Berkshire Hathaway | No More Apple Pie & Bank Bread!No More Apple Pie and Bank Bread | Buffett’s Recipe for Market Caution
Berkshire Hathaway has recently disclosed its earnings amid fluctuating around a $1 trillion valuation. A notable update is its continued reduction of stakes in overvalued assets, including a 20% decrease in holdings of Apple and Bank of America, boosting its cash reserves to $325 billion
Although Warren Buffett himself isn't favoring share buybacks at present, Berkshire Hathaway stands as a compelling investment option
Why Berkshire Hathaway's $325 Billion Cash Pile Signals Market Caution
The company's net earnings remain subject to significant fluctuations due to rules requiring valuation changes of investment holdings. However, there was a slight decline in operating earnings, mainly driven by lower insurance underwriting income. Despite this, that segment is historically volatile, and year over year aka YoY, the company has maintained strong performance.
Yea2date aka YTD, operating earnings have risen over 10%, totaling just under $33 billion compared to just below $29 billion last year. This points to an annualized earnings estimate of approximately $44 billion, implying a price2earnings aka P/E ratio of about 22, without factoring in over $320 billion in cash and significant investment holdings.
Excluding cash and investments, the adjusted P/E ratio is closer to single digits. Share buybacks have paused, reflected in a ~1% decrease in the outstanding shares YoY, signaling Berkshire's assessment of current market valuations.
Segment Highlights
The various business units within Berkshire Hathaway showcase its robust asset base and earning capacity. Insurance underwriting income saw a sharp YoY drop, but other business areas performed strongly. Income from insurance investments remained solid, and BNSF, its railroad subsidiary, also showed strong results despite a double digit YoY decline.
Berkshire Hathaway Energy continues its growth, cementing its position in the utility sector with significant renewable energy ventures. For context, NextEra Energy (NEE), with a market capitalization of $160 billion, posted quarterly earnings around 10% higher.
Berkshire's other controlled and non-controlled businesses contribute over $13 billion annually, underpinning its diversification and consistent earnings performance. This strength across segments underscores its formidable financial health.
Market Context
Currently, market valuations are elevated by historical standards.
Excluding periods of earnings dips, market enthusiasm is exceptionally high, with the S&P 500 P/E ratio nearing 30x, approaching levels last seen in 1999. Buffett and Berkshire appear to view a 3% yield from such a P/E as unattractive, especially when bonds offer higher returns.
The 2008 Playbook
Berkshire's track record of effectively utilizing its cash reserves is notable. Excluding its insurance float, the company still holds $150 billion in cash.
During the 2008 financial crisis, Berkshire leveraged its liquidity for strategic investments in companies like General Electric, Swiss Re, Dow Chemical, and Bank of America, as well as finalizing the full acquisition of BNSF in 2010. This proactive use of capital proved advantageous.
The current strategic sale of assets suggests Berkshire is preparing for potential market downturns. Given high S&P 500 valuations, reallocating part of an S&P 500 position into Berkshire Hathaway could be wise, ensuring exposure to a cash-rich portfolio capable of seizing future opportunities. Meanwhile, Berkshire’s earnings are valued lower than the broader market, potentially minimizing major downturn risks.
Investment Risks
A key risk is that timing the market is inherently challenging, with the adage "time in the market beats timing the market" serving as a caution. If Berkshire's market outlook is incorrect, its $300+ billion in cash could underperform while broader markets remain strong, which would diminish its appeal as an investment.
Final Thoughts
Berkshire Hathaway has taken the bold step of liquidating some of its most significant and priciest holdings, opting to incur capital gains taxes to increase liquidity. This move has bolstered its cash position to $325 billion, $150 billion above its float level. Meanwhile, its strong operational businesses continue generating healthy cash flow.
Drawing on its successful strategies during the 2008 crisis, Berkshire appears to be positioning itself for another downturn amid current high market valuations. We advise investors to consider shifting part of their S&P 500 exposure into Berkshire Hathaway for enhanced diversification and potential benefits in a market correction, long story short Berkshire Hathaway remains a robust investment opportunity but wont make millionaire!
What do you think moonypto fam?
Brka
Million dollar stock.Berkshire Hathaway breaking out versus Gold*Note #BRK does own Barrick Gold #ABX
Very interesting chart pattern
25 years in the making
The close of September should mark a confirmed breakout, of Warren Buffet's famous holding company, against Gold on a quarterly basis.
More evidence of a Melt Up in paper assets? And the continuation of the Bull market in the "roaring 20's"
If this is a continuation structure the amplitude suggests that one Berkshire Share, could be converted into well over 530 ounces of Gold.
At current prices that would equate to over a million dollars per share!
Berkshire Hathaway CallsThe price established itself on a strong demand zone and seems like its going to make some gains up to $543,000 area.
Upon reaching that area the price might break through the supply zone, in which case we can expect a rally to the last high of $566,000.
Or else, the trend will reverse back to its current point.
BRK.A Potential for Bullish Continuation| 12th January 2023Looking at the H4 chart, my overall bias for BRK.A is bullish due to the current price being above the Ichimoku cloud, indicating a bullish market. Looking for a buy entry at 480527.01, where the previous high is. Stop loss will be at 445251.00, where the recent swing low is. Take profit will be at 541960.00, where the previous swing high is.
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BERKSHIRE HATHAWAY repeating the post COVID recovery!Berkshire Hathaway Inc. (BRK.A) made a new ~5 month High yesterday, spearheading the bullish reversal of high cap stocks at the moment. The price is above the 1D MA200 (orange trend-line) and well above the 1D MA100 (green trend-line) and 1D MA50 (blue trend-line), the latter two are about to make a Bullish Cross.
This draws comparisons with the previous 'Strong correction' Phase, during the COVID outbreak in February - March 2020. As you see the stock dropped a little over -30%, with the 1D MA50/100 Bearish Cross signaling the last flush, the 1D Death Cross signaling the Bottom and the 1D MA50/100 Bullish Cross the confirmation of the new rally.
This time during the 2022 correction phase, the stock dropped a little less than -30%, again the 1D MA50/100 Bearish Cross signaled the last flush, the 1D Death Cross signaled the Bottom and the 1D MA50/100 Bullish Cross is very close to take place. Will it confirm a new rally. That remains to be seen. What's certain is the fact that this time, Berkshire is already above the 1D MA200, without having the 1D MA50/100 Bullish Cross, but it is just below the 0.618 Fibonacci retracement level, which was also a Resistance before the Cross.
We've plotted the 2020 correction and recovery phase on the 2022 price action (black line) and as you see, even though lengthened, it matches the trend almost perfectly. This points to a longer term recovery this time (reasonable in the absence of the 2020 trillions USD in rescue packages) but it does show an ATH test by Q3 2023.
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Bershire Hathaway Falling. BRK.AMassive zigzag at play, pivot confirmed and what looks like an impulse straight down - highly suggestive of the expected C Wave. Down we go.
We are not in the business of getting every prediction right, no one ever does and that is not the aim of the game. The Fibonacci targets are highlighted in purple with invalidation in red. Confirmation level, where relevant, is a pink dotted, finite line. Fibonacci goals, it is prudent to suggest, are nothing more than mere fractally evident and therefore statistically likely levels that the market will go to. Having said that, the market will always do what it wants and always has a mind of its own. Therefore, none of this is financial advice, so do your own research and rely only on your own analysis. Trading is a true one man sport. Good luck out there and stay safe.
Does Warren Buffet know what others do not???
I remember when I read an article about Warren Buffet sitting on 128 billion dollars cash at the end of 2019, I asked myself:
What is about to happen?
The pandemic-related crash happened in the following 2 months!
Now, he is sitting on a bigger amount of cash. According to Bloomberg, he is sitting on 149.2 Billion Dollars in the era of the highest inflation rate in the past 30 years.
The question is:
What is about to happen?
Looking at the charts, we can see the triple top formation in the BRK.A chart.
A triple top is formed by three peaks moving into the same area, with pullbacks in between, while a triple bottom consists of three troughs with rallies in the middle.
While not often observed in everyday market trading, triple tops and bottoms provide a compelling signals to technical traders for trend reversals.
In addition to chart shapes portraying the letters "M" or "W", trading volume trends should also be employed to confirm the strength of the signal.(Investopedia)
While Warren Buffet who is investing in money-making companies cuts his exposure to the market significantly, do you think it is a good time to invest?
your answer to this question will be critical in the next 3 months!
You can see the most important support (green lines) and resistance (red lines) to watch in the coming days in these charts!
Best,
Moshkelgosha
DISCLAIMER
I’m not a certified financial planner/advisor, a certified financial analyst, an economist, a CPA, an accountant, or a lawyer. I’m not a finance professional through formal education. The contents on this site are for informational purposes only and do not constitute financial, accounting, or legal advice. I can’t promise that the information shared on my posts is appropriate for you or anyone else. By using this site, you agree to hold me harmless from any ramifications, financial or otherwise, that occur to you as a result of acting on information found on this site.
Reference article:
www.investopedia.com
www.bloomberg.com
Another Money Shifts is about to happen in the market..!I would like to start this forecast with this Peter Lynch quote:
“In this business, if you’re good, you’re right six times out of ten. You’re never going to be right nine times out of ten.”
It means, the best traders are never right all the time, they make losses too. Focus on getting more trades right than wrong and you’ll be considered successful.
Having said that, If you want to increase your chance of success you need to evaluate the market situation, individual sectors and industires; and then find the best stocks with the highest chance of appreciation to go long and highest chance of depreciation to go short!
I monitored Waren Buffet's porfolio and Berkshire performance for a year and compared it with Nasdaq 100 and find out a possible top in BRK.A could be an early sign of the end of Nasdaq 100 correction..!
BRK.A vs NDX:
(Some times there is value in a comparing Apple and Oranges)
In my Dec 16, 2021 analysis (Editor's Pick) I mentioned:
Based on the pattern in the charts and the past 2 days of high volatility in the market, the most probable scenario could be a complex correction and a shift from tech stocks to Banks, Energy, and Telecommunications.
Please review the performance of these sectors in the past 3-4 weeks!
Now let's review the current situation:
Based on my current observation Value stocks started forming top patterns:
Example:
NASDAQ:COST
NYSE:UNH
NYSE:HD
NYSE:KO
NYSE:MCD
Berkshire owns all the aboe mentioned stocks except UNH!
Conclusion:
I think there is a good chance we see shift from value stocks to Tech stocks once again in the next one or two weeks which could push them up around 5%!
Best,
Moshkelgosha
DISCLAIMER
I’m not a certified financial planner/advisor, a certified financial analyst, an economist, a CPA, an accountant, or a lawyer. I’m not a finance professional through formal education. The contents on this site are for informational purposes only and do not constitute financial, accounting, or legal advice. I can’t promise that the information shared on my posts is appropriate for you or anyone else. By using this site, you agree to hold me harmless from any ramifications, financial or otherwise, that occur to you as a result of acting on information found on this site.
Don't underestimate Buffett Well as you can see this chart I made in 2016 worked out very well better than anticipated in fact, people still wonder why Buffett is sitting on $150+Bn Cash!
NYSE:BRK.B
NYSE:BRK.A
BCBA:BRKB
CAPITALCOM:BRKB
SP:SPX
TVC:NDX
CURRENCYCOM:US100
CURRENCYCOM:US30
NASDAQ:TLT
AMEX:SPY
NASDAQ:QQQ
CRYPTOCAP:TOTAL
FOREXCOM:SPXUSD
OANDA:SPX500USD
AAPL's Bull case and Bear case.This is going to be different this from my other posts, are gonna be more unbiased and diving deeper into AAPL. As you can see from the arrows, it showed when the stock broke out of either downward wedge pattern or consolidation or continuation pattern. Both of these are considered bullish with the continuation cases like AMZN consolidating then broke off and also in this case too, AAPL, which broke to new all-time highs a month past today. Currently, AAPL is in both a short continuation pattern and also a downward wedge. If AAPL holds this position and does not fall threw below the 130s, it has formed a double bottom pattern. This is also a bullish signal in it itself. The MACD diverges again and again, which is also bullish. Now as I am always talking about being bullish, let us talk about the bear case or why it will fall. AAPL currently is depending on iPhone sales for the company to grow, which is a disadvantageous position as if AAPL makes a bad iPhone, expect it will drop 5 or 10% after earnings. As AAPL is attempting to diversify into the services sector, it has hurdles to overcome like in the streaming sector, it is trying to break through into it but the current dominator in that space are Netflix and Disney. While with both its pros and cons, I believe that AAPL is an amazing company to invest in as rest assured, the odds that AAPL will go bankrupt are lower than you getting struck by lightning than getting slapped in the face by a middle school student, who is wearing heels and just ate Japanese food, which came from a gas station. It has a lot of cash in hand or $195.57 billion in cash on hand. Big companies like Berkshire Hathaway and other tech companies invest in it so rest assured, you will not lose all your money if you put it in aapl. In conclusion, I am bullish on apple and will continue doing so and continue investing in it, even if the markets are a tad overvalued. Warning! I am not a financial adviser and take this with a grain of salt. Happy trading and investing and make sure to hit follow and like and comment on this post to get this out to more and more people! Good luck on all future endeavours everyone
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Berkshire ShortBerkshire Hathaway has long been a leader for the S&P, but it currently looks like the conglomerate is heading into a rough period of time.
The Daily 200 SMA in pink has rolled over bearish, and the key Weekly support level for the past 2-3 years has been breached to the downside.
Being one of the top 10 holdings in the S&P index, if this downtrend continues this could be a stock that acts as a downside-weight for the indexes and market as a whole.
(Plus many big financial names look like shit right now, which should act as a similar downside-weight to more financially-weighted indexes like the Dow)
Long-term Market outlook: BEARISH
(not financial advice, just an opinion)
👍 Berkshire Going To Test Channel Support. (BRK.A)💰 LET'S GET INTO SOME BERKSHIRE HATHAWAY ANALYSIS!💰
1️⃣ First off SMASH that LIKE BUTTON & Give us a FOLLOW for DAILY ANALYSIS! ❤❤❤
(Overall Market Sentiment) 🐻 Bearish
- Daily Chart
- Red Engulfing Candle
- 3/3 EMA DOTS Red
It looks to me that berkshire will continue down to test the upward channel support. Look for all indicators to shift on support otherwise it could be disaster if we breached below that main level.
Best of luck to you and all of your trades this week! 🤜
Drop your charts and comments down below, share with us what you think is going on in the markets! ❤❤❤
Thanks for checking out our analysis! ✌😁✌
🥇MLT | MAJOR LEAGUE TRADER
BRK.b valuationAt over 19x forward earnings it would appear BRK.b stock isn't exactly cheap right now. In fact, a fair valuation model (DCF) suggests it could be valued at this price by year end 2020 based on long term earnings growth estimates of 7%.
Looking at earnings estimates for 2019 gives projections for 10.40 EPS. A long term average market multiple of 17x suggests $177 valuation. The 2020 EPS estimate of 11.6 at a market mulitiple of 17x would imply a valuation around 200 by year end 2020.
With no dividend yield investors are not 'getting paid to wait'. Holding this stock is all about making capital gains. Meanwhile the downside volatility doesn't do the long investor any favors.
I'm sure the theory is Berkshire can reinvest earnings better for long term growth rather than returning earnings to shareholders in div yields. But this week Buffett admits he's sitting on billions in idle cash because market valuation has been too high to justify making any new large acquisitions.
What do you think? At 19x forward earnings is BRK.b a good investment right now to buy and hold for the next few years?
Why I'm Not Worrying About Warren Buffett's Record Stash of CashThe logic is deceptively simple: Buffett piles up cash when the market is too expensive and about to crash. That's a poor look at the data.
"Why I Am Not Worrying About Warren Buffett's Record Stash of Cash"
drduru.com $SPY $BRK.A $BRK.B
Why I'm Not Worrying About Warren Buffett's Record Stash of CashThe logic is deceptively simple: Buffett piles up cash when the market is too expensive and about to crash. That's a poor look at the data.
"Why I Am Not Worrying About Warren Buffett's Record Stash of Cash"
drduru.com $SPY $BRK.A $BRK.B