Category Archive

In his 1997 Berkshire Hathaway Annual Letter, Warren Buffett advises that if you are a net saver, you should prefer lower stock prices, as this benefits future investments. Many investors mistakenly rejoice at rising stock prices, even though they will be net buyers of stocks, which makes no sense. For … Read More

During the 1997 Berkshire Hathaway Annual Meeting, Warren Buffett discusses using filters to identify businesses where future value can be reasonably estimated. Buffett advocates discounting future returns using risk-free government bond rates, focusing on the business’s future earnings rather than potential resale value. The goal is to ensure that investors … Read More

During the 2001 Berkshire Hathaway Annual Meeting, Warren Buffett advises that if you’re invested in a good business but the management is making poor decisions, it’s often better to sell and invest elsewhere with a sensible management team. Persuading management to change their minds is challenging and rarely successful. CEOs … Read More

In the book – The Snowball: Warren Buffett and the Business of Life, there’s a lengthy quote by Warren Buffett describing his investing strategy from finding opportunities in South Korean companies. Buffett highlighted the value he found in South Korean companies that were trading at low valuations despite being fundamentally … Read More

In his 1984 Berkshire Hathaway Annual Letter, Warren Buffett argues that companies should only retain unrestricted earnings if there is a reasonable prospect that retaining the earnings will create at least an equivalent amount of market value for shareholders. He acknowledges that managers often prefer to retain earnings for reasons … Read More

In the book – The Snowball, Warren Buffett discussed Coca-Cola’s costly “Project Infinity,” criticized by Herbert Allen for excessive spending with unclear benefits. Buffett, a board member, expressed frustration, noting that IT departments often pursue unnecessary projects. He believed the project wouldn’t boost Coca-Cola sales or reduce jobs, highlighting a … Read More

During the 2016 Berkshire Hathaway Annual Meeting, Warren Buffett explains that he seeks very large deals in investments or operating businesses, while his associates, Ted Weschler and Todd Combs, manage $9 billion portfolios with fewer, smaller positions. Despite this difference, their investment approach is similar, focusing on understanding businesses and … Read More

During the 2010 Berkshire Hathaway Annual Meeting, Warren Buffett discusses the perpetual presence of investment opportunities, particularly for those not managing large sums of money. He highlights the inherent conflict in the investment management industry, where asset gathering can overshadow asset management. Buffett illustrates this with an example from Charlie … Read More

In his 1999 Berkshire Hathaway Annual Letter, Warren Buffett explains that he and Charlie Munger aren’t distressed by their lack of tech insights, as there are many areas where they lack expertise. They avoid making judgments in fields like patents and manufacturing, focusing instead on operating within their circle of … Read More

During the 1997 Berkshire Hathaway Annual Meeting, Warren Buffett discussed his annual report, in which he described Coke and Gillette as “The Inevitables,” noting their exceptional businesses but warning against overpaying for their stocks, which can lead to short-term risks. He emphasized that his praise shouldn’t be seen as an … Read More

During the 1996 Berkshire Hathaway Annual Meeting, Warren Buffett explained that when determining a discount rate for valuing future cash flows, he prefers using the long-term government bond rate. He avoids adding extra risk premiums for different businesses, arguing that it’s more important to focus on businesses with predictable futures. … Read More

In his 1979 Berkshire Hathaway Annual Letter, Warren Buffett explained why the most appropriate way to measure annual operating performance is by the ratio of operating earnings to shareholders’ equity, valuing securities at cost. Using market value can distort performance due to fluctuations in securities’ market values. In 1979, Berkshire’s … Read More

In his 1960 Partnership Letter, Warren Buffett outlines his goal of achieving long-term performance superior to the Industrial Average, emphasizing that this superior performance will not be consistently evident compared to the Average. He explains that outperformance is likely in stable or declining markets, while performance may be average or … Read More

In his 1985 Berkshire Hathaway Annual Letter, Warren Buffett explained how in mid-1973, he purchased Washington Post Company (WPC) shares at a quarter of their business value, capitalizing on a significant market undervaluation. Most investors, influenced by academic theories on market efficiency, ignored intrinsic business value. By year-end 1974, despite … Read More

In his 1986 Annual Letter, Warren Buffett acknowledges his underperformance in deploying capital compared to the excellent management by his company’s managers. Buffett and Vice Chairman Charlie Munger focus on retaining talented managers, who typically come with acquired companies and perform exceptionally due to their passion and owner-like mentality. Their … Read More

During the 2021 Berkshire Hathaway Annual Meeting, Warren Buffett cautions new stock market entrants against excessive trading, urging them to consider the unpredictability of long-term success for major companies. He highlights a list of the 20 largest companies by market value as of March 31st, led by Apple. Buffett then … Read More

During the 2017 Berkshire Hathaway Annual Meeting, Warren Buffett explains how Berkshire Hathaway identifies businesses to acquire, emphasizing long-term competitive advantage, trusted management, and cultural fit. He recalls purchasing See’s Candy in 1972, highlighting their confidence in its lasting appeal despite higher prices. This confidence has led to significant profits … Read More

In his 2020 Berkshire Hathaway Annual Letter, Warren Buffett discussed increasing shareholder value by using the power of repurchases. Buffett explained how the previous year Berkshire Hathaway repurchased 80,998 “A” shares for $24.7 billion, increasing shareholders’ ownership by 5.2% without additional investment. Warren Buffett and Charlie Munger made these repurchases … Read More

In his 2004 Berkshire Hathaway Annual Letter, Warren Buffett explained how in 2004, the stock market had a rare “normal” return of around 11.2%, a rate only seen once before in 35 years. Despite strong business performance making it theoretically easy to achieve high returns, many investors experienced poor results. … Read More

In his 1983 Berkshire Hathaway Annual Letter, Warren Buffett criticizes the high activity in the stock market, which brokers promote using terms like “marketability” and “liquidity.” He argues that frequent trading benefits brokers but not investors, as it incurs significant costs. Using a hypothetical company earning 12% on equity with … Read More