Watsa Swami Syndrome?

Swami Syndrome: A proclivity for predicting the future coupled with a blinding disconnect to the fact that a coin toss (or the proverbial monkey) would be more accurate than your lame prognostications.

Prem Watsa is affectionately called the “Warren Buffet of the North”. He’s not usually as gabby as Warren however, and I doubt that he’s ever whined about not paying enough taxes (Hey Warren, you can cut a check to the Feds anytime you know, its not against the law). Prem did do a recent interview however, wherein he boldly joined the ranks of the Doomsday Swamis.

An Interview with Watsa Swami: He has never been more bearish

The global credit squeeze is in its “early days,” says investor Prem Watsa, who is so bearish that his insurance company has stashed the bulk of its $18-billion investment portfolio into ultrasafe government bonds.

In a rare interview, the chairman of Fairfax Financial Holdings Ltd. said he thinks it’s possible the United States is on the cusp of a prolonged market slide, similar to the one endured by Japan between 1990 and 2003, when the Nikkei index plunged 80 per cent.

“We raise the question, why can’t the Japanese experience be repeated in the U.S.? We think it could be,” Mr. Watsa said.

Watsa Swami thinks the US markets may very well be on their way to a real catastrophe, and he has put his money where is mouth is. He then goes on to state that a near term recession is a sure thing:

“We don’t know how bad the recession’s going to be, so credit is going to be tough,” he said. “You’re going to have these big losses, the banks are going to have big losses. So we are worried.”

Watsa Swami has been a hugely successfull prognosticator in the past with Fairfax, but strange things can happen when folks put that Swami hat on in public.

One absolute prediction for a near term recession.

and

One rather bold, sky is falling prediction of a Japanese style disaster in the U.S.

Let’s check back in with Watsa Swami in June to see how well that Swami hat is fitting in 2008.

-- Filed November 24, 2007 at 11:55 pm