Theory | wealthymatters

Prem Watsa – The Canadian Warren Buffett

May 23, 2012 5 Comments

wealthymatters.com Seeing how Prem Watsa is in the news in India these days with respect of the sale of Thomas Cook India by its British parent,(http://economictimes.indiatimes.com/news/news-by-industry/services/travel/toronto-based-fairbridge-capital-to-buy-thomas-cook-india-deal-estimated-at-rs-1000-crore/articleshow/13365646.cms) ,now might be just the time to take a look at the life of this media shy individual.

Watsa is not very widely known outside of Canada, but is well regarded and followed in value investing circles. He has shown an incredibly prescient ability to analyze the financial markets. Some of his most famous calls include selling half his stocks before the 1987 crash and buying S&P puts before the index fell off a cliff in 2000. He also bet against the Japanese Nikkei but his biggest success came more recently during the 2008 sub-prime crisis when he bought credit default swaps on the premise that banks and financial institutions would struggle if a credit and liquidity crisis arose. Today, Watsa is the CEO and Chairman of Fairfax, which has a market cap of approximately $8.7 billion.Fairfax Financial Holdings Limited is a financial holding company based in Toronto, Ontario, which is engaged in property, casualty, and life insurance and reinsurance, investment management, and insurance claims management. He is also a member of the Advisory Board for the Richard Ivey School of Business-his alma mater, a member of the Board of Directors of the Royal Ontario Museum Foundation and as well as Chairman of the Investment Committee of St. Paul’s Anglican Church.Till recently he was also a non-executive director of ICICI Bank.Whatever I can piece together of his story is pretty fascinating…. Read more of this post

Filed under Paper Assets, Theory Tagged with Buffett of the North, Canadian Buffett, Chou Associates, Confederation Life Insurance, contrarian investor, Fairfax Financial Holdings Limited, Francis Chou, Gardiner Watson Asset Management, Hamblin Watsa Investment Counsel Ltd, insurance company, postaday, Prem Watsa, Richard Ivey School of Business, Security Analysis by Benjamin Graham, Sir John Templeton, Steven Markel, Thomas Cook, value investing, value investor, Warren Buffett

How To Shift Between Simple And Compound Interest Rates

May 21, 2012 Leave a comment

wealthymatters Now that banks and other financial institutions are having to compete to raise deposits from the public,quite a few are resorting to a bit of window dressing.They quote annual yields,annualized returns or simple interest rates instead of compound interest rates for multi-year deposits.

Now a simple interest rate looks more impressive than a compound interest rate over longer periods of time ;so do check what sort of interest the seller is offering before locking your money away at a rate that looks great.

Here is a simple step-by-step way that you can use to mentally estimate the compound interest rate that is equal to any simple interest rate. Read more of this post

Filed under Paper Assets, Theory, Tool Kit Tagged with annualized return, Compound Interest, compound interest rate, converting simple interest to compound interest, equivalent simple and compound interest rates, postaday, Rule of 72, simple interest, simple interest rate, yield

Strategies To Make Money In The Stock Market

May 20, 2012 Leave a comment

First, remember Benjamin Graham’s mantra “The essence of portfolio management is the management of RISKS, not the management of RETURNS. Well-managed portfolios start with this precept.”

Second,remember what Baron Rothschild said – “I never buy at the bottom and I always sell too soon.” Trying to squeeze the last drop of profit from every deal might not be such a great idea.

Third,consider doing what Bernard Baruch used to do. Some 70 years ago, he would research a stock, buy it, and then each time the stock rose 10% from his purchase price, buy an additional amount equal to his first purchase. If the stock began declining he would sell everything he had bought when the drop equaled 10% of its top price.

Filed under Paper Assets, Theory, Tool Kit Tagged with Baron Rothschild, Benjamin Graham, Bernard Baruch, investing in shares, investing in stocks, investing in the share bazzar, postaday, share, stocks

Life Lessons From Warren Buffett

May 13, 2012 4 Comments

wealthymatters.com

Filed under Theory Tagged with Buffett Quotes, earning, expectations, How To Become Rich, How to Become Wealthy, investment, life lessons, postaday, risk taking, saving, spending, Warren Buffett

An Elizabethan Tale

May 7, 2012 2 Comments

wealthymatters.com Queen Elizabeth I(right) ruled England in the 16th century.She succeeded her father King Henry VIII, her half-brother King Edward VI and her half -sister Queen Mary I who ruled before her. Between them, her two predecessors King Henry VIII and King Edward VI had completely destroyed the Pound by debasing it till there was very little silver left in it. Queen Elizabeth,who was very ambitious for England was hampered by a weak Pound so she sought the help of Sir Thomas Gresham(left),a merchant,to solve the problem.

In the days when coins were made of precious metals,debasement was the practice where the ruler or the government of the day decided to lower the precious metal content of the coin while keeping its face value unchanged.For example,consider a coin which has a face value of 1Pound. The face value of a coin is referred to as its tale. This coin is made up of a metal (gold or silver) and the metal content of the coin is worth 1Pound as well. The metal content in a coin is referred to as specie.So in this example the tale of the coin is equal to its specie, which is the ideal situation. Now the ruler decides to debase the coin by 20 percent. So he reduces the metal content or the specie value of the coin by 20 percent . But at the same time he maintains the face value of the coin at 1Pound. And thus debases the coin. Read more of this post