If you’re an investor looking for practical advice that still holds true today, Warren Buffett’s 1984 Berkshire Hathaway letter is packed with insights—and he doesn’t sugarcoat anything.
First, Buffett reminds us that “economic gains must be evaluated by comparison with the capital that produces them.” Even though Berkshire’s net worth grew by $152.6 million in 1984, he calls the result “mediocre” compared to their own history. It’s a sharp reminder that absolute numbers mean little without context.
Buffett also gives one of his clearest warnings about growing pains: “Our historical 22% rate is just that—history.” As Berkshire got bigger, it needed “a few big ideas—small ones just won’t do.” It’s a lesson for investors chasing high returns: size eventually slows you down, and expecting the same growth forever is unrealistic.
One of the most powerful sections discusses stock buybacks. Buffett lays it out plainly: “When companies with outstanding businesses and comfortable financial positions find their shares selling far below intrinsic value in the marketplace, no alternative action can benefit shareholders as surely as repurchases.”
He’s telling investors to celebrate—not fear—smart buybacks. But he also warns against “greenmail” buybacks, where insiders and opportunists profit at the expense of ordinary shareholders, calling the practice “odious and repugnant.”
Another classic Buffettism from this letter tackles doing nothing—a hard thing for active investors: “We try to avoid compromise of these standards, although we find doing nothing the most difficult task of all.” Sometimes patience is the best strategy, even when it feels uncomfortable.
Buffett also reaffirms that intrinsic value, not market price, is what truly matters. Talking about Berkshire’s stake in GEICO, he notes, “We look to business performance, not market performance. If we are correct in expectations regarding the business, the market eventually will follow along.” It’s a clear call for investors to focus on fundamentals, not short-term stock movements.
Finally, Buffett shares a necessary truth about dividend policy: “Unrestricted earnings should be retained only when there is a reasonable prospect… that at least one dollar of market value will be created for owners.” Simply put, companies shouldn’t hoard cash unless they can deploy it better than shareholders could themselves.
You can find the entire letter here:
1984 Berkshire Hathaway Letter
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