Author Topic: Fairfax Financial 13F  (Read 13686 times)

netnet

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Re: Fairfax Financial 13F
« Reply #40 on: March 05, 2009, 01:44:12 PM »
But remember market timing is a bit of a fool's errand to quote Seth Klarman's annual letter

"While it is always tempting to try to time the market and wait for the bottom to be reached (as if it would be obvious when it arrived), such a strategy has proven over the years to be deeply flawed. Historically, little volume transacts at the bottom or on the way back up and competition from other buyers will be much greater when the markets settle down and the economy begins to recover. Moreover, the price recovery from a bottom can be very swift. Therefore, an investor should put money to work amidst the throes of a bear market, appreciating that things will likely get worse before they get better."

Putting the hedges on was not market timing, it was (presumably) driven by the belief that the market was over priced.  Once high quality stock were cheap Prem loaded up.  Was that a bad thing to do?  Remember the story of Buffett and Washington Post.  He bought and down it went.  But he was right to buy.

Now, for us, we are still worried about the down-side and are willing to spend for a little insurance, but we are neither  as smart or rich as Prem.  Although, we are going to pull off the hedges if the market tanks 5% to 10% more.