Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Further Gold Price Pressure as the USDX Is About to Rally - 23rd Oct 20
Nasdaq Retests 11,735 Support - 23rd Oct 20
America’s Political and Financial Institutions Are Broken - 23rd Oct 20
Sayonara U.S.A. - 23rd Oct 20
Economic Contractions Overshadow ASEAN-6 Recovery - 23rd Oct 20
Doji Clusters Show Clear Support Ranges for Stock Market S&P500 Index - 23rd Oct 20
Silver Market - 22nd Oct 20
Goldman Sachs Likes Silver; Trump Wants Even More Stimulus - 22nd Oct 20
Hacking Wall Street to Close the Wealth Gap - 22nd Oct 20
Natural Gas/UNG Stepping GAP Patterns Suggest Pending Upside Breakout - 22nd Oct 20 -
NVIDIA CANCELS RTX 3070 16b RTX 3080 20gb GPU's Due to GDDR6X Memory Supply Issues - 22nd Oct 20
Zafira B Leaking Water Under Car - 22nd Oct 20
The Copper/Gold Ratio Would Change the Macro - 21st Oct 20
Are We Entering Stagflation That Will Boost Gold Price - 21st Oct 20
Crude Oil Price Stalls In Resistance Zone - 21st Oct 20
High-Profile Billionaire Gives Urgent Message to Stock Investors - 21st Oct 20
What's it Like to be a Budgie - Unique in a Cage 4K VR 360 - 21st Oct 20
Auto Trading: A Beginner Guide to Automation in Forex - 21st Oct 20
Gold Price Trend Forecast into 2021, Is Intel Dying?, Can Trump Win 2020? - 20th Oct 20
Gold Asks Where Is The Inflation - 20th Oct 20
Last Chance for this FREE Online Trading Course Worth $129 value - 20th Oct 20
More Short-term Stock Market Weakness Ahead - 20th Oct 20
Dell S3220DGF 32 Inch Curved Gaming Monitor Unboxing and Stand Assembly and Range of Movement - 20th Oct 20
Best Retail POS Software In Australia - 20th Oct 20
From Recession to an Ever-Deeper One - 19th Oct 20
Wales Closes Border With England, Stranded Motorists on Severn Bridge? Covid-19 Police Road Blocks - 19th Oct 20
Commodity Bull Market Cycle Starts with Euro and Dollar Trend Changes - 19th Oct 20
Stock Market Melt-Up Triggered a Short Squeeze In The NASDAQ and a Utilities Breakout - 19th Oct 20
Silver is Like Gold on Steroids - 19th Oct 20
Countdown to Election Mediocrity: Why Gold and Silver Can Protect Your Wealth - 19th Oct 20
“Hypergrowth” Is Spilling Into the Stock Market Like Never Before - 19th Oct 20
Is Oculus Quest 2 Good Upgrade for Samsung Gear VR Users? - 19th Oct 20
Low US Dollar Risky for Gold - 17th Oct 20
US 2020 Election: Are American's ready for Trump 2nd Term Twilight Zone Presidency? - 17th Oct 20
Custom Ryzen 5950x, 5900x, 5800x , RTX 3080, 3070 64gb DDR4 Gaming PC System Build Specs - 17th Oct 20
Gold Jumps above $1,900 Again - 16th Oct 20
US Economic Recovery Is in Need of Some Rescue - 16th Oct 20
Why You Should Focus on Growth Stocks Today - 16th Oct 20
Why Now is BEST Time to Upgrade Your PC System for Years - Ryzen 5000 CPUs, Nvidia RTX 3000 GPU's - 16th Oct 20
Beware of Trump’s October (November?) Election Surprise - 15th Oct 20
Stock Market SPY Retesting Critical Resistance From Fibonacci Price Amplitude Arc - 15th Oct 20
Fed Chairman Begs Congress to Stimulate Beleaguered US Economy - 15th Oct 20
Is Gold Market Going Back Into the 1970s? - 15th Oct 20
Things you Should know before Trade Cryptos - 15th Oct 20
Gold and Silver Price Ready For Another Rally Attempt - 14th Oct 20
Do Low Interest Rates Mean Higher Stocks? Not so Fast… - 14th Oct 20
US Debt Is Going Up but Leaving GDP Behind - 14th Oct 20
Dell S3220DGF 31.5 Inch VA Gaming Monitor Amazon Prime Day Bargain Price! But WIll it Get Delivered? - 14th Oct 20
Karcher K7 Pressure Washer Amazon Prime Day Bargain 51% Discount! - 14th Oct 20
Top Strategies Day Traders Adopt - 14th Oct 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

How to Earn 10% From the Safest Company in America

Companies / Investing 2009 Dec 01, 2009 - 12:59 PM GMT

By: DailyWealth

Companies

Best Financial Markets Analysis ArticleTom Dyson writes: I just listened to Bill Berkley's third-quarter conference call...

Bill Berkley started an insurance business while he was a student at Harvard in 1967 with $2,500 in capital. Today, Bill's company, W.R. Berkley, is the ninth-largest property and casualty insurer in America, with a market cap of $4 billion.


"September was the first month in 34 months when our volume was up," Bill said. "The things we're seeing now are all the signs of a turn in the cycle."

The insurance business moves in cycles. Supply and demand drive these cycles. When there are many companies offering insurance but only a few customers, there's too much competition. Prices fall and underwriting becomes unprofitable. They call this a soft market in the industry.

When there are few suppliers of insurance and lots of buyers, there's a scarcity. Insurance prices soar, and it's easy for underwriters to make a profit. They call this a hard market.

It's been a soft market for property and casualty insurance over the last four years. But according to Bill Berkley, low prices are generating losses at many insurance firms. These losses – combined with the collapse of AIG and the credit crunch – are sucking billions of dollars out of the industry and creating a scarcity of insurance.

In other words, we're moving into a hard market. Bill predicts insurance prices will start rising in the first quarter of 2010. But it may be happening already

Towers Perrin's Commercial Lines Insurance Pricing Survey (CLIPS) is the most accurate pricing survey in the insurance business. The most recent survey shows year-over-year prices in property and casualty insurance rose last quarter for the first time in four years.

Insurance is a great business... especially when you're entering the sweet spot in the cycle. But there's another reason for investing in insurance companies right now...

We're in a recession. I'm only interested in businesses that can thrive in a weak economy. Insurance fits the bill. People always need insurance... even in recessions.

What most people don't realize is, insurance is also a money management business. Insurance companies have huge cash balances resulting from the premiums they collect. They can't spend this cash in case they have to make sudden payouts. But they can earn interest while they hold it. Insurance companies invest in stocks, bonds, hedge funds, and private equity. Some insurance companies even use their cash balances to make short-term loans like a bank.

In recessions, insurance companies can make defensive investments in the stock market to hedge them against crisis. The most profitable company in Canada last year was an insurance company that had put on huge short positions in the stock market had bet on a collapse in subprime mortgages.

Small and midsize insurance companies are the best way to profit from the new insurance cycle. We have three of them in the 12% Letter portfolio. But for the absolute safest bet among large insurance companies, Berkshire Hathaway is my favorite.

Berkshire Hathaway is Warren Buffett's company. Buffett understands the insurance cycle as well as anyone. He'll have Berkshire's insurance operations perfectly positioned for the coming feast. With $24 billion on its balance sheet and one of the strongest investment portfolios on Wall Street, Berkshire Hathaway is arguably the safest company in the world for public investors.

Buffett himself said you should expect Berkshire to produce 7% a year returns. But that was before the collapse of AIG. With the stronger insurance market coming and the new high-yield investments Buffett picked up during the financial crisis of 2008, I think you can expect average annual returns on your money around 10% from Berkshire's stock if you buy today.

Good investing,

Tom Dyson

http://www.dailywealth.com

The DailyWealth Investment Philosophy: In a nutshell, my investment philosophy is this: Buy things of extraordinary value at a time when nobody else wants them. Then sell when people are willing to pay any price. You see, at DailyWealth, we believe most investors take way too much risk. Our mission is to show you how to avoid risky investments, and how to avoid what the average investor is doing. I believe that you can make a lot of money – and do it safely – by simply doing the opposite of what is most popular.

Customer Service: 1-888-261-2693 – Copyright 2009 Stansberry & Associates Investment Research. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This e-letter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Stansberry & Associates Investment Research, LLC. 1217 Saint Paul Street, Baltimore MD 21202

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Daily Wealth Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules