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Subject:  Re: MBIA Bonds? Date:  12/20/2012  11:15 AM
Author:  globalist2013 Number:  34562 of 35909

you think there is any upside to get in now?


I'll echo what Howard said about MBIA's prospects. I really have no idea if MBIA will survive in the long run. But I’m guessing the odds are on their side now.

Where he and I do differ is in how we manage our risks. I wouldn't let a questionable situation --which MBIA certainly is-- become 2% of AUM without doing a whole lot more digging into their financials than I'm willing to do. In other words, I never bet big, and I define 'big' as a 2% exposure, never mind the fact that 'exposure' becomes 'risk' only when recovery becomes zero. Let me illustrate those concepts with a story I've told before.

Years ago, I was reading a value shop's quarterly report to shareholders, and they mentioned buying ShopKo's stock. What they found attractive -- and seemed to reduce their risks-- was that ShopKo typically onwed the land on which their stores were cited. Per GAAP rules, that