Giving it 361,156%

Berkshire’s dream is to replicate the success of 2002 when, after the Enron and WorldCom scandals, Buffett jumped into junk bonds, snapping up more than $7bn worth of energy and telecom assets. Many observers thought he had taken leave of his senses; but he was soon to prove them spectacularly wrong.

By the end of 2003, he had pocketed $1.1bn profit on his junk bonds alone. The idea this time around is that he will load up on prime mortgage-backed securities, whose value has been hit by their dodgy sub-prime variants, as well as cheap bonds being offloaded by desperate investment banks.
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Source: Thanks to Sanjeev from MSN BRK board

Our bouncy market reflects a very moody herd

ECONOMISTS don't like to think about it but, according to conventional theory, events such as the present wild gyrations in financial markets aren't supposed to happen.

That theory says share prices move only when investors quietly incorporate new information about the prospects of their investments, whereas it's clear the markets are swinging between blind panic and the thought that maybe it's just a great buying opportunity. The herd can't decide which way to run. How would you feel if you walked into a shoe shop and the manager rushed up and told you to buy extra shoes because prices had skyrocketed? Or if nervous customers warned you not to buy any socks because sock prices had fallen by half?

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8 Money Secrets From Warren Buffett

We all have someone whom we admire and respect. For me one person on my shortlist is Warren Buffett who is sometimes referred to as the "Sage of Omaha". I first heard about Buffett back in 2001 when I first started getting serious about investing and so I started reading all the titles with his name on it. Off course Buffett hasn't actually written any of them but they were priceless none the less.

If you have never heard of Buffett, Forbes currently ranks him as the third richest man in the world and he is arguably the world's greatest investor. He has amassed his fortune by making astute investment decisions and investing in businesses. Here is what I have learnt from Buffett:

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The World According to Eveillard

"I'm not worried about the global economic boom, except that it's a credit boom. What worries me is that we've had a credit boom for 15 years now, and a credit boom usually ends in a credit bust," Eveillard says. "Already you see problems cropping up like subprime debt. There are also indications that real estate is peaking in Ireland and Spain and England, not just America. And the appetite for risk remains high."
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Source : Thanks to dpatel from MSN Brk Board

How Berkshire Built a Super-Cat Powerhouse

As of 2006, Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) wrote the third-largest amount of net premiums in the reinsurance industry -- an amazing feat for a firm that started out making textiles. One of the key foundations of Berkshire's reinsurance business is its super-catastrophe line, and the company's annual shareholder letters offer an incredibly valuable case study of that segment's success. Let's take a closer look at the integral components of Berkshire's reinsurance division.

Berkshire's success in super-cat reinsurance, which insures very large catastrophic loss events, becomes more impressive in light of the challenges it faced. Capable reinsurers such as RenaissanceRe (NYSE: RNR), XL Capital (NYSE: XL), and Montpelier Re (NYSE: MRH) compete fiercely for market share. In addition, barriers to entry are minimal, with recently formed reinsurers such as Flagstone Re (NYSE: FSR) and Greenlight Re (Nasdaq: GLRE) almost constantly emerging. Lastly, reinsurance is a commodity to some extent.

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