Savvy investors know that the time to dive into a market is when blood is starting to run in the streets. Consider, for example, this bit of news from the Wall Street Journal (subscriber link):
Warren Buffett, seizing a chance to profit from turmoil in the nation’s credit markets, is starting up a bond insurer that aims to make it cheaper for local governments to borrow and promises to be a tough competitor for the industry’s embattled incumbents.
The billionaire investor’s Berkshire Hathaway Assurance Corp., set to open for business today in New York state, will guarantee the bonds that cities, counties and states use to finance sewer systems, schools, hospitals and other public projects.
There’s been word in the trades and the press that big bond-insurance players (who guarantee municipalities’ bonds, allowing the bonds to be written using the insurers’ credit ratings, which generally permit access to better interest rates) are in danger of seeing their current ratings erode due to fallout from the mortgage and credit crunch, opening the door to new players.
Given the capitalization and diversification within Berkshire Hathaway’s portfolio, this would seem to be a natural fit for Uncle Warren.
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1 So Mr. Buffet Gets Into Insuring Bonds…Then Mr. Ross Gallops In…Coincidence? | BloodhoundBlog: Real estate marketing and technology blog | Realtors and real estate, mortgages, lending, investments // 24 Jan 2008 at 11:55 pm
[...] Keeping the above in mind, why aren’t we seeing more people reporting on what I’m seeing? Here is another, and here. [...]