Thread by @Dhruv_shahah

I still remember when I was in the 10th grade, my father passed on one of the most life-changing books for me.

The Warren Buffett Way by Robert Hagstrom.

A thread.

Life-changing how?

Well, it was the first time somebody had shown me a glimpse of the magic of financial markets.

In fact, my curiosity was piqued to such an extent that I'd carry the book around everywhere I went.

But there was one particular bit in the book that outright blew my mind.

Buffet had pumped in some $40M into a company whose share had dropped precipitously-from $61 to just 2$. Which company? And more importantly, why??

It was the Government Employees Insurance Company-- or GEICO.

Now GEICO operated on a concept only a handful of insurers had tapped into at the time- "If you insure only people with good driving records, you’ll have fewer claims; and if you sell direct to customers, without agents, you keep overhead costs down."

After seeing a few years of prosperity, the company had begun to stumble in a bid to underprice competitors. And soon, the company's share price went into a downward spiral.

But Buffet was sold on the fact that the business had potential, and the underlying advantage was unchanged. And before long, GEICO was back on the path of profitability- earning more in premiums than claims paid in almost every year! The feat was absolutely unheard of.

Buffet went on to buy the whole company in 1996, and by 2003 the company was raking in $8 BILLION in premiums. A masterstroke indeed.

Also, we at Ditto Insurance (bit.ly/3ob9aKR) don't believe in such stringent rules as GEICO did. We want to help everyone buy a comprehensive insurance policy. So make sure you #AskDitto when thinking of buying #insurance.