Letter

Fairfax Financial's 2016 letter to shareholders

Prem Watsa · 2017

An unusually candid account of a defensive hedging programme from start to finish: what it cost, why it was kept for years, and what changed the decision to remove it.

• Risk
• Investing

1 idea from this letter

• Post-mortemRisk located

  The cost of protection, itemised: what a seven-year hedge actually cost

  A hedge is a premium paid every year; over a long bull market the premium is the whole story, so account for it as a cost from the start.

  Portfolio hedging decisions, insurance company analysis, and any discussion of tail protection.