How Warren Buffett Achieves Great Returns Every Year - Advantages of Insurance Float
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- เผยแพร่เมื่อ 13 ก.พ. 2019
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In this video we look at how Warren Buffett uses insurance float to help him achieve crazy high investment returns. Warren Buffett has been able to return more than 19% a year since 1965 and he has done so by using the insurance companies he owns - at least partially, plus Warren Buffett is the best investor ever so that doesn't hurt.
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What do you think of the way Warren Buffett uses the insurance float to grow the book value of the business?
I feel like your videos are underrated..
I really appreciate that!!! :)
This is a great video, I've always been curious what Warren Buffet meant by Insurance Leverage. Great Video, Keep em Coming Jimmy
Thank-you for a clear and comprehensible explanation of how insurance companies use float to enhance their earnings. One takeaway is to examine the investments section of the annual and quarterly reports to see how different insurance companies utilize their float. Another is that I could look at a small part of my emergency fund as a "float" to invest in something safe with a higher return than a high-yield savings account, like a short-term, government bond ETF.
That's an awesome way of looking at it!
I learned a ton from this - thanks for sharing! And your videos are great, watched a ton of them
Leverage was key to his wealth
Buffet keeps saying leverage is bad but he himself used leverage. He also didn't get rich by investing in index funds yet advises index investing. He doesn't practice what he preach. I don't think that's honest. The media has put him on a pedestal.
well this seems like a very obvious thing that most financial institutions do, when you have cash at hand that you will have to payout later, you invests it in normally very safe assets(normally doesn't pay 10%!). but it is a risky thing and would have to be very safe investments otherwise if you lose that money your company is going to be in trouble. most of them actually buy their own stocks and receive their own dividends, which is basically using the float to siphon money off of their own company, I know it sounds wierd but it is what most of them do.
Very interesting! Did you record another insurance videos?
Thank you! It is very useful.
Hi Jimmy! Since most of your recent portfolios are Dividends inclined, Could you make a portfolio for 'Growth & Dividends'. We'd really appreciate it!
Thanks
I'm confused.. if liabilities are 80, how can the float be 50? That would mean people are paying over 62% of the value of whatever is being insured every year. Am I missing something?
Wow. This is such great info. Could you cover how to invest in bonds in future
Good idea, I could do a whole series on bonds, I feel like bonds aren't as popular as stocks, but it can still be interesting.... Thanks for the support!
@@LearntoInvest definitely do some in bonds, I love all your videos, keep it up!
Excellent information. .. (Y)
This video should get million views.
Great video
The float is all opportunity for someone like Buffett and no opportunity cost because he is utilizing other people's money
What do you study ? good that you put maths and research together
Great
Thanks for the great video. Does this concept of float apply to non-insurance businesses? I can see something similar in Amazon Prime for example as it collects membership fees ahead of time. Also, how do you analyze float to value a stock?
I don't think so. AWS actually has expenses. Insurance float is basically free money. Only a fraction of it is ever paid out in claims.
but since the float is a safety measure against clients claiming, and it is calculated based on the real probabilities of the clients claiming that money, why on earth is not illegal to invest that money? does not make sense
Because the money isn't deposited like a bank. As long as the business has the funds available, either through cash or liquid investments, to pay claims then they're fine. Investing premiums also helps raise funds for massive payout requirements such as during an event such as Katrina or unseasonably large wildfires or uncharacteristically large earthquakes.
He's one smart cookie.
Lemonade is the Tesla of Insurance
I think in the video, you spoke a lot of the good side about how he leveraged his float money, but in many of his talks, he stated that when they pay, they pay BIG. Many times, they have to leave the float money a lone because it's usually not a matter of "if" they need to pay out but rather, when. I just felt like you overplayed the idea of how he's making money off the float. He explained many times in his shareholder meanings that he currently feels it's profitable given the premium they charge, but it may not always be the case ._.
Buffet keeps saying leverage is bad but he himself used leverage. He also didn't get rich by investing in index funds yet advises index investing. He doesn't practice what he preach. I don't think that's honest. The media has put him on a pedestal.
Actually he tells the public to do things differently because he knows not everyone is intelligent enough to handle the risks involved, and what he preaches are relatively safer options. He himself does something else because he can manage it. Its exactly similar to a father smoking a cigarette but telling his son to never do it.