SHRIX

Aggressive-Donkey-10

great question., IF sp500 "tanks" then likely due to a recession, so stocks down, corporate bonds down, usually long bonds will rise and yields down as a flight to safety and recession lowers inflation risk, but not always. Gold could go either way bank CD like you thought of is a good, insured safe idea, but money is locked up and low yield SHRIX would be an option, it is a mutual fund holding reinsurance catastrophe bonds and yields about 13% and has near zero correlation to sp500 \[earthquakes and hurricanes don't watch CNBC\]

bl1nds1ght

Check out Stone Ridges's funds: SHRIX - High Yield Reinsurance Risk Premium Fund Class I SRRIX - Reinsurance Risk Premium Interval Fund However, I don't feel that an individual investor has any business tilting into alternatives without good reason. The funds are generally expensive, to boot. I'm not actively investing in reinsurance and I work in it, so that should tell you something.

throwaway474673637

So insurance ressembles a short vol strategy on GDP growth? Because I don’t think Buffet’s actually seeking GDP growth vol. Even if it’s the former, why? BRK’s main insurance business is GEICO, and that’s mostly an auto insurer. Do more people have car accidents when GDP goes down? Maybe they do, but I just haven’t seen any data to prove it. BRK is also active in reinsurance, and I don’t see reinsurance as having much exposure to equity vol (either short or long) either. Anecdotally, insurance-linked securities funds were basically flat over the last two equity vol blowups (Sept.-Oct. 2008 and Mar. 2020) and regressing the returns of only reinsurance fund I can find (SHRIX) onto an equity vol index (VIXY) shows almost [no exposure.](https://www.portfoliovisualizer.com/factor-analysis?s=y&regressionType=1&symbols=SHRIX&sharedTimePeriod=true&factorDataSet=-1&marketArea=0&factorModel=0&useHMLDevFactor=false&includeQualityFactor=false&includeLowBetaFactor=false&fixedIncomeFactorModel=0&__checkbox_ffmkt=__checkbox_true&__checkbox_ffsmb=__checkbox_true&__checkbox_ffsmb5=__checkbox_true&__checkbox_ffhml=__checkbox_true&__checkbox_ffmom=__checkbox_true&__checkbox_ffrmw=__checkbox_true&__checkbox_ffcma=__checkbox_true&__checkbox_ffstrev=__checkbox_true&__checkbox_ffltrev=__checkbox_true&__checkbox_aqrmkt=__checkbox_true&__checkbox_aqrsmb=__checkbox_true&__checkbox_aqrhml=__checkbox_true&__checkbox_aqrhmldev=__checkbox_true&__checkbox_aqrmom=__checkbox_true&__checkbox_aqrqmj=__checkbox_true&__checkbox_aqrbab=__checkbox_true&__checkbox_aamkt=__checkbox_true&__checkbox_aasmb=__checkbox_true&__checkbox_aahml=__checkbox_true&__checkbox_aamom=__checkbox_true&__checkbox_aaqmj=__checkbox_true&__checkbox_qmkt=__checkbox_true&__checkbox_qme=__checkbox_true&__checkbox_qia=__checkbox_true&__checkbox_qroe=__checkbox_true&__checkbox_qeg=__checkbox_true&__checkbox_trm=__checkbox_true&__checkbox_cdt=__checkbox_true&customFactors=VIXY&timePeriod=2&rollPeriod=36&marketAssetType=1&robustRegression=false) Reinsurance is it’s own risk factor. It isn’t related to traditional carry strategies (buy high yielding assets and sell low yielding ones). They’re only similar in that they both pay you while you wait. Like your MetLife comparison shows, it is however indeed a source of leverage for Buffet. That being said, I’m not sure BRK loses any more than its factor exposure would predict in high vol drawdowns. Here’s an FF3 [regression](https://www.portfoliovisualizer.com/factor-analysis?s=y&regressionType=1&symbols=BRK.A&startDate=12%2F01%2F2019&endDate=05%2F31%2F2020&sharedTimePeriod=true&factorDataSet=-1&marketArea=0&factorModel=0&useHMLDevFactor=false&includeQualityFactor=false&includeLowBetaFactor=false&fixedIncomeFactorModel=0&ffmkt=true&__checkbox_ffmkt=__checkbox_true&ffsmb=true&__checkbox_ffsmb=__checkbox_true&__checkbox_ffsmb5=__checkbox_true&ffhml=true&__checkbox_ffhml=__checkbox_true&__checkbox_ffmom=__checkbox_true&__checkbox_ffrmw=__checkbox_true&__checkbox_ffcma=__checkbox_true&__checkbox_ffstrev=__checkbox_true&__checkbox_ffltrev=__checkbox_true&__checkbox_aqrmkt=__checkbox_true&__checkbox_aqrsmb=__checkbox_true&__checkbox_aqrhml=__checkbox_true&__checkbox_aqrhmldev=__checkbox_true&__checkbox_aqrmom=__checkbox_true&__checkbox_aqrqmj=__checkbox_true&__checkbox_aqrbab=__checkbox_true&__checkbox_aamkt=__checkbox_true&__checkbox_aasmb=__checkbox_true&__checkbox_aahml=__checkbox_true&__checkbox_aamom=__checkbox_true&__checkbox_aaqmj=__checkbox_true&__checkbox_qmkt=__checkbox_true&__checkbox_qme=__checkbox_true&__checkbox_qia=__checkbox_true&__checkbox_qroe=__checkbox_true&__checkbox_qeg=__checkbox_true&__checkbox_trm=__checkbox_true&__checkbox_cdt=__checkbox_true&timePeriod=2&rollPeriod=36&marketAssetType=1&robustRegression=false) doing a pretty good job of explaining losses during the COVID drawdown. Also worth mentioning that if you regress BRK’s returns onto FF3 + VIXY you don’t see any short vol exposure [over the last 10 years](https://www.portfoliovisualizer.com/factor-analysis?s=y&regressionType=1&symbols=BRK.A&sharedTimePeriod=true&factorDataSet=-1&marketArea=0&factorModel=0&useHMLDevFactor=false&includeQualityFactor=false&includeLowBetaFactor=false&fixedIncomeFactorModel=0&ffmkt=true&__checkbox_ffmkt=__checkbox_true&ffsmb=true&__checkbox_ffsmb=__checkbox_true&__checkbox_ffsmb5=__checkbox_true&ffhml=true&__checkbox_ffhml=__checkbox_true&__checkbox_ffmom=__checkbox_true&__checkbox_ffrmw=__checkbox_true&__checkbox_ffcma=__checkbox_true&__checkbox_ffstrev=__checkbox_true&__checkbox_ffltrev=__checkbox_true&__checkbox_aqrmkt=__checkbox_true&__checkbox_aqrsmb=__checkbox_true&__checkbox_aqrhml=__checkbox_true&__checkbox_aqrhmldev=__checkbox_true&__checkbox_aqrmom=__checkbox_true&__checkbox_aqrqmj=__checkbox_true&__checkbox_aqrbab=__checkbox_true&__checkbox_aamkt=__checkbox_true&__checkbox_aasmb=__checkbox_true&__checkbox_aahml=__checkbox_true&__checkbox_aamom=__checkbox_true&__checkbox_aaqmj=__checkbox_true&__checkbox_qmkt=__checkbox_true&__checkbox_qme=__checkbox_true&__checkbox_qia=__checkbox_true&__checkbox_qroe=__checkbox_true&__checkbox_qeg=__checkbox_true&__checkbox_trm=__checkbox_true&__checkbox_cdt=__checkbox_true&customFactors=VIXY&timePeriod=2&rollPeriod=36&marketAssetType=1&robustRegression=false) and BRK’s downside capture ratio is lower than it’s upside capture ratio too.