In the 1984 Berkshire Hathaway Shareholder Letter, Warren Buffett describes his and Munger’s suprising strategic plan for finding their big investment ideas, saying:
“Using my academic voice, I have told you in the past of the drag that a mushrooming capital base exerts upon rates of return. Unfortunately, my academic voice is now giving way to a reportorial voice. Our historical 22% rate is just that—history. To earn even 15% annually over the next decade (assuming we continue to follow our present dividend policy, about which more will be said later in this letter) we would need profits aggregating about $3.9 billion. Accomplishing this will require a few big ideas—small ones just won’t do.”
“Charlie Munger, my partner in general management, and I do not have any such ideas at present, but our experience has been that they pop up occasionally. (How’s that for a strategic plan?)”.
You can read the entire 1984 shareholder letter here – 1984 Berkshire Hathaway Shareholder Letter.
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