What I Learned In 2020 - John Hempton
The Joe Walker Podcast
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The Importance of Hedging
In 2009, QBE abandoned their longstanding practice of hedging its foreign assets. The Australian dollar decided to go from 60 something all the way back to 90. That $2 billion was unhedged so it went straight to their shareholders' equity. So they had a $2 billion cash drawer on the way down and a $2billion shareholder equity hit on the way up. They lost both ways. It's actually one of the reasons why QBE has been a terrible stock for the last 10 years. In fact, the crappier the stock, the more it's going up. But at the moment, the stonks are going up too hard. And we had to cover
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