh4580]

http://online.wsj.com/article/SB10001424052748704540904575451910642552160.html?mod=WSJ_hps_LEFTWhatsNews#articleTabs%3Darticle

 

[Grenville]

Nice article. Provides a better idea on how the deflation protection is structured. Also good press for the Fairfax team!

[Parsad]

Here's a direct link without having to register.  Cheers!

 

http://online.wsj.com/article/SB10001424052748704540904575451910642552160.html?mod=googlenews_wsj

[Parsad]

The team at Hamblin-Watsa have always been very diligent about counterparties...I wonder who is on the other end of this trade!  ;D  Cheap hedge they bought to protect a gigantic portfolio.  Cheers!

[nodnub]

Here's a direct link without having to register.  Cheers!

 

http://online.wsj.com/article/SB10001424052748704540904575451910642552160.html?mod=googlenews_wsj

 

The only way that link would work is if you are coming from a google search referral page, (whereas here the referral page is cornerofberkshire

 

A work around is to provide a google news search results link for the article title such as:

 

http://www.google.ca/search?tbs=nws%3A1&q=Firm+Makes+Bold+Bet+on+Falling+Prices

[barminov]

The team at Hamblin-Watsa have always been very diligent about counterparties...I wonder who is on the other end of this trade!   ;D  Cheap hedge they bought to protect a gigantic portfolio.  Cheers!

 

Surprise surprise, the counterparties are our old friends at Citibank Canada and Deutsche Bank!

 

I guess these guys learned nothing from the whole CDS thing. Maybe it's not such a good idea to sell instruments where you can lose a boat load and stand to gain a very small and capped amount. What the hell do I know though, I'm not a CFA and the highest math I got to was Calculus 2.  ::)

 

 

[twacowfca]

The team at Hamblin-Watsa have always been very diligent about counterparties...I wonder who is on the other end of this trade!   ;D  Cheap hedge they bought to protect a gigantic portfolio.  Cheers!

 

Surprise surprise, the counterparties are our old friends at Citibank Canada and Deutsche Bank!

 

I guess these guys learned nothing from the whole CDS thing. Maybe it's not such a good idea to sell instruments where you can lose a boat load and stand to gain a very small and capped amount. What the hell do I know though, I'm not a CFA and the highest math I got to was Calculus 2.  ::)

 

 

 

Q.  What's the second derivative of stupidity?

[Estimated Profit]

Hey Sanj,

 

The link you posted requires a subscription. Any chance the text can be posted?

[biaggio]

Hey Sanj,

 

The link you posted requires a subscription. Any chance the text can be posted?

 

Just go to google and search for the title of article

[nodnub]

Hey Sanj,

 

The link you posted requires a subscription. Any chance the text can be posted?

 

look above. I provided the link to the search results page that will take you to the full article.  You have to come from a google search results page for it to work.

[jegenolf]

Actually, it looks like there's a better way to get the google link. If instead of clicking the link on the google results page you copy the link and paste it like this:

 

http://www.google.com/url?sa=t&source=web&cd=1&ved=0CBcQFjAA&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB20001424052748704540904575451910642552160.html&rct=j&q=wall%20street%20journal%20fairfax%20financial&ei=7Zd2TIfaMYWglAfD9fztCw&usg=AFQjCNHJ2rKspQTeCleDWyAjtj6dmOFz5Q&cad=rja

 

It gives you a direct link to the article. Only a minor additional convenience but I'm lazy enough that I appreciate a direct link (and obviously cheap enough I don't have a subscription!).

[opihiman2]

The team at Hamblin-Watsa have always been very diligent about counterparties...I wonder who is on the other end of this trade!   ;D  Cheap hedge they bought to protect a gigantic portfolio.  Cheers!

 

Surprise surprise, the counterparties are our old friends at Citibank Canada and Deutsche Bank!

 

I guess these guys learned nothing from the whole CDS thing. Maybe it's not such a good idea to sell instruments where you can lose a boat load and stand to gain a very small and capped amount. What the hell do I know though, I'm not a CFA and the highest math I got to was Calculus 2.  ::)

 

 

 

Q.  What's the second derivative of stupidity?

 

Zero.

[Hoodlum]

I wonder who else is on the other side of the bet.

 

"Some banks selling these derivatives say they are skeptical of deflation. Prices for the derivative insurance suggest a 20% chance of deflation over the next 10 years, traders say. The banks say they have hedged their exposure, or reduced their risk, by finding other investors skeptical of deflation to take the other side of the trades or by purchasing their own insurance."

[Estimated Profit]

I wonder who else is on the other side of the bet.

 

"Some banks selling these derivatives say they are skeptical of deflation. Prices for the derivative insurance suggest a 20% chance of deflation over the next 10 years, traders say. The banks say they have hedged their exposure, or reduced their risk, by finding other investors skeptical of deflation to take the other side of the trades or by purchasing their own insurance."

 

Here we go again with the black boxes with these financial institutions. Though Citibank and Deutsche Bank may have hedged by selling the contracts to other counterparties, that won't mean Jack if the other counterparties are forced into bankruptcy by this or other stupid decisions.

 

I laud Chou for the sharing of his ideas of the US financials long term potential but the risks are still real. Peter Garrett might sing of their "short memories".