Warren Buffett's Berkshire Hathaway Inc (BRKa.N) (BRKb.N) is starting a bond insurer that would help state and local governments lower their borrowing costs, and is likely to lure business from established rivals struggling with credit market turmoil.
Buffett, often called the world's greatest investor, is known for taking large business and investment risks.
He has said, for example, that Berkshire is willing to suffer a $6 billion insurance loss on a single storm. The company was able to boost premiums following Hurricane Katrina after weaker rivals reduced underwriting risk.
Buffet's risk profile fits the one of a risk-taker, while in reality his larger-than-life bets decrease risks because they enable him to shape the situation. He always buys control, not risk. He times his purchases so that his ability to control the developments in the industry is at a maximum. For example, now everybody is out of cash and he can come in and define his new rules for the game.
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