Warren Buffett just published his shareholder letter
It's a must-read for every investor
I summarized it for you in 14 lessons:
It's a must-read for every investor
I summarized it for you in 14 lessons:
1. Tribute to Charlie Munger
“Charlie was the “architect” of the present Berkshire, and I acted as the “general contractor” to carry out the day-by-day construction of his vision."
“Charlie was the “architect” of the present Berkshire, and I acted as the “general contractor” to carry out the day-by-day construction of his vision."
2. The power of incentives
"Bertie understands the power – for good or bad – of incentives, the weaknesses of humans, the “tells” that can be recognized when observing human behavior. She knows who is “selling” and who can be trusted. In short, she is nobody’s fool."
"Bertie understands the power – for good or bad – of incentives, the weaknesses of humans, the “tells” that can be recognized when observing human behavior. She knows who is “selling” and who can be trusted. In short, she is nobody’s fool."
3. Time in the market beats timing the market
"I can’t remember a period since March 11, 1942 – the date of my first stock purchase – that I have not had a majority of my net worth in equities, U.S.-based equities. And so far, so good."
"I can’t remember a period since March 11, 1942 – the date of my first stock purchase – that I have not had a majority of my net worth in equities, U.S.-based equities. And so far, so good."
4. Buy good companies
"We want to own either all or a portion of businesses that enjoy good economics that are fundamental and enduring. Within capitalism, some businesses will flourish for a very long time while others will prove to be sinkholes. "
"We want to own either all or a portion of businesses that enjoy good economics that are fundamental and enduring. Within capitalism, some businesses will flourish for a very long time while others will prove to be sinkholes. "
5. Focus on companies with plenty of reinvestment opportunities
"At Berkshire, we favor the rare enterprise that can deploy additional capital at high returns in the future. Owning only one of these companies can deliver wealth almost beyond measure."
"At Berkshire, we favor the rare enterprise that can deploy additional capital at high returns in the future. Owning only one of these companies can deliver wealth almost beyond measure."
6. Buy companies run by great managers
"We also hope these favored businesses are run by able and trustworthy managers, though that is a more difficult judgment to make, however, and Berkshire has had its share of disappointments."
"We also hope these favored businesses are run by able and trustworthy managers, though that is a more difficult judgment to make, however, and Berkshire has had its share of disappointments."
7. Let your winners run
"By both luck and pluck, a few huge winners have emerged from a great many dozens of decisions. And we now have a small cadre of long-time managers who never muse about going elsewhere and who regard 65 as just another birthday."
"By both luck and pluck, a few huge winners have emerged from a great many dozens of decisions. And we now have a small cadre of long-time managers who never muse about going elsewhere and who regard 65 as just another birthday."
8. Try to be a bit above average for long periods of time
"Berkshire should do a bit better than the average American corporation and, more importantly, should also operate with materially less risk of permanent loss of capital."
"Berkshire should do a bit better than the average American corporation and, more importantly, should also operate with materially less risk of permanent loss of capital."
9. Buy when there's blood running through the streets
"Berkshire’s ability to immediately respond to market seizures with both huge sums and certainty of performance may offer us an occasional large-scale opportunity."
"Berkshire’s ability to immediately respond to market seizures with both huge sums and certainty of performance may offer us an occasional large-scale opportunity."
10. Rule number 1: Never lose money
"One investment rule at Berkshire has not and will not change: Never risk permanent loss of capital."
"One investment rule at Berkshire has not and will not change: Never risk permanent loss of capital."
11. Share repurchases only make sense when the company is undervalued
"All stock repurchases should be price-dependent. What is sensible at a discount to business-value becomes stupid if done at a premium."
"All stock repurchases should be price-dependent. What is sensible at a discount to business-value becomes stupid if done at a premium."
12. Never sell wonderful companies
"The lesson from Coke and AMEX? When you find a truly wonderful business, stick with it. Patience pays, and one wonderful business can offset the many mediocre decisions that are inevitable."
"The lesson from Coke and AMEX? When you find a truly wonderful business, stick with it. Patience pays, and one wonderful business can offset the many mediocre decisions that are inevitable."
13. Don't try to make market forecasts
"We don't believe we can forecast market prices of major currencies. We also don’t believe we can hire anyone with this ability."
"We don't believe we can forecast market prices of major currencies. We also don’t believe we can hire anyone with this ability."
14. The magic of compounding
"We have been in the business for 57 years and despite our nearly 5,000-fold increase in volume – from $17 million to $83 billion – we have much room to grow."
"We have been in the business for 57 years and despite our nearly 5,000-fold increase in volume – from $17 million to $83 billion – we have much room to grow."
That's it for today.
Last year I read everything Warren Buffett has ever said and written.
I summarized it in a free e-book of 60 pages. You can grab it here: compounding-quality.ck.page
Last year I read everything Warren Buffett has ever said and written.
I summarized it in a free e-book of 60 pages. You can grab it here: compounding-quality.ck.page
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