Message Font: Serif | Sans-Serif
No. of Recommendations: 2
I bought a stock on one of the newsletter recommendations and blindly trusted the opinion of the picker that this reinsurer was a great company, with Buffett-related management and its moat was growing. Blind faith led to thousands lost when I knew in my head this was not my type of company. I'll make my own mistakes from now on.

That company would be Montpelier Re, which I also own. Although my position in MRH is down as well, I am not sure that the verdict on the company has yet been delivered. While certainly the loss of a huge chunk of the company's equity in a single storm puts managment's approach to risk diversification in question, the nature of re-insurance will always be that even in a well run company many years of profits will be periodically interupted by a horrendous year. Thus, the owner of a re-in company stock must be willing to ride out the business cycle. What Katrina hammered home to me is that the relatively low P/B for MRH existed for a reason - the risk of the business and the risk that the company could be driven out of business.

Even after Katrina, MRH is still up from its founding in 2002.

Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.