Market Crash: The Financial Stocks I'd Buy Without Hesitation

Berkshire Hathaway holds a $373 billion cash stockpile and has resumed share repurchases; shares are down ~11% from the 52-week high and trade at ~1.4x book value, giving management buyback optionality. Progressive shares have fallen >33% from a $292 peak, trade at a P/E of ~10, with premiums-in-force +10% (Feb), net premiums earned +8%, and a combined ratio of 85% through Feb; it paid $13.50/share last year (~7% yield). S&P Global, with ~50% share of U.S. credit ratings, faces AI-related software risk but retains strong ratings/indexes moats and a 53-year streak of dividend increases; the stock trades near four-year lows at ~29x trailing and ~22x forward earnings.

Analysis

Berkshire’s restart of repurchases should be viewed less as a pure valuation arbitrage and more as an EPS-and-optionality lever with measurable second-order effects: every $20–30B of buybacks reduces float by ~0.5–0.8% and mechanically boosts per-share intrinsic earnings given the firm’s slow-but-steady operating cash generation. That process amplifies upside from existing cyclical exposures (notably oil via energy holdings) while simultaneously compressing the margin for error on capital allocation — large-scale M&A remains difficult without meaningful price dislocation, so incremental buybacks will likely be the marginal deployment for the next 12–36 months.

Progressive’s underwriting strength gives it convexity to a normalizing claims environment and rising investment yields; combined-ratio outperformance plus 10%+ premium growth in the tails creates a durable spread between underwriting returns and cost of capital. The key risks are reserve development and catastrophe clustering — a single multi-year reserve build or elevated catastrophe losses would force a rapid re-rating given the stock’s low multiple and high implied yield sensitivity over the next 6–18 months. Reinsurance pricing and competitor capital behavior are the control knobs to watch: a softening reinsurer market or aggressive competitor discounting could compress margins quickly.

S&P Global is suffering headline AI risk but has asymmetric optionality: core ratings and indexes are low-elasticity cash cows while proprietary datasets and distribution can be transformed into premium AI products (model licensing, fine-tuning datasets) if management executes. The near-term catalyst set is secular (debt issuance cycles, index licensing renewals) so timing is 6–24 months; tail downside is a structural decline in issuance or a fast, credible open-source AI substitute for premium data, but upside from successful productization of AI is underpriced by the market today.

Key Decisions for Investors

• BRKB — Initiate a 2% NAV long (prefer BRKB vs BRKA for liquidity). Target +20% in 12–24 months assuming 1–3% annual share reduction from repurchases and modest energy tailwind; downside ~-15% in a broad equity drawdown. Use a 12–18 month trailing stop or hedge with a 1yr put 10% OTM sized to 50% of the equity position to cap tail risk.
• PGR — Buy 1.5% NAV long equity and sell 9–12 month covered calls ~10% OTM to harvest yield (target total return +25–35% if underwriting holds). If comfortable with leverage, replace part of the equity with a bull-call spread (12–18 month) to gain convex upside while capping loss; stress-test position for a 30–40% underwriting shock scenario.
• SPGI vs NVDA/QQQ — Pair trade: long SPGI 1% NAV vs short NVDA (or 0.6% NAV short QQQ) to hedge AI-beta over 12–18 months. Expect +20–25% relative upside if issuance stabilizes and AI fears fade; tail risk is continued outperformance of AI leaders, in which case keep short-sized to 50–70% of the long notional.
• Energy tactical — Buy CVX (1% NAV) and a small OXY call spread (6–9 month) to express asymmetric upside to Iran/conflict risk. Target 30–50% upside on the option spread if oil spikes; cap loss to premium paid and trim equity if oil drops >20% over 90 days.