Warren Buffett’s yearly letter to Berkshire Hathaway’s shareholders has become somewhat of a pilgrimage in and by itself. It gives a rare peek into the mind of Oracle of Omaha — the world’s most prolific investor — and how he is thinking about the markets.
We will refrain from adding our (unnecessary) inputs and rather instead focus on some of the key tidbits we found the most helpful.
Long-term thinking in a short-term world
“……we own stocks based upon our expectations about their long-term business performance and not because we view them as vehicles for timely market moves. That point is crucial: Charlie [Warren Buffett’s business partner] and I are not stock-pickers; we are business-pickers.”
Even he is not immune to it
“I make many mistakes.”
Two key elements in building enduring businesses
“The insurance business is made to order for Berkshire. The product will never be obsolete, and sales volume will generally increase along with both economic growth and inflation. Also, integrity and capital will forever be important. Our company can and will behave well.”
Be the master of your own fortune
“We want your company to be financially impregnable and never dependent on the kindness of strangers (or even that of friends). Both of us like to sleep soundly, and we want our creditors, insurance claimants and you to do so as well.“
on Berkshire Hathaway's $144bn cash pile
“That imposing sum, I assure you, is not some deranged expression of patriotism…….Charlie and I have endured similar cash-heavy positions from time to time in the past. These periods are never pleasant; they are also never permanent. And, fortunately, we have had a mildly attractive alternative during 2020 and 2021 for deploying capital.”
Acts of generosity
“Annually, I would call Paul [Warren Buffett’s business friend] and tell him his salary should be substantially increased. Annually, he would tell me, “We can talk about that next year, Warren; I’m too busy now.”
Never gets old
“……And people who are comfortable with their investments will, on average, achieve better results than those who are motivated by ever-changing headlines, chatter and promises.”
We tried to talk about this here.
While we cannot emulate his strategy like-for-like, we can always use these nuggets of wisdom in our own investing journey.
