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Trump Presidency To Make Berkshire Hathaway Inc. (NYSE:BRK.B) Great Again

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The U.S election dust having settled down, Berkshire Hathaway Inc. (NYSE:BRK.B) continues to edge higher having emerged that Donald Trump presidency could make the company great again. The stock’s impressive run in recent weeks has been down to expected benefits that Trump’s presidency could bring to some of the holding firm’s subsidiaries and holdings.

 High Interest Rate Push

 Trump Presidency is expected to have a positive impact on the Insurance sector where Berkshire Hathaway has a lot of interest through its subsidiaries, including GEICO and General RE. Trump has been pushing for a rise in interest rates something that if implemented is expected to result in an increase in earnings in the sector.

 Insurance companies make a good chunk of their earnings from money they invest after receiving from clients before paying out. A higher rate environment is thus expected to boost returns from investments such as Treasury bonds. The investment firm holdings in the financial sector could also receive a major boost from Trump’s anti-regulation stance.

 Trump Rally

Ever since Trump was elected as the next president of the United States, the stock market has been on an impressive run. Should the ‘Trump rally’ persist into the end of 2017 then Berkshires should be one of the beneficiaries given its diversified investments in various sectors of the economy.

 Trumps proposed lower corporate tax rate is something that is expected to have a positive impact on Berkshire Hathaway. Such an action should result in a reduction in deferred tax liability thus help boost book value for some of the firm’s holdings. Lower tax rate environment would see Berkshire paying less of its earnings as tax. The extra amount could be used to reinvest in other value generating holdings, which should continue pushing the stock higher in the market.

 If the recent happenings is anything to go by, then Trump Presidency is expected to be good for Berkshire and other companies looking to take advantage of low tax environment and minimal regulation. The stock has already rallied by more than 8% since the election a pointer of what to expect as Trump assumes the presidency come January.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of MMJReporter.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure

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