Last August, I pounded the table on how attractive shares of publicly traded insurance companies were. I believed these stocks offered what I am always searching for: an "asymmetric opportunity." By that, I mean an investment opportunity that is low-risk and high-reward. I felt that buying shares of insurance companies was like a coin flip, offering only two possible outcomes: Investors would either break even or make really good money. Since then, this idea has played out well for us... While the S&P 500 has done very well, rising 25%, the insurance sector has done even better, surging 37%. Last August, I felt that our downside was limited because of these companies' incredibly cheap valuations. Then, some of the biggest and best insurance businesses on the planet were trading for less than 50% of their book value. These companies were so cheap that they realistically couldn't fall much further. The potential upside, on the other hand, was significant. It was also clear that these insurance stocks had a major catalyst in the pipeline: a move higher in interest rates. Insurance companies make most of their money from their investment portfolios. Since most of each investment portfolio goes into bonds, insurance companies' earnings and interest rates are tied at the hip. With August interest rates at 5,000-year lows (I'm not exaggerating), there was only one direction that earnings for insurance companies could go. Since then, interest rates have taken off... The yield on the 10-year Treasury is up 177% since I wrote to you in August. This increase in interest rates is good for insurance companies' earnings, and it's why this sector has been outperforming. I don't think it is done... | 
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