However, he argues that defining Berkshire as a conglomerate is only partially correct. And in his 2020 letter, Buffett goes on to explain that “conglomerates earned their terrible reputation” and why owning stocks in these businesses may not be the best investment strategy. Buffett concedes that those who invest in companies on the speculation that they may one day be worthwhilecould reap returns — he just has no interest in that kind of investment. He prefers to invest in companies that are already successful and that have a strong chance of continuing success over the long term. Rather than getting too caught up in the price or recent movement of a stock, Buffett says, buy from companies that make great products, that have strong competitive advantages, and that can provide you with consistent returns over the long term. He mocks himself for making mistakes, and sings the praises of Berkshire’s army of CEO-managers.

“At Berkshire, Charlie and I have long focused on using retained earnings advantageously,” Buffett writes. Among those top 10 Berkshire Hathaway companies, the amount of earnings that are retained and reinvested is more than double the size of the earnings being paid out as dividends. The Washington Post’s stock suffered too, even after Buffett’s acquisition. After the end of 1974, the Post had officially been a loser for Berkshire Hathaway, falling from a value of $10.6M to $8M. But Buffett had a conviction the company’s fortunes would turn, and he knew he had picked up the company at a great price, despite the fact that it had fallen even more.

Save your money in peacetime so you can buy more during war

I would suggest to read both, as the former sets the arena or mental framework required and the latter throws you into the field and make you wear your own damn jersey. I was taking unpaid leaves to finish these and almost lost my job😂. Got it for like ~$10 bucks and probably I will carry these on my death bed as well. This should be required reading for anyone thinking about managing theirs or other people’s money. The letters themselves are fine, but this is routinely recommended as an investing book, and as such, I cannot recommend it. For someone looking for a historical perspective on Berkshire Hathaway’s history, maybe.

• In shareholder letter after shareholder letter, Buffett reminds his readers that the true stars of Berkshire Hathaway are not him or Charlie Munger — they are the managers that run the various companies under the Berkshire Hathaway umbrella.
• Control purchase of Clayton Homes and the usage of Berkshire’s credit rating to guarantee wholly-owned mortgages issued by Clayton to help buyers finance their homes, while charging Clayton a 100bp spread for this benefit.
• Buffett does not believe that standard GAAP accounting figures always give an accurate idea of what a company is worth, so he walks through a valuation of Scott Fetzer Company to explain why Berkshire purchased the company.
• The Little Book of Common Sense Investing by John Bogle There are some investment managers, of course, who are very good – although in the short term, it’s hard to tell whether a great record is due to luck or skill.
• Jamie Dimon’s Annual Letters One CEO who always weighs the price/value factor in return decisions is Jamie Dimon at J.P.

I’ve been investing most of my life and have managed money professionally for 9 years. Buffett’s philosophies have had a huge impact on how I run my businesses and live my life. I put this compilation together as a thanks to his positive influence on myself and many, many others. S Berkshire Hathaway annual shareholders meeting, Buffett also told a curious seventh-grader that the key to making friends and getting along with coworkers… I have invested most of my life and managed money professionally for 9 years.

Mia And Sebastian’s Theme Piano Notes Letters

H. Brown had to “stand in the shoes of owners” and truly weigh whether the cost of a project was worth the potential results. H. Brown Shoe Company, at the time the leading manufacturer of work shoes in North America. In his shareholder letter that year, Buffett talked about a few of the reasons why. It was really fun to read through https://forexarena.net/ the history and see how Buffett went from small time to big time. Knowing the ending didn’t ruin the surprises about which investments panned out and which ones didn’t (some, like Coke, weren’t surprising, but others, like Blue Chip, were more so). Took me like 2 months for the letters and another 2 months for valuation.

Impressively, most all of the content is enjoyable to read too. I’m a bit sad having concluded it though of course can find more subsequent letters to enjoy and learn more. Intense competition in the reinsurance business has produced major losses for practically every company operating in the area. Our underwriting loss was something over 12%—a horrendous figure, but probably little different from the average of the industry. Post that, I read another book named The Essays of Warren Buffett – it is an excellent compilation of all the letters by Lawrence A. Cunningham. His large derivatives stakes involving sales of both single-name and tranche-based credit default swaps and long-dated equity index puts in 2008.

Before this, Berkshire Hathaway had mostly made money from investing in stocks. For a long time, however, Buffett notes in his1992letter, investors interested in “value” and investors interested in “growth” have been considered to be at odds. But when a company buys back its own stock while it is priced at or above the stock’s intrinsic value, the company is by definition overpaying.

Value investing

Going to my first shareholder meeting this May, so reading this was a great way to get the most out of the trip. Our property/casualty (“P/C”) insurance business has been the engine propelling Berkshire’s growth since 1967, the year we acquired National Indemnity and its sister company, National Fire & Marine, for $8.6 million. Today, National Indemnity is the largest P/C company in the world as measured… All of the letters in the book and the examples above were written by Warren E. Buffett and are copyrighted and reprinted with his permission. These letters may not be reproduced, copied, sold or otherwise distributed without the permission of Warren E. Buffett.

Grateful Olson stitched this together and Buffett has shared so much. Bankruptcy investment in FINOVA in which Berkshire Hathaway led the plan of reorganization with Leucadia which involved a backstop bid at 70c for the takeback notes, but which Berkshire subsequently backed out of due to the September 11 attacks . Mount Everest, K2 and Kangchenjunga are the 3 indisputable tallest mountain ranges out there. It is likely on the bucket list of many new and aspiring climbers, working as a backdrop siren call as they hone their skills on lesser mounds.

Because of that, the book is considerably long and if you decide to read it all at once you’ll find some of the year-to-year discussions a little repetitive. This is to be expected, as each letter was originally written to be read with about a year difference, and the overall nature of the business does not usually change that much in this amount of time, but something to be mindful of nonetheless. I learned over many iterations how and why the corporate culture is better in Berkshire than in most other companies. He leads the viewer from the very beginning to today’s state which is an amazing transformation from a declining textile operation to a huge conglomerate holding. It is also detailed why this structure is adventageous, almost to a point where I’d want to buy a few shares.

“Managers of this stripe cannot be ‘hired’ in the normal sense of the word. What we must do is provide a concert hall in which business artists of this class will wish to perform,” he writes. For Buffett, investment bankers are too often simply using whatever math is most preferable for their preferred outcome, whether or not it is deceptive to the buyers and sellers involved in the transaction. Again appear and just as earnestly urge spinning off the earlier acquisition in order to ‘unlock shareholder value,’” he writes.

In fact, chances are most of these books will be flung across the room well before the last chapter. A lot of them are wilting in bookshelves around the world waiting for a day when the owner inevitably bundles it into the charity box for donation. With over 19 things you can do right now to improve your next party.

Warren Buffett has not just a gift for capital allocation, but down-to-earth demeanor, attractive sense of humor, and uncanny ability to read people. It does not help that many letters are repetitive like detailing the annual meeting or how Berkshire works, over and over again, with only a handful of words and values changed. Yes, a given sentence could appear like 18 times, so if you read one letter every day, it’s very hard to focus because it feels like an infinite loop – if you don’t skip anything. “Helped” by accounting and business verbiage, my reading speed was unusually low, in the 8-12 pages/hour range. So expect to spend as much time as watching the entire TV show Friends twice, or a 10 seasons of a full-length 42 minute show without ads, or about a week of your time (in non-stop terms).

Warren Buffett calls stock buyback critics ‘economic illiterate’ in Berkshire Hathaway annual letter

In spring 2001, Cisco’s shareholders had lost a total of 28.6% on their investment — yet CEO John Chambers took home $157M, mostly on his stock options (about $330,000 of that total consisted of direct, cash compensation). It’s no wonder Buffett publishes an updated table of Berkshire’s per-share performance alongside the stock index at the beginning of each year’s shareholder letter, which has become an annual event in the world of business and finance. A lot of the annual letter is boilerplate and some years have nothing meaningful, but periodically there berkshire hathaway letters to shareholders is a section that is worth its weight in gold. I do believe someone else pulled out all of those sections and someone not looking to devote a year of reading to this book might consider reading that version. Reading Buffet’s letters is a good starting point that introduces one to this entire field of shareholders letters , which when thoughtfully written can prove to be a rich source of wisdom for their readers. The letters start fairly small in size but grow bigger each year, following the increase in size and scope of Berkshire Hathaway itself.

All letters in the book and the above samples are written and copyrighted by Warren E. Buffett and are reproduced with his permission. These letters must not be reproduced, copied, sold, or otherwise distributed without the permission of Warren E. Buffett. Limping on Water by Phil Beuth An autobiography that chronicles his life at Capital Cities Communications and tells you a lot about its leaders Tom Murphy and Dan Burke. These two were the best management duo – both in what they achieved and how they did it – that Charlie and I have ever witnessed. Much of what you become in life depends on who you admire and copy.

I think those that don’t shy away from owning a stock for decades will find the most value in the book, however the day traders and crypto fans will of course see it utterly boring. If the importance of sitting and sleeping comfortably with your investment is of importance you might end up heeding some of his advice or even become a shareholder. The letters provide you with a solid understanding of Buffett’s investment philosophy and that alone makes the book worthwhile. In addition, you will get a better understanding of accounting and the insurance industry. This book collects 50 years of Warren Buffett’s letters to Berkshire Hathaway shareholders.

Berkshire Hathaway Letters To Shareholders 1965-2012

In his 2019 shareholder letter, Buffett reported that Berkshire Hathaway’s top 10 stock investments had generated almost $3.8B in dividends over the previous year. If investors can do that, they’ll naturally tend to go in the opposite direction of the herd — to “be fearful when others are greedy and greedy only when others are fearful,” as he wrote in 2004. Underlying the actual industry knowledge share, Buffet takes on something of a mentor role for his shareholders and helps the reader avoid the pitfalls of bad investing, bad reporting and bad business practice. This strategy of train and explain means you will leave this book with a wealth of knowledge you never knew you needed. Warren is a great guy, the kind that you’d love to have as a grandpa – and not in hopes of inheriting a fortune but as someone to learn valuable lessons from. By way of these letters he could be any long-term investor’s virtual grandpa.

One striking example that he discusses at length in his 1979 letter to shareholders is that of Waumbec Mills in Manchester, New Hampshire. He argues that asset-heavy companies “can be good investments,” with the Burlington Northern Santa Fe Railway and Berkshire Hathaway Energy as prime examples. These two Berkshire-owned companies had combined earnings of $8.3B in 2020. The most common culprits, for Buffett, are the kinds of executives who determine that they’re going to buy a certain amount of stock over a certain period of time. While the technological innovation was even more impressive than the car, the industry as a whole could be said to have failed most of its investors.

You can find most of the letters for free on Berkshire’s website, but this compiles them into a well-designed, easily readable format. It has been claimed by many that you will learn more from reading these letters than getting an MBA. There are hundreds of books about Buffett’s life, advice and methods. These are his true words; “lesson plan” of his views on business and investment. You can find most of the fonts for free on Berkshire’s website, but this one compiles them into a well-designed, easy-to-read format.