One big problem with operating earnings is that they're very volatile, mainly because underwriting profit is very volatile.

If you start with reported operating earnings and replace the actual underwriting profit portion with some sort of cyclically adjusted underwriting profit figure, it's probably an excellent metric to follow. Personally I also simply subtract out the "other" category, since it averages pretty close to zero over time as a percentage, and so merely muddles the individual numbers. A lot of it is currency adjustments. Admittedly it includes the equity method earnings which I shouldn't be subtracting.

Of course an operating earnings figure, adjusted or not, does exclude both unrealized and realized capital gains from stock positions, so for example you won't ever see any benefit at all from the Apple position.


A good read here
https://rationalwalk.com/a-closer-look-at-berkshir...

Jim

Berkshire Hathaway FAQ

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