BERKSHIRE HATHAWAY INC.SHAREHOLDER LETTERS

[funman168]

what if u sold smthing u tink is cheap to buy another which is supposing cheaper, but end up the cheaper is also wron?

[CityFarmer]

what if u sold smthing u tink is cheap to buy another which is supposing cheaper, but end up the cheaper is also wron?

If it is a wrong decision, rectify it, learn the lesson, and hopefully next round can be wiser.

It applies to investments with new money, as well as with rotated fund.

[vesfreq]

IMHO it is loaded because

1) He is talking about REALISED loss, unrealised is another matter
2) It is talking about 50 years track which all 3 >1% losses happened in just 2 years of bear market
3) With concentrated bets it is very hard to have realised loss of such small magnitude
4) Opportunity cost is very important. He has repeated said not closing Berkshire Textile was one of his biggest mistakes. He is cash rich now so rotation is not an issue currently. Sold Tesco due to fundamental deterioration which is what value investors should also focus on instead of staying in love.

Statement 4 is so true. "Staying in love" is such an apt analogy.

[specuvestor]

I forgot 5) Avoiding the bombs is just as important as picking the gems

[violinist]

They are 50 as well?

[greengiraffe]

Fifty years of Berkshire annual letters: here are some highlights
• STEPHEN GROCER
• THE WALL STREET JOURNAL
• MARCH 02, 2015 7:43AM

Top Takeaways From Warren Buffett's Letter

HIS earliest letters, written to the people who had put their money into his hedge-fund-like investing partnership in the 1960s, were “photocopied and passed hand to hand around Wall Street until the copies became blurry and hard to read,” according to biographer Alice Schroeder.
Since the those days the letter has evolved. For the past 50 years, he’s been the chairman of Berkshire Hathway Inc. Today, the letters are read not just by a devoted circle of Buffett acolytes who own his company’s shares but by some of the biggest institutional money-managers and the smallest retail investors, soaking up Buffett’s farmers-almanac style advice on investing, his views on the economy, and his take on the world.
Here’s a look at the past 50 years of quips and quotes from the Oracle of Omaha:

1977 Letter
“Just as it would be foolish to focus unduly on short-term prospects when acquiring an entire company, we think it equally unsound to become mesmerised by prospective near term earnings or recent trends in earnings when purchasing small pieces of a company; ie, marketable common stocks.”
Start of sidebar. Skip to end of sidebar.
• MOREBerkshire hints at Buffett successor
• MOREBuffett defends Berkshire structure
End of sidebar. Return to start of sidebar.
1978 Letter
“We are not concerned with whether the market quickly revalues upward securities that we believe are selling at bargain prices. In fact, we prefer just the opposite since, in most
years, we expect to have funds available to be a net buyer of securities.”
“The primary test of managerial economic performance is the achievement of a high earnings rate on equity capital employed (without undue leverage, accounting gimmickry, etc.) and not the achievement of consistent gains in earnings per share.“
1981 Letter
“Many managements apparently were overexposed in impressionable childhood years to the story in which the imprisoned handsome prince is released from a toad’s body by a kiss from a beautiful princess. Consequently, they are certain their managerial kiss will do wonders for the profitability of Company T (arget).
“Such optimism is essential. Absent that rosy view, why else should the shareholders of Company A (cquisitor) want to own an interest in T at the 2X takeover cost rather than at the X market price they would pay if they made direct purchases on their own?”
1982 Letter
“As we look at the major acquisitions that others made during 1982, our reaction is not envy, but relief that we were non-participants. For in many of these acquisitions, managerial intellect wilted in competition with managerial adrenaline. The thrill of the chase blinded the pursuers to the consequences of the catch. Pascal’s observation seems apt: ‘It has struck me that all men’s misfortunes spring from the single cause that they are unable to stay quietly in one room.’”
1983 Letter
One of the ironies of the stock market is the emphasis on activity. Brokers, using terms such as “marketability” and “liquidity”, sing the praises of companies with high share turnover (those who cannot fill your pocket will confidently fill your ear). But investors should understand that what is good for the croupier is not good for the customer. A hyperactive stock market is the pickpocket of enterprise.
1985 Letter
“Historically, Berkshire shares have sold modestly below intrinsic business value. With the price there, purchasers could be certain (as long as they did not experience a widening of this discount) that their personal investment experience would at least equal the financial experience of the business. But recently the discount has disappeared, and occasionally a modest premium has prevailed.”
Buffett has historically compared the change in Berkshire’s per-share book value to the performance of the S & P 500. In the 2014 letter, he added another metric to his annual letter: the historical record of Berkshire’s stock price. Because Berkshire’s “emphasis has shifted in a major way to owning and operating large businesses” the relationship between book value and intrinsic value has grown wider.
“You might think that institutions, with their large staffs of highly-paid and experienced investment professionals, would be a force for stability and reason in financial markets. They are not: stocks heavily owned and constantly monitored by institutions have often been among the most inappropriately valued.”
1988 Letter
“Our experience with newly-minted MBAs has not been that great. Their academic records always look terrific and the candidates always know just what to say; but too often they are short on personal commitment to the company and general business savvy. It’s difficult to teach a new dog old tricks.”
Of course, there are exception to every rule. Warren Buffett hired Tracy Britt right out of Harvard Business School and she has quickly emerged as one Mr. Buffett’s top lieutenants.
1991 Letter
“Charlie and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children.”
1995 Letter
“Soon after our purchase of the Salomon preferred in 1987, I wrote that I had “no special insights regarding the direction or future profitability of investment banking.” Even the most charitable commentator would conclude that I have since proved my point.”
Two years later, Travelers Group Inc. purchased Salomon Brothers for $9 billion. ”Berkshire’s final results from its Salomon investment won’t be tallied for some time, but it is safe to say that they will be far better than I anticipated two years ago,” Buffett wrote in the 1997 letter.
1997 Letter
“A short quiz: If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef? Likewise, if you are going to buy a car from time to time but are not an auto manufacturer, should you prefer higher or lower car prices? These questions, of course, answer themselves.
“But now for the final exam: If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period?”
Since the net saver is most likely going to be a net buyer of stocks during that period, he wants a lower stock market.
1999 Letter
“If investor expectations become more realistic — and they almost certainly will — the market adjustment is apt to be severe, particularly in sectors in which speculation has been concentrated.”
“Berkshire will someway have opportunities to deploy major amounts of cash in equity markets — we are confident of that. But, as the song goes, “Who knows where or when?” Meanwhile, if anyone starts explaining to you what is going on in the truly-manic portions of this “enchanted” market, you might remember still another line of song: “Fools give you reasons, wise men never try.”
At the height of the dotcom boom, Mr Buffett casts a sceptical eye toward the soaring valuations in the market.
2002 Letter
“Derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.”
In Berkshire’s 2002 annual letter, Buffett issued a now-famous warning about the liabilities that could arise from the “burgeoning quantities of long-term derivatives contracts.” His warning would prove prescient when the financial crisis struck, but by that time, Berkshire itself had taken on some massive derivative obligations. Buffett has gone to great lengths to explain why Berkshire’s derivative book is different, but it’s rare to hear an investor talking about Buffett’s WMD comment without also discussing Berkshire’s own derivative bets.
2003 Letter
“If class warfare is being waged in America, my class is clearly winning.”
Buffett, one of the richest people in the world, has long suggested that the wealthiest Americans need to pay more taxes. But in 2004, his comment was about the corporate tax rate. The prior year, corporate income taxes accounted for 7.4% of all federal tax receipts, down from a post-war peak of 32 per cent in 1952.
2004 Letter
“Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful.”
Buffett warned in 2005 against trying to time the market too much, saying that many investors have “had experiences ranging from mediocre to disastrous” because they traded too often, followed fads and entered and exited the market at the wrong times.
2005 Letter
“Getting fired can produce a particularly bountiful payday for a CEO. Indeed, he can ‘earn’ more in that single day, while cleaning out his desk, than an American worker earns in a lifetime of cleaning toilets. Forget the old maxim about nothing succeeding like success: Today, in the executive suite, the all too-prevalent rule is that nothing succeeds like failure.”
Buffett, whose $US100,000 salary at Berkshire has been unchanged for more than 25 years, has long criticised executive pay and expressed his distaste for golden parachutes. He later claimed to be a “Typhoid Mary” for having served on 19 corporate boards while only earning a spot on a single compensation committee.
2006 Letter
“When someone with experience proposes a deal to someone with money, too often the fellow with money ends up with the experience, and the fellow with experience ends up with the money.”
Buffett’s 2007 comment was in reference to the 2-and-20 fee structure employed by many hedge funds. Buffett called the fees a “grotesque arrangement.”
2007 Letter
“You only learn who has been swimming naked when the tide goes out — and what we are witnessing at some of our largest financial institutions is an ugly sight.”
One of the most frequently cited of Buffett’s quotes was referring to the bursting of the housing bubble. “Our country is experiencing widespread pain” because of the erroneous belief that home prices would always rise, he wrote. That pain, of course, would only get worse in the year ahead.
2008 Letter
“Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”
With the S & P 500 down by more than half from its 2007 peak, even casual investors were paying close attention to Buffett in early 2009. His message: buy. “We enjoy such price declines if we have funds available to increase our positions,” he wrote.
2009 Letter
“We will never become dependent on the kindness of strangers. Too-big-to-fail is not a fallback position at Berkshire.”
“Borrowers then learn that credit is like oxygen. When either is abundant, its presence goes unnoticed. When either is missing, that’s all that is noticed.”
“Human potential is far from exhausted, and the American system for unleashing that potential — a system that has worked wonders for over two centuries despite frequent interruptions for recessions and even a Civil War — remains alive and effective.”
Buffett had a wider audience than ever in 2010 after new investors flocked to the company as a result of a $US26.5 billion takeover of railroad Burlington Northern Santa Fe and the addition of Berkshire to the S & P 500. The annual letter included a “freshman orientation session” about Berkshire for the newcomers.
2010 Letter
“Our elephant gun has been reloaded, and my trigger finger is itchy.”
A year after the railroad deal, Buffett announced he was on the lookout for major acquisitions as part of his unending effort to profitably employ the bucketfuls of cash his company collects every month. While the 2011 pronouncement attracted attention, Buffett hasn’t come close to bagging another company as big as Burlington. He did buy engine lubricant-maker Lubrizol Corp. for $US9 billion in 2011 and earlier this month agreed to supply about $US12 billion to join with a Brazilian investment firm to buy ketchup maker HJ Heinz Co.
2011 Letter
The Berkshire board is “enthusiastic about my successor as CEO, an individual to whom they have had a great deal of exposure and whose managerial and human qualities they admire.”
Berkshire shareholders have long obsessed about who would replace Buffett, and in the 2011 letter he indicated the company’s board had identified a single individual to succeed him as chief executive. The would-be successor wasn’t named, and Buffett later said that even his replacement was unaware that they were considered the top candidate.
2012 Letter
“Wishing makes dreams come true only in Disney movies; it’s poison in business.”
The quote is the kicker to a anecdote about Buffett’s effort to save Berkshire’s textile business. He says he wanted the business to succeed and the 20 years he invested in money and time proved to be an exercise in futility.
“We will keep our foot to the floor and will almost certainly set still another record for capital expenditures in 2013. Opportunities abound in America.”
“If you are a CEO who has some large, profitable project you are shelving because of short-term worries, call Berkshire. Let us unburden you.”
2013 Letter
“Charlie and I have always considered a “bet” on ever-rising US prosperity to be very close to a sure thing … Indeed, who has ever benefited during the past 237 years by betting against America? If you compare our country’s present condition to that existing in 1776, you have to rub your eyes in wonder. And the dynamism embedded in our market economy will continue to work its magic. America’s best days lie ahead.”
“Woody Allen stated the general idea when he said: ‘The advantage of being bisexual is that it doubles your chances for a date on Saturday night.’ Similarly, our appetite for either operating businesses or passive investments doubles our chances of finding sensible uses for our endless gusher of cash.”

[serendibz]

anyone attending the AGM this year?

[opmi]

anyone attending the AGM this year?

those who want to visit their idol better, better do soon. Despite Buffett eating like 6 years old, he still cannot deviate too much from the mortality tables that he builds his insurance empire on..