Fairfax Financial Doing Well in the 100-Year Storm

I read somewhere some years ago about gold and gold investors. It went something like "everybody wants to go to heaven, but nobody wants to die." The idea is that for gold to take-off, lots of really bad stuff has to be going on out there.

Fairfax Financial Holdings (FFH/NYSE) has been doing well for a while -- and really well recently.

Here's a good piece in The Globe and Mail in Canada:

Fairfax said yesterday that it has made $574.5-million so far this quarter by selling credit default swaps on firms like AIG. The swaps amount to bets that the firms' financial health would deteriorate.

Shares of Fairfax gained nearly 8.5 per cent yesterday. The company, which says it began preparing for this financial storm five years ago, has realized total gains of $1.65-billion from swaps and still has an unrealized gain of $446.8-million.

"It is too early to say when the storm will recede, but we continue to be vigilantly looking for unintended consequences of the tumultuous events that are unfolding before us," Fairfax chief executive officer Prem Watsa said in e-mailed comments to The Globe and Mail last week.

Watsa has been worried about a once-in-a-50-year-storm or a once-in-a-100-year-storm. And it sure seems like we've got either of those blowing right now. Or at least something very, very close.