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Berkshire Hathaway's cash is going to good use | Apple gave its excuses |

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Today's big stories

  1. Berkshire Hathaway's massive cash pile started to pay off last quarter
  2. Here's why your portfolio could see a post-election rally this year – Read Now
  3. Apple blames supply problems as it cuts its Chinese production targets

Buffeted But Still Standing

Buffeted But Still Standing

What’s Going On Here?

Warren Buffett’s Berkshire Hathaway reported quarterly results over the weekend, which showed that healthy income from high interest rates made up for some of last quarter’s stock losses.

What Does This Mean?

Warren Buffett and his right-hand man Charlie Munger have beefed up Berkshire Hathaway’s cash reserves over the last ten years, and with good reason: when you own a goliath insurance business, you need to be ready to make big payouts when catastrophe strikes. Good thing they prepared: Hurricane Ian hit Florida last quarter, and the firm was smacked with a $3.4bn pre-tax loss as a direct result of the disaster. And holding cash is paying off in other ways now that interest rates are marching upward: the sprawling conglomerate made a mouthwatering $397 million in interest last quarter – nearly triple the amount it made at the same time last year.

Why Should I Care?

Zooming in: Hamstrung by stocks.
Berkshire’s insurance business may have taken a hit last quarter, but its other companies – which straddle industries from railways to utilities and energy – managed to turn a profit while the broader economy circled the drain. The good news is that helped tick its operating profit up a better-than-expected 20% last quarter. The bad news is the firm's stock portfolio – which includes big stakes in the likes of Apple, American Express, and Chevron – wasn’t looking quite as hale and hearty: its $20-billion drop in value last quarter meant the conglomerate made an overall loss of nearly $3 billion.

The bigger picture: Eye on the prize.
Buffett often calls these quarterly stock swings “meaningless”, which makes sense given that Berkshire’s aiming at stable, long-term success, not get-rich-or-die-trying moonshots. Case in point: while others shied away from see-sawing markets, Berkshire still swept in, buying almost $4 billion more in shares than it sold last quarter. And with the firm’s stock outperforming the S&P 500 by a healthy 17% this year alone, investors clearly aren’t knocking Buffett’s slow-and-steady philosophy. Retail investors, take note.

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Analyst Take

Will The US Midterm Elections Be Good For Stocks?

Will The US Midterm Elections Be Good For Stocks?

By Luke Suddards, Analyst

We don’t often write about politics, but sometimes it’s worth making an exception.

See, the US midterm elections are upon us, and the months that follow this every-four-year voting ritual have historically tended to be good ones for stocks.

So before the ballots are counted, let’s look at how things are expected to play out, which sectors might be expected to rally, and what might temper any gains this year.

That’s today’s Insight: how the US midterm elections might affect stocks.

Read or listen to the Insight here

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Far From The Tree

Far From The Tree

What’s Going On Here?

According to news out on Monday, Apple will produce three million fewer iPhones than expected ahead of the crucial holiday season.

What Does This Mean?

There’s an old economists’ saying that runs, “When America sneezes, the world catches a cold.” But that old chestnut seems to describe China pretty well these days. The country’s battling an economic slowdown, a teetering property market, and a whole host of issues triggered by its on-again-off-again lockdowns right now. No surprise, then, that Zhengzhou’s Foxconn-operated iPhone hub is planning to make around 3% – that’s around three million – fewer iPhones than anticipated this year (tweet this). And whatever the reason for that production cut, it won't calm the already jangling nerves of Big Tech investors who just struggled through a treacherous earnings season.

Why Should I Care?

Zooming in: Supply or demand?
Apple’s insisting that its lowered iPhone targets are all down to supply snarls and not demand, but not that long ago the firm was planning an increase in production. So sure, a 3% cut in one quarter is no big deal in isolation, but such a rapid change in tone from Apple will have investors wondering if weaker demand is, in fact, at play here.

The bigger picture: Supercycles.
The iPhone’s getting on these days, and its years of rampant, reliable annual growth are in the past. Instead, demand for the product tends to jump every few years as major technology changes: the iPhone 6’s bigger screen led to a pop in sales, as did the first 5G-enabled device, the iPhone 12. That's natural enough for older products, but it does make predicting iPhone sales pretty hard: new features tend to be closely guarded secrets, after all. On top of that, Apple may well find it harder to create bigger and better product improvements within the already mature smartphone market. And if that does happen, those step-ups in sales might be less impressive too.

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💬 Quote of the day

“I like long walks, especially when they are taken by people who annoy me.”

– Noel Coward (an English playwright, actor, and composer)
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🌍 Finimize Live

🥳 Coming Up This Week…

All events in UK time.

💰 Strategies For Market Volatility: 1pm, November 8th
How To Profit From Special Situations As A Value Investor: 5pm, November 9th
🔧 Tools Value Investors Use For Turbulent Times: 6pm, November 10th
🔥 How To Build Better Financial Habits In Your 20s & 30s: 3pm, November 11th

👀 And After That…

♻️ How To Build An Eco-Friendly Crypto Portfolio: 1pm, November 14th
💥 How To Diversify During High Inflation: 6pm, November 14th
🐻 How To Survive A Crypto Bear Market: 7pm, November 15th
How To Successfully Invest In Dividend Stocks: 6pm, November 22nd
🚀 2023 Outlook: What’s Next For Crypto?: 6.30pm, November 23rd (in person, London)
🌍 Finding Opportunities In A Challenging Market With BlackRock: 1pm, December 2nd
🇦🇪 The Modern Investor Opening Party In Dubai: 6pm, December 6th
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🎯 On Our Radar

  1. Wacky Wiki. There’s a group of enthusiasts devoted to a strange, old Wikipedia device.
  2. It’s hard work being woke. The tough life of an AI ethicist.
  3. Eco-horror. A whole new genre’s just been born.
  4. Basquiat’s blues. Here’s how music influenced the famed New York artist.
  5. The real social dilemma. Online political ads are affecting the US midterms.
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