Firm makes bold bet on falling prices

A Canadian insurer is turning to a seldom-used strategy to make a big wager on falling prices over the next decade. As more investors worry about the possibility of deflation—or a sustained period of falling prices that could cripple stocks—Fairfax Financial Holdings Ltd. has spent nearly $200 million to buy derivative contracts wagering on a decline in the consumer-price index, an inflation indicator. The trade could lead to huge profits if deflation occurs.