Warren Buffett would have heaved a sigh of relief that France has crashed out of the World Cup.
BusinessWeek reports that a win for France would have cost Buffett $30 million. His company Berkshire Hathaway had sold insurance requiring it to pay a client if France won the tournament.
Actually when you think about it, you can see that Buffett is really smart. Let's face it: he would have taken a big premium on any bet that large. And no doubt he would have checked out the French team completely. There is no way he would have taken this bet without knowing that he could get better odds than the bookmakers. And he would have known he was safe placing that bet because he knew there was no way France was going to win.
Actually, it's a story that shows the World Cup can teach us a few things about business and investing.
The first rule is you need a strong defense. Just ask English goal keeper Robert Green who stuffed up against the United States. The same applies to investors. It's always a good idea to have defensive stocks and don't make any foolish blunders that can cost you money.
The second rule is don't rely on the referees. The performance of the World Cup refs have been as bad as the way the Securities and Exchange Commission handled threats like Bernard Madoff, not to mention the US Treasury and Federal Reserve.
Watch and learn.
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