What's going on?

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.