So ChatGPT walked into a stock market and said… “Buy insurance.” No, seriously. While everyone’s obsessing over the latest AI darling or crypto moonshot, our robot overlord decided to get boring and recommend Palomar Holdings (PLMR). And honestly? It might be onto something.
Here’s the deal: Palomar isn’t your grandpa’s insurance company. They’re the specialty shop of the insurance world – think earthquakes, hurricanes, floods, and all the fun stuff that makes regular insurers break out in cold sweats. It’s like being the guy who sells umbrellas, but only during hurricanes.
The Smart Money Move
What makes Palomar clever isn’t that they’re gambling on disasters (though they kind of are). It’s that they’re not stupid about it. They take a slice of the risk, then pass the really scary stuff to reinsurance companies. It’s like being a bookie who hedges their bets – you get the upside without betting the farm.
Plus, they’ve diversified beyond “will California fall into the ocean?” insurance. They do regular property coverage, crop insurance, and even rent out their A-rating to smaller insurers for a fee. It’s basically the insurance equivalent of Airbnb-ing your credit score.
The Numbers Don’t Lie
Here’s where it gets interesting: Palomar is up 30% this year, with a three-year average return of 44%. That’s not a typo. While trading at just 21 times earnings – reasonable in today’s “everything is expensive” market.
The stock took a hit after Q2 earnings because Wall Street had a moment, but then Palomar beat Q3 expectations and… crickets. The market apparently didn’t get the memo. Six analysts covering it give it a “strong buy” with a 12% upside target.
The AI Experiment
This pick is part of a fascinating experiment where someone’s been asking ChatGPT for weekly stock recommendations and actually investing $100 each time. The AI portfolio is crushing it with a 7.57% return versus a measly 2% for boring old index funds.
Last week’s AI pick, cable company Amphenol, shot up 8.39% in seven days. The portfolio’s star performer? Micron Technology, up nearly 50% since being added. Not bad for a robot with no skin in the game.
The Reality Check
Look, insurance stocks are about as sexy as watching paint dry in a beige room. But sometimes the best opportunities hide in plain sight while everyone’s chasing the shiny objects. Palomar’s business model is solid: they make money when bad things don’t happen, and they’re smart enough not to bet everything when bad things do happen.
Is this the next Tesla? Absolutely not. Is it a potentially solid play in a market full of overpriced everything? Maybe. And if an AI thinks it’s worth a shot, who are we to argue with our future robot overlords?
Disclaimer: This is not investment advice. It’s just one human’s interpretation of what a very sophisticated autocomplete function thinks about insurance stocks. Do your own research, or at least ask a different AI for a second opinion.