{"id":166580,"date":"2023-05-08T06:26:02","date_gmt":"2023-05-08T10:26:02","guid":{"rendered":"http:\/\/stateofthenation.co\/?p=166580"},"modified":"2023-05-08T06:26:35","modified_gmt":"2023-05-08T10:26:35","slug":"the-oracle-of-omaha-morphs-into-prophet-of-doom-after-making-mega-fortune-via-decades-of-super-stealthy-insider-trading","status":"publish","type":"post","link":"http:\/\/stateofthenation.co\/?p=166580","title":{"rendered":"

The ‘Oracle of Omaha’ Morphs Into “Prophet of Doom” After Making Mega Fortune via Decades of Super Stealthy Insider Trading<\/span><\/b><\/h2>"},"content":{"rendered":"

Buffett Turns Gloomy: The “Incredible Period” For The US Economy Is Coming To An End<\/h1>\n

ZeroHedge.com<\/p>\n

While Warren Buffett’s insights on the economy are traditionally cheerful and uplifting – usually hitting at time of peak pessimism in the form of self-serving\u00a0NYT op-eds\u00a0<\/a>or CNBC vignettes (and usually around the time the Omaha billionaire knows that the government will backstop his TBTF investments, unlike those of pretty much anyone else), on Saturday the head of Berkshire Hathaway had a far more downbeat and gloomy prediction for his own businesses – and the broader economy in general – the good times may be over.<\/p>\n

Speaking at Berkshire’s annual general meeting in Omaha, Nebraska, the billionaire investor said he expects\u00a0earnings at the majority of the conglomerate’s operations to fall this year\u00a0<\/strong>as the coming economic downturn slows corporate activity further. He made his pessimistic comments even as Berkshire posted an almost 13% gain in operating earnings to $8.07 billion for the first quarter, up from $7.04 billion a year ago.<\/p>\n

\u201cThe majority of our businesses will report lower earnings this year than last year,\u201d Buffett, 92, said, before crowds of thousands at the event on Saturday\u00a0according to Bloomberg<\/a>. During the last six months or so, the \u201cincredible period\u201d for the US economy has been coming to an end, he said.<\/p>\n

As Bloomberg notes Berkshire is often viewed as a proxy for economic health owing to the expansive nature of its businesses ranging from railroad to electric utilities and retail. Buffett himself has said Berkshire owes its success to the incredible growth of the US economy over the decades,\u00a0but his prediction for a slowdown at his firms comes as upheaval at regional banks threatens to curtail lending as inflation and higher rates continue to bite.<\/strong><\/p>\n

Buffett\u2019s long-time business partner Charlie Munger, 99, who joined him on stage, said the more-difficult economic environment will also make it harder for value investors, who typically buy stocks that look cheap compared to the intrinsic value of the businesses.<\/p>\n

\u201cGet used to making less,\u201d Munger said.<\/p>\n

Despite the broader pessimism, Buffett said he expects earnings at its insurance underwriting operations \u2014 which are less correlated to business activity \u2014 to improve this year. Berkshire already reported higher earnings at those businesses including auto-insurer Geico, which swung to profitability following six quarters of losses.<\/p>\n

Geico posted $703 million in earnings as higher average premiums and lower advertising spending contributed to the gain even as claim frequencies fell, Berkshire said in a statement reporting its earnings Saturday. That revival follows a difficult period for the underwriting business as inflation took its toll on the cost of materials and labor.<\/p>\n

Geico has been facing particular pressure from rivals including Progressive, which Buffett has called \u201cwell-run,\u201d and Allstate which had long used telematics programs to track drivers and encourage better behavior before Geico introduced the offering. Geico\u2019s profit also helped Berkshire\u2019s insurance underwriting businesses deliver $911 million in profit compared with $167 million a year earlier.<\/p>\n

Berkshire previously said it expected Geico to return to operating profitability in 2023, after securing premium rate increases. Still, Geico remains an issue for Berkshire, with top line growth in the quarter of less than 1% that \u201csignificantly lags peers,\u201d CFRA analyst Cathy Seifert said.<\/p>\n

\u201cI suspect rate hikes being put through to offset claim cost inflation is being met with policy cancellations,\u201d she said. \u201cWhile the loss of unprofitable policies is not always a bad thing- that\u2019s not usually the policies \u2014 and policyholders \u2014 that leave.\u201d<\/em><\/p><\/blockquote>\n

Other parts of the conglomerate took a bigger hit,\u00a0with after-tax earnings from Berkshire Hathaway Energy falling 46.3% from the same time last year amid \u201clower earnings from the US regulated utilities, other energy businesses and real estate brokerage businesses.<\/strong>\u201d Railroad results were also weaker than expected due to a fall in freight volumes and higher operating expenses, according to Edward Jones analyst Jim Shanahan.<\/p>\n

But at one of Berkshire\u2019s best known businesses, Brooks Running Co., Chief Executive Officer Jim Weber was skeptical of a steep consumer downturn.<\/p>\n

\u201cWith unemployment being so low, it\u2019s hard to be believing we\u2019re going to fall off a cliff into a recession at the consumer level,\u201d Weber said in an interview on Friday ahead of the meeting. \u201cI wonder if this is going to be an asset-value recession.\u201d<\/em><\/p><\/blockquote>\n

Among other topics discussed on Saturday were Buffett’s succession, the banking crisis, the US debt ceiling crisis, the company’s investment in Occidental, Chna’s upcoming invasion of Taiwan and more:<\/p>\n