If you only read one thing about investing a year, it should be Berkshire Hathaway’s Annual Letter to Shareholders written by the Oracle of Omaha, Warren Buffet.
The 2023 letter was published in their annual report last Saturday. You can find it here.
Here are my takeaways from this year’s letter:
WARREN ON THE GOOD THAT WEALTH BRINGS
“We believe Berkshire’s individual holders largely to be of the
once-a-saver, always-a-saver variety. Though these people live well, they eventually dispense most of their funds to philanthropic organizations. These, in turn, redistribute the funds by expenditures intended to improve the lives of a great many people who are unrelated to the original benefactor.”
MY TAKEAWAY: The wealthy enjoy their money, but they’re savers, not spenders. And contrary to Hollywood’s portrayal, they are more like Bill Gates than Gordon Gecko. They use their money for good, not to buy more yachts to water-ski behind or even to create generational wealth.
WARREN ON INVESTING
“Please note particularly that we own publicly-traded stocks based on our expectations about their long-term business performance, not because we view them as vehicles for adroit purchases and sales. That point is crucial: Charlie and I are not stock-pickers; we are business-pickers.”
MY TAKEAWAY: They are investors in businesses, not traders of stocks. He’s the most successful investor that’s ever lived. He owns no crypto or any stock they don’t plan on holding for a very long time.
WARREN ON CRYSTAL BALLS
“Charlie and I plead ignorance and firmly believe that near-term economic and market forecasts are worse than useless. Our job is to manage Berkshire’s operations and finances in a manner that will achieve an acceptable result over time…”
MY TAKEAWAY: Not even the Oracle of Omaha can predict the future. So what chance do we have? Our job is to manage our resources responsibly.
WARREN ON AMERICA
“I have been investing for 80 years – more than one-third of our country’s lifetime. Despite our citizens’ penchant – almost enthusiasm – for self-criticism and self-doubt, I have yet to see a
time when it made sense to make a long-term bet against America. And I doubt very much that any reader of this letter will have a different experience in the future.”
MY TAKEAWAY: We certainly ain’t perfect, but there is more opportunity in this country than anywhere else in the world. Don’t bet against America.
WARREN ON CHARLIE
He finishes this year’s letter with some of his favorite recent quotes from his long-time business partner and friend, Charlie Munger.
These are my favorites of Warren’s favorites:
– The world is full of foolish gamblers, and they will not do as well as the patient investor.
– Early on, write your desired obituary – and then behave accordingly.
– You can learn a lot from dead people. Read of the deceased you admire and detest.
– 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.
– Finally, I will add two short sentences by Charlie that have been his decision-clinchers for decades: “Warren, think more about it. You’re smart and I’m right.”
