Prem Watsa Quotes
101 Prem Watsa Quotes
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[On investing 20-25% of his funds money into one stock which did far better when traditionally he had advocated diversification] Ben was flexible in his thinking, but he always looked for a margin of safety.
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[In May 2007] I was in Japan in 87, 88. And when I spoke to them I said listen on 200 times earnings. They said ‘This is Japan it’s different, we’ve go the keiretsu the land price is not going to go down. We are different.’ Today you go to the Americans, and talk to the Americans and they say ‘No we’re not like Japan. We are different. We have free enterprises. We know how to handle the economy. We fix up our problems quickly and we move on.’
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[In 2007] We think it’s a huge amount of risk... Structure this idea exists in the marketplace that you can take any risk and put it into a structure into an asset backed bond and you can eliminate and get rid of the risk.
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[In 2007] A lot of them are ‘AAA’. There are less than 5 or 6 companies I think in the United States that have ‘AAA’ ratings. Companies. There are thousands of these structures [Asset backed bonds] that have ‘AAA’ ratings. We think that there is a lot of risk… If you just want to think of risk… if you have a 50% drop that’s a trillion dollars that disappears with this. Liquidity regresses.
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[In 2007 on asset backed bonds] The risk in this area we think is very significant.
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[In May 2007] Ben Graham saying there’s no margin of safety. We thinking there’s a possibly of a one in 50 a one in 101 year storm coming. You’ve got to protect yourself… Bond markets, stock markets, real estate markets.
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[In 2007] China and India are going to keep growing… If there’s any hiccup… The Shanghai stock exchange is like a rocket… We have learned over time that nothing grows to the sky.
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You have these unexpected air bubbles. Air pockets… It might last for a long time…
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Don’t lose capital. Make sure you don’t lose money.
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[On Benjamin Graham’s investing] GEICO. 25% percent of his funds in one stock… And when he got that position, he didn’t want to buy it because it wasn’t at book value… He said back in 1972 ‘We almost never bought it.’
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[On asset backed bonds in 2007] You’d have asked me three years ago, I’d have said the same thing. You can’t forecast…
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Benjamin Graham’s big principle was margin of safety.
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You have to be really, really careful even in a good growth stock with what you pay. Most importantly you have to make sure the growth actually takes place…
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Ben [Graham] was a tremendous teacher…
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[On stock market highs in May 2007] At the high, no-one sees the downside.
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We used to buy companies [In 1974] for less than cash per share.
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Good businesses, fair prices. It’s all return on equity.
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Ben Graham would not want you to go and meet management. Because his book was written for the average investor. He just wanted anyone who read the book [The Intelligent Investor] to be a good investor… We think meeting management is very important.
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You look at value oriented investors all over Canada, the United States, and the rest of the world I’ve been fortunate to have bumped into many of them… long track records of success. But all focused on a margin of safety.
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Recognize and be grateful for all the good things that have come your way.
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Value investors do seem to live a long life… Irving Kahn at 105 is still investing.
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