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Douglas Simpson
Works at Arbitrator, educator, value investor; fan of behavioral finance & economics
Attended Dartmouth College
Lives in Connecticut, Near Hartford
1,441 followers|39,784 views


El-Erian comments on implications of China's recent GDP number release, reminds us GDP is but one piece of the formula regarding China's economic situation.
#China   #Mohamed_El-Erian #ChinaGDP  
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China is learning about "runs" on financial institutions that offer rates "too good to last."  Quoting Bloomberg:
 "Returns exceeding bank deposits have lured investors to trusts, allowing the products to become the biggest segment of the country’s financial industry after banks. Trust assets have surged more than fourfold from the beginning of 2010, making more investors vulnerable to losses as China’s slowing economy increases the difficulty for borrowers to repay debt." Endquote
#bankruns   #shadowbanking   #alternativeinvestments  
Chinese investors demanding their money back from a troubled 973 million-yuan ($156 million) high- yield product in Shanxi province were confronted by police in front of a China Construction Bank Corp. branch.
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My colleague and I were just last week explaining to our LLM students the effects of the flow of capital into and out of the cyclical insurance underwriting markets.  Rising capital availability and low catastrophe losses are combining to result in lower reinsurance prices in 2014 renewals.  This will flow down to greater availability and affordability in the primary markets ... a "Soft Market" ... until the cycle reverses.
Willis report here:

#SoftMarket   #InsuranceUnderwritingCycle   #Reinsurance   #CatastropheInsurance  
Property and casualty reinsurance prices declined on policies renewed for April 1 amid an oversupply of capital and muted demand from clients, according to Willis Re.
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Isn't it nice that Uncle Sam gets dividends from a big bank with a monopoly business?
#dividends   #federalreservebank  
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As always, the best advice in the room.  
Warren Buffett's Annual Letter to Shareholders, from the Berkshire Hathaway Annual Report.
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Have him in circles
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Douglas Simpson

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Bob Shiller sees signs of weakening in housing market.   He briefly explains in this CNBC video (after a financial services ad).
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Reading "Tap Dancing to Work: Warren Buffett on Practically Everything, 1966-2012" (Carol Loomis, Fortune Books 2012), I came across her conversion of a 12/10/2001 speech to an article.  In it, Buffett explains the historical relationship between the total value of all U.S. stocks and the GNP.  I found that +GuruFocus has a current article articulating Buffett's reasoning, with current data, at the link shown.
#WarrenBuffett   #GNP   #StockMarketValuation   #TapDancingToWork  
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What many may forget is that Warren Buffett has a long-time business partner, Vice Chair of Berkshire Hathaway Charlie Munger.  And he is just as smart.  Watching this on YouTube will lead you to other video interviews of Charlie Munger, all valuable.
#BerkshireHathaway   #CharlieMunger   #WarrenBuffett  
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(Reuters) — Berkshire Hathaway Inc. Chairman and CEO Warren Buffett said on Friday that his firm had eliminated most of its catastrophe insurance business in the United States.

Citing a decrease in rates, Mr. Buffett told cable television network CNBC: "We actually in the United States have almost eliminated our catastrophe insurance business."

Several news reports misquote him as mentioning "interest rates," but if you read the full transcript, it is clear he is talking about premium rates, not interest rates.

Four interesting videos, totalling about 25 minutes, from the 3-hour interview he gave to CNBC this morning, are here:

The catastrophe coverage is not mentioned in those, but found in the 48 page informal transcript of the interview, here: (downloadable as a PDF).  The references to catastrophe insurance rates start at page 21.

Note the reference to rates.  Buffett counts on the ability to write business at an underwriting profit and then to invest the "float."  In the area of catastrophe insurance, Berkshire can offer policyholders impeccable financial strength without having to post collateral or go through the legal and financial mechanics to structure a catastrophe bond.  Of course, if competition drives catastrophe insurance rates down and eats away at his ability to do that, he makes clear that his underwriters are not to issue policies merely to retain 'market share.'  Instead, they should leave the field and wait for better times.  Typically, rates will rise after a big loss scares away the "weak hands."

If the "strong hands" are "leaving the game," what does that say about the odds for the others?  As a saying goes: "If you don't know who the 'chump' is at the card table .... its probably you."

I also remember something taught me in the Army that young, eager new officers must remember.  "There comes a time when you will be in a fight, things are getting hot, you are all excited and eager and feel you can beat the world.  Then, your experienced senior non-commissioned officer, that tough veteran Master Sergeant, puts his hand on your shoulder and whispers in your ear: 'Lieutenant ... its time to go.'  When that time comes, listen to him."

#catastrophe_insurance   #berkshirehathaway   #disasterrecovery   #warrenbuffett   #economics   #federalreservebank  
Warren Buffett says that while there will be another financial crisis "someday," he'd be "surprised a lot" if global stock prices plunged 50 percent soon.
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I don't agree that Berkshire Hathaway is necessarily a wise player in terms of underwriting. That decision is based on actuarial projections, not profit.
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In the words of one Ukrainian citizen touring the newly opened personal palace of fugitive Ukrainian President Yanukovych, "It's incredible how a person could bring his country to such shameful poverty and at the same time live in such luxury.  There are no morals."   #Ukraine   #yanukovych   #corruption   #accountability   #transparency  
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Have him in circles
1,441 people
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Arbitrator, Educator
Insurance regulatory law
  • Arbitrator, educator, value investor; fan of behavioral finance & economics
    Self-employed, 2003 - present
  • The Hartford
    Counsel, 1978 - 2003
  • U.S. Army
    Lieutenant, 1970 - 1972
Map of the places this user has livedMap of the places this user has livedMap of the places this user has lived
Connecticut, Near Hartford
Atlanta - Park Ridge - Detroit - Indianapolis - South Bend - London, UK
“Someone's sitting in the shade today because someone planted a tree a long time ago.” ― Warren Buffett
For 30 years, Doug provided legal counsel to management of insurance companies and brokers; he now arbitrates disputes, teaches an LLM course, studies history, finance and economics and tries to enjoy life during the remainder. 

Married 30+ years, our daughter is teaching sixth grade outside Boston.

Influential books/writers: 
Alexrod, "Evolution of Cooperation"
Christensen, "The Innovator's Dilemma"
Diamond, "Collapse:  How Societies Choose to Fail or Succeed"
Olson, "The Rise and Decline of Nations"
Kahneman, "Thinking Fast and Slow"
Fisher, "Common Stocks and Uncommon Profits"
Graham, "The Intelligent Investor"
Bragging rights
Co-author of "Creating an Antitrust Compliance Program -- Checklist of Issues," Checklists for Corporate Counsel, Business Laws, Inc. (1996), a chapter on Alternative Risk Management in "Research Handbook on International Insurance Law and Regulation," (Edward Elgar, 2012), privately commissioned works on the subject of insurance law and regulation and "Finite Risk Transfer: May Be Habit Forming - Use Only As Directed," in the Mar/Apr 2007 issue of Contingencies, the magazine of the American Society of Actuaries.. Mr. Simpson is a co-inventor of "Online method and system for fulfilling needs resulting from property and other similar losses," U.S. Patent No. 7,624,031, issued 11/24/2009. "Online method and system for fulfilling needs resulting from property and other similar losses " U.S. Patent #8,135,599 Issued March 13, 2012.
  • Dartmouth College
  • University of Connecticut School of Law
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