Here are the headlines and highlights from the Berkshire Hathaway Annual letter to shareholders, from Warren Buffett and Charlie Munger.
BH owns whole (100%) businesses and publicly traded companies (via stock) and has no say in management
Many Berkshire owners enjoy charitable giving
Trust is the primary criteria of the CEOs they employ
Business mistakes happen, personal conduct errors are zero tolerance offenses
We focus on favorable economics, trustworthy managers, and long term business performance. We are not stock pickers; we are business pickers.
Made some big wins, many marginal performers and a few that have died. About one every five years is good enough to achieve the performance.
Dividend yielding stocks are attractive. Coke and AMEX are two they have owned many years.
It helps to start (investing) early and live into your 90s.
They make a lot of money on their “float” (The difference between premium revenue and claim payments)
We will always hold a boatload of cash and U.S. Treasury bills
Our CEO will always be the Chief Risk Officer
Berkshire paid $32 billion in tax in 2022 and we hope to pay more during the next decade. We owe the country no less
I call this the Charlie Munger greatest hits list. Quips and quotes from the prolific investor, as outlined in the Berkshire Hathaway letter:
The world is full of foolish gamblers, and they will not do as well as the patient investor
If you don’t see the world the way it is, it’s like judging something through a distorted lens.
All I want to know is where I’m going to die, so I’ll never go there. And a related thought: Early on, write your desired obituary – and then behave accordingly.
If you don’t care whether you are rational or not, you won’t work on it. Then you will stay irrational and get lousy results.
Patience can be learned. Having a long attention span and the ability to concentrate on one thing for a long time is a huge advantage.
You can learn a lot from dead people. Read of the deceased you admire and detest
Don’t bail away in a sinking boat if you can swim to one that is seaworthy.
A great company keeps working after you are not; a mediocre company won’t do that.
Warren and I don’t focus on the froth of the market. We seek out good long-term investments and stubbornly hold them for a long time.
Ben Graham said, “Day to day, the stock market is a voting machine; in the long term it’s a weighing machine.” If you keep making something more valuable, then some wise person is going to notice it and start buying.
There is no such thing as a 100% sure thing when investing. Thus, the use of leverage is dangerous. A string of wonderful numbers times zero will always equal zero. Don’t count on getting rich twice.
You don’t, however, need to own a lot of things in order to get rich.
You have to keep learning if you want to become a great investor. When the world changes, you must change.
Warren and I hated railroad stocks for decades, but the world changed and finally the country had four huge railroads of vital importance to the American economy. We were slow to recognize the change, but better late than never.
And finally, one from Warren:
Find a very smart high-grade partner – preferably slightly older than you – and then listen very carefully to what he says.
Warren is 92 and his “high-grade partner” is 99. How inspiring!
Ron
Attestation Statement: I Ron Gambassi hereby attest and affirm that the enclosed sales literature or advertising package contains no false or misleading statements or misrepresentations of material facts, and that all information set forth therein is in conformity with the Company’s most recently amended registration statement as filed with the Department on or about September 2021.
Data sources: Berkshire Hathaway letter to shareholders
