Berkshire Hathaway Prepares for Industry Shifts
Investing icon Warren Buffett and his team at Berkshire Hathaway recently shared their insights on various market factors and upcoming changes that could impact their businesses. Despite recent stock market volatility, Buffett believes the sell-off hasn’t been ‘dramatic’ and sees continued opportunities in equities.
Artificial Intelligence Impact
Ajit Jain, Vice Chairman of Insurance Operations, noted that artificial intelligence could be a ‘real game changer’ for their insurance operations. While Berkshire Hathaway hasn’t made significant investments in AI yet, individual insurance operations are exploring its potential. “The individual insurance operations do dabble in AI and try to figure out what is the best way to exploit it,” Jain explained.
Changes in Auto Insurance
Geico, Berkshire’s largest insurance unit, is preparing for a fundamental shift with the advent of self-driving cars. “Most of the insurance that is sold and bought revolve around operator errors,” Jain explained. “The new self-driving cars are more safe and are involved in fewer accidents and there, less insurance will be required.”
Currency Market Fluctuations
The US dollar has lost over 7.78% of its value since the start of the year amid the ongoing tariff war initiated by US President Donald Trump. Buffett expressed concerns about fiscal policy in the United States, stating, “Fiscal policy is what scares me in the United States, because it’s made the way it is and all the motivations are to doing a lot of things that can cause trouble with money.”
Investment Strategies
Buffett advised that investors should be cautious about moving to fixed-income investments, stating, “Paper money can see its value evaporate if fiscal folly prevails. Fixed-coupon bonds provide no protection against runaway currency.”
Competitive Insurance Market
The entry of private equity firms has made the insurance business more competitive. Ajit Jain noted, “We used to do a fair amount in this space, but in the last three, four years, I don’t think we’ve done a single deal.”
Commitment to Japan Stocks
Buffett expressed his long-term commitment to investing in Japan stocks, saying, “In the next 50 years… we won’t give a thought to selling those.”
