netnet Posted March 4, 2011 Share Posted March 4, 2011 My nephew has taken to Buffett/Munger's dictum about building a circle of competence. For whatever reason, he wants to learn about the insurance industry. Well I don't know very much about insurance to tell the truth. So, I directed him to a reinsurance broker I know. I also suggested that he re-read BH's annual letters. But I know that there are insurance gurus on this board. So the question is--What would you suggest that an enterprising sort do to get to level so that he knows what he doesn't know? thanks netnet Link to comment Share on other sites More sharing options...
twacowfca Posted March 4, 2011 Share Posted March 4, 2011 My nephew has taken to Buffett/Munger's dictum about building a circle of competence. For whatever reason, he wants to learn about the insurance. Well I don't know very much about insurance to tell the truth. So, I directed him to a reinsurance broker I know. I also suggested that he re-read BH's annual letters. But I know that there are insurance gurus on this board. So the question is--What would you suggest that an enterprising sort do to get to level so that he knows what he doesn't know? thanks netnet That takes humility, not knowledge. In my case, I was too smart to learn that lesson, except by falling on my face more than once. Ouch! Failure can be the most powerful reality check. As an uncle, you'll be wise to let him fall down, while cautioning him not to learn that way while he's rock climbing. Link to comment Share on other sites More sharing options...
Myth465 Posted March 4, 2011 Share Posted March 4, 2011 As an uncle, you'll be wise to let him fall down, while cautioning him not to learn that way while he's rock climbing. LOL. Taking what twa said, show him some basic metrics. Give him a basket of 10 companies with 2-3 crappy ones in there and $200-$500. Tell him after 2-5-whatever years he keeps whatever it returns, but you get 80% of the basis or something like that. He would have to pick 1 insurer, 1 reinsurer, and 1 whatever. I am sure he would be quite interested and will learn naturally over the next few years. Its what I did, except without a nice uncle to spot me the money. Also have him listen to some LRE conference calls. Link to comment Share on other sites More sharing options...
Rabbitisrich Posted March 7, 2011 Share Posted March 7, 2011 Have him pour over the 10ks for the five years leading to Gen Re's sale in '98, and the 7 years leading to MBIA's fail in '07, and let him figure out the warning trends. Link to comment Share on other sites More sharing options...
Guest HarryLong Posted March 8, 2011 Share Posted March 8, 2011 Have him call me. I would be happy to teach him what I know. Link to comment Share on other sites More sharing options...
Parsad Posted March 8, 2011 Share Posted March 8, 2011 Hi Netnet, I think the best lesson is as you've suggested to read Berkshire's letters. I would also suggest reading Fairfax's letters from the first annual report in 1985 when it was still called "Markel"! Fairfax is almost entirely an insurance and investment business, so it would probably be a better case study in insurance than Berkshire. With Prem's successes and lumps, your nephew will also learn alot about what works and what doesn't. Cheers! http://www.fairfax.ca/financial.htm Link to comment Share on other sites More sharing options...
netnet Posted March 9, 2011 Author Share Posted March 9, 2011 Thanks everybody. And Harry, I will have him call you next week. (If you don't mind, I'll listen in!) Link to comment Share on other sites More sharing options...
Guest HarryLong Posted March 9, 2011 Share Posted March 9, 2011 Sounds good, my pleasure. Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now