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Brian Abbott

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  • Reinsurance Update: Looking Ahead To Q1 2013 Results [View instapost]
    Wow, I remember writing a VERY similar article.... hope this is due to some kind of error. (thanks for the heads up @a_girl_irl )
    Jul 21 02:52 PM | Likes Like |Link to Comment
  • Selling Puts On The Dogs Of The Dow [View instapost]
    >>But why do you choose the smallest price? Shouldn't you be looking at some more fundamental things like P/E?

    Good question, and I think it is that the Dow already consists predominantly of dividend-paying, value-slanted companies. You've already screened out the growth-oriented companies by limiting analysis to the Dow.

    >>Another question I have (might be trivial) but how do you price your puts when you sell?

    The best time to sell is when volatility is higher (which is also when there has been a sell-off - a second reason to use that timing).

    I place an offer to sell limit order with my broker about one third up from the bid/ask spread. Another advantage of this Dogs of Dow put technique is that they have among the most liquid option markets so you lose less to the spread that way.
    Jul 14 10:24 AM | Likes Like |Link to Comment
  • Reinsurance Update: Summary Of Q12013 Earnings [View article]
    Thanks for your comment. The combined ratio is taken from the quarterly report filings.I have yet to find a good free third party source of the information. Wikinvest had it at one point, but I just checked and couldn't find it on there anymore. The investor relations website at most of these companies posts some nice presentations, but of course they all frame the data in a way to position themselves in the best light so, while interesting, probably aren't the best source for data needed for investing decisions.
    May 24 04:54 PM | Likes Like |Link to Comment
  • Reinsurance Update: Interim 2013 Q1 Earnings Comparisons [View article]
    good question. The tricky part is making sure the low price to book isn't just the market punishing a poor performer. I do cash out when my covered calls get hit - which has been happening lately. Then it brings up the next question you'll probably ask - how do you know when to get back in? - and I do that by writing out of the money naked puts. That ensures that if I buy again, it is after some degree of a sell-off, and if the price doesn't go down, then it generates current income in the meantime.

    Thinking about it more philosophically, selling puts is like earning an insurance-type of premium, on a reinsurer (who insures the risks of another insurer) - so in terms of calculus it is like a 3rd or 4th derivative depending on how you count it (since a put option itself is a derivative, on an equity which already has a degree of optionality embedded in it).
    May 2 06:51 PM | Likes Like |Link to Comment
  • Reinsurance Update: Interim 2013 Q1 Earnings Comparisons [View article]
    great question. PRE is a European reinsurer that I will include in the larger update next weekend. They haven't announced earnings yet. I agree with you that there is too much cash chasing yield, and is finding its way into this sector.

    I sell puts to acquire shares, and then sell calls to get rid of the shares, and the runup in the sector is so big that no puts have exercised in a while, and exercised covered calls will take me out of ALL my equity positions by June, barring a major (>10%) sector decline. Thus I am not in the mood to buy. But it has been hard to know where to put cash to work - nothing is cheap lately.
    Apr 27 07:09 PM | Likes Like |Link to Comment
  • Property Casualty Insurance And Reinsurance: What You Need To Know [View article]
    great article!
    Apr 27 07:05 PM | Likes Like |Link to Comment
  • Reinsurance Update: Interim 2013 Q1 Earnings Comparisons [View article]
    90-95% book value is the highest since the 2008 collapse. 120% is a valuation that larger primary insurers like BRK and CB trade at, and is a little high for reinsurers. (There are a few that do trade that high, including RNR and ACGL). A theory that we have developed on these discussion boards is that reinsurers should trade cheaper than primary insurers because they carry the tail risk for the industry.
    Apr 27 07:04 PM | Likes Like |Link to Comment
  • Blending Alpha And Beta: Building A 'Mini-Endowment' [View article]
    This is a great approach, and I like your focus on low expense ETF's. I do wonder if you are making things a little more complicated than they need to be by adding small allocations of 2 or 3% to a few things - they become unable to impact overall returns meaningfully at small allocations like that. If truly important, could they be made larger, and if not important, could they be eliminated?
    Apr 21 12:53 PM | Likes Like |Link to Comment
  • 3 Gold Stocks With Recent Intensive Insider Buying [View article]
    the drop in 49 North stock has been stunning. I am not long currently, but have owned some in the past. The are selling very far below liquidation value I believe. I saw they are issuing debentures. Glad they are not issuing common stock at these low levels. I am thinking hard about buying some - and yet it keeps going down.
    Apr 13 07:32 PM | Likes Like |Link to Comment
  • Reinsurance Update: Looking Ahead To Q1 2013 Results [View article]
    What kinds of alternative sources are you talking about? Cat bonds are one example that started getting hot pre-2008, with money coming in from hedge funds and the like. The market, as judged by stock prices, doesn't seem overly concerned about this. These stocks have gone vertical for several months now - most are even up today as the rest of the market suffers a 1+% loss.
    Apr 3 03:26 PM | Likes Like |Link to Comment
  • Amazon's Growth Is Slowing [View article]
    I enjoyed the article and the conversational style. I totally agree with the sentiment about Amazon. Hard to believe how a company can still maintain a 1999-era valuation, but AMZN does it somehow.
    Feb 22 11:55 AM | Likes Like |Link to Comment
  • Using The Leverage Of Long-Term Bonds In Your Portfolio Allocation [View article]
    Bond are definitely the most hated asset class out there. "Bond bubble" is the most common investing meme out there..... how can it possibly be a correct thesis when that many people believe it? Or they could be right and it is a bubble, but they are completely wrong about it nearing an imminent collapse.
    Feb 7 10:21 AM | Likes Like |Link to Comment
  • Attempting To Mimic The Yale Endowment Portfolio Using ETFs [View article]
    another strategy not mentioned in this Yale report, but is on their website, and also popularized by other asset allocation writers such as GMO, is Timber. It has some unique long-term diversification benefits. Specifically, it keeps growing during times when prices aren't favorable. It is a self-growing asset, which somehow is a very unique feature. Hard to invest in, outside of a couple of REITs (and unclear whether the same benefits accrue in a REIT structure)
    Jan 29 09:25 AM | Likes Like |Link to Comment
  • Attempting To Mimic The Yale Endowment Portfolio Using ETFs [View article]
    I liked WDTI when it came out - managed futures sounded interesting, and like all good strategies they can demonstrate good backtesting results. And it has basically been flat or down ever since. I guess the good thing for the manager is that they can say it was a mechanical strategy so it isn't their fault. I moved on a few years ago.
    Jan 29 09:23 AM | Likes Like |Link to Comment
  • A 60/40 Portfolio Without U.S. Treasuries Or U.S. Large Caps [View article]
    appreciate your thoughts. Of course, I didn't advocate avoiding equities - only substitution of international and REITs in place of general US equities. I agree with your comments about correlations, but the facts from the past 4 years are that it pretty much didn't matter which kind of equity you were in - they all behaved the same. of course that can change tomorrow, and that's why equities were only 40% overall.
    Jan 24 08:52 AM | Likes Like |Link to Comment