"Given the unprecedented decline of the equity markets during the past several months, we felt it was prudent to promptly inform our shareholders that we closed out our equity index total return swaps this week and effectively eliminated our equity portfolio hedge. While we believe the recession may be long and deep, we also believe that stock prices may have already discounted the worst of the economic decline. As value investors, we are finding an incredible number of investment opportunities across the world. That said, in the short term we recognize that stock markets can continue to fall significantly."Why should you be interested? Because frankly, Fairfax has structured one of the most remarkable portfolios before this financial crisis, being heavily invested in cash, U.S. government bonds, equity index hedges, and credit protection against financial companies. But even they have made the change in stance. Buy at the sound of cannons in the streets, right?
Disclosure: I own shares of Fairfax Financial and Odyssey Re
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