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Bonds Are a 'Safe' Investment: A Big Lie Gets Even BiggerThe Boston Globe reports that after handing out 24,000 rebate checks following the Boston Red Sox win in the 2007 World Series, Berkshire Hathaway (NYSE: BRK.A)'s Jordan's Furniture unit is taking a bet on a 2008 repeat.
In a furniture industry suffering from flat sales due to a weak housing market and rising gasoline prices, this promotion is seen as a critical tactic for keeping sales from tumbling. In 2007, Jordan's deal was that anyone who bought furniture at its stores -- which feature Imax theaters -- between March 7 and April 16 would get a rebate check if the Red Sox won the 2007 World Series.
This year, Jordan's is repeating the deal with a twist that lowers the odds of a payout. The "Monster Sweep 2008" will offer customers who make a purchase between today and April 27 rebates on their purchases of sofas, sectionals, dining room tables, beds, mattresses and rugs only if the Red Sox win the 2008 World Series in four consecutive games.
It is unclear which insurer is willing to take this bet on Jordan's, but I am guessing that whichever company took on the risk in 2007 did not profit from the deal. I would guess that the premium for insuring this promotion would be higher than last year's -- even though the odds of a payout for 2008 are lower.
Meanwhile, the Red Sox won their season opener in Tokyo today against the Oakland A's 6-5 in 10 innings. Go Sox!
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Berkshire Hathaway.
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