Here’s the problem under the hood at Berkshire Hathaway in Warren Buffett

It’s Midterm Day in America, so pack your guns (where legally allowed), ask your local election attorney for a speed dial and pop the popcorn. USA, USA. More on that later.

The company lost $2.7 billion in the third quarter, although its earnings are known to be volatile, and losses were reduced to fluctuations in derivatives and investments. Operating profit was up 20% during the quarter, and it has $109 billion in cash to play with. It’s definitely worth giving Buffett a pass, isn’t it?

Well, maybe not. Blogger The Rational Walk, a longtime Buffett watcher, dived into Berkshire’s latest earnings, and found the conglomerate’s cash cow, Geico auto insurance company, struggling.

Geico sure had a great decade, and thrived during the pandemic because people weren’t driving – easy money for an auto insurance company. But it’s paying for it now, not just because people are driving again, but because car crash repairs are more expensive because of inflation.

Progressive Competitive Auto Insurance Company PGR
He also points out that the effect of inflation increases not only the valuation of used cars—bad news when you have to pay to replace it—but the total costs of loss and repair.

rational walk

Another point worth noting is that Geico has been cutting costs – layoffs, reducing advertising. Since the industry is incredibly competitive, low advertising may have an impact on policies in place, and may do so in the future.

“While a few quarters of adversity doesn’t necessarily signal a turning point in Geico’s long-term prospects, recent results compare unfavorably with progressive. The reason I’m spending more time studying Geico’s results is that it’s clearly the most process,” the blogger says. turmoil at Berkshire’s insurance group, and that shareholders will want to monitor future developments carefully.”

markets

US Stock Futures ES00

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She was referring to a third day of gains in what appears to be a rumor-buying ahead of the midterms. The main market action in the crypto space was BTCUSD
He was reeling amid a problem with the token used by crypto exchange FTX.

commotion

As voters head to the polls, UK betting site Smarkets has identified a 90% probability that the Republicans will control the House, and a 68% probability that the GOP will control the Senate as well.

LIFT LIFT
Shares slipped in pre-market trading after numbers of active runners missed expectations, and the midpoint of revenue guidance was also below estimates.

Trip TripAdvisor
Stocks fell on a profit loss. Take-Two Interactive TTWO
It retreated after cutting its forecast for reservations.

After closing, Walt Disney dis
Results reports. DuPont DD
Shares rose with the chemical company topping analysts’ estimates.

Nvidia NVDA
An alternative chip is being made for China to comply with US export hurdles.

The $1.9 billion Powerball draw has been delayed.

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Now supports Chinese series.

The most important indicators

These indices were the most active in the stock market as of 6 AM ET.

ribbon

Safety name

TSLA

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Jim Stop

DWAC

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AMC

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NIO

New

AAPL

apple

dead

meta pads

AMZN

Amazon.com

Mullen

Mullen Cars

BBBY

bed bath behind

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The 60/40 model is going through a terrible year as both stocks (part 60) and bonds have plummeted. But it’s too early to let go of the towel, say analysts at asset management firm Glenmede, whose model for the next decade projects average annual gains close to 7%. Michael Reynolds, vice president of investment strategy, said the company’s model uses valuations and returns as a primary basis for projecting returns. “Glenmede’s empirical research has shown that while valuations are a poor timing tool for the market in the near term, they are one of the best determinants of the expected long-term returns for investors,” he said via email.

Stock market valuations are based on a combination of natural price-to-earnings, price-to-cash flow, and price-to-book ratios, as well as dividend yields, which are then adjusted for the level of interest rates. The fixed income model is based mostly on inflation expectations and the likely future path of the federal funds with associated term premiums.

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