Friday, March 11, 2011

Japan Quake: Oil, Berkshire Fall: Yen Up

Sorry about the late start. A few years ago I mentioned, in a post I can't lay my hands on, that among my duties (after the mission critical stuff, ordering coffee etc) is gaming various disaster scenarios, looking for the less than obvious investment plays.

I said that at the top of everyone's list is a 'big one' in Japan. The problem for speculators is that everyone else has done the same thing, so the window closes very fast.

Today we're seeing that play out. Reinsurance heavyweight Berkshire Hathaway is trading down 1.3%.
Japan is repatriating money so the Yen strengthens. A possible hit to the world economy spanks an oversold oil market.

It get's to the point that the big efficient markets react almost instantly so you have to go further afield into more obscure, less obvious, less liquid, riskier bets.

I'm reluctant to point them out because
a) Quoting Mr. Buffett "Good investment ideas are rare, valuable and subject to competitive appropriation just as good product or business acquisition ideas are,"
b) the risk is tougher to evaluate.

So, for now, I'll leave you with a couple ssmart observations from FT Alphaville;

Insurance in the ring of fire
How many years has Japan been preparing for the ‘big one’?
On Friday it hit — the 8.9 magnitude quake that hit off the coast of north-eastern Japan is the seventh-largest on record, and far outstrips the 1995 temblor in Kobe.
The ‘good’ news about this quake is that it didn’t hit closer to Japan’s densely populated (and very expensive) capital. The even better news is that Japan has been preparing for this event since practically forever. Buildings are heavily reinforced, school children and office workers practice for earthquakes regularly
… and of course, there’s lots of earthquake-related insurance…
So here’s Espirito Santo insurance analyst Joy Ferneyhough...MORE 
Japan’s earthquake markets, then and now
From Reuters’ financial graphics editor, Scott Barber: