No. of Recommendations: 6
Just to add even a little more darkness, your first point...
(i) as expected, interest income is much improved, with higher interest rates;
...doesn't IMO add up to anything. Higher interest rates do nobody any good if the inflation rate is higher. Berkshire may actually be worse off now on the interest rate front with both rates and inflation higher, since the nominal interest is taxed, not the real interest. It's only the after-inflation after-tax gain that adds value to a share.
You make a convincing argument that most of the impact of interest rate hikes gets eaten up by taxes: the pre-tax real gain is interest minus inflation, but taxes are implied to interest, not just to the interest minus inflation difference.
However, in this case, operating profits (in the special, Berkshirean sense of the word) are post-tax, and have gone from $4.8b (2021) to $6.5b (2022) and now to $9.6b (2023; Item 7, page K-35), so I guess current rates are still better than older rates, inflation notwithstanding.
However I'm sticking with this ticker. I expect that at some point the valuation level will be really cheap again, and the bulletproofness hasn't gone away, so I'll probably pile back in then.
Yes, in that sense I am very much sticking with the ticker. I can’t even bring myself to remove the ticker from my Yahoo Finance list of current holdings. I’m in ticker shock.
Dtb
