Fairfax

Firm Makes impolite Bet on travel Prices - WSJ.com#printMode scalawag 1 of 3 Dow Jones Reprints: This copy is for your personal, non-commercial use only. To lodge presentation-ready copies for diffusion to your colleagues, clients or customers, use the Order Reprints tool at the fall into place of whatsoever condition or visit www.djreprints.com See a essay reprint in PDF format. ECONOMY Order a reprint of this article now AUGUST 26, 2010 Firm Makes Bold Bet on Falling Prices A Wager by Fairfax Financial Risks $174 Million. If Deflation Arrives, It Could Be expense Billions. By GREGORY ZUCKERMAN A Canadian insurer is turning to a seldom-used strategy to represent a big wager on falling prices over the following(a) decade. As more investors worry or so the possible action of deflationor a sustained period of falling prices that could stultify stocks Fairfax Financial Holdings Ltd. has spent nearly $200 million to dilute first derivativ e contracts wagering on a settle in the consumerprice index, an rising prices indicator. The trade could lead to huge profits if deflation occurs. Greg Zuckerman discusses a Canadian insurer that has wagered on derivatives that profit from a decline in consumer prices.

Fairfax purchased about of the derivative enthronizations in the first ternion months of the year, when few fretted about deflation and the equal of the contracts was cheap. It added more in the second quarter. The derivatives now are catching the direction of some on Wall Street. They have gained more than 50% in value since Fairfax made its original purchases from a number of banks, generating news paper publisher profits of more than $100 mi! llion. The Fairfax bet, which aims to protect $22 jillion of Fairfaxs investment portfolio, comes as investors grapple with a particularly challenging environment, with the conservation fragile and stock indexes struggling. Few investors are willing to make big wagers on deflation, despite its potential, with m any(prenominal) skeptical any deflationary period would...If you unavoidableness to get a full essay, order it on our website: OrderEssay.net

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