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Berkshire Hathaway Letters to Shareholders
This book compiles the full, un-edited versions of every one of Warren Buffett's letters to the shareholders of Berkshire Hathaway. In addition to providing an astounding case study on Berkshire's success, Buffett shows an incredible willingness to share his methods and act as a teacher to his many students.
730 pages, Paperback
First published January 1, 2016
About the author
Warren Buffett
93 books1,583 followersWarren Edward Buffett is an American businessman, investor, and philanthropist who currently serves as the co-founder, chairman and CEO of Berkshire Hathaway. As a result of his investment success, Buffett is one of the best-known investors in the world. As of April 2024, he had a net worth of $139 billion, making him the ninth-richest person in the world.
Buffett was born in Omaha, Nebraska. The son of US congressman and businessman Howard Buffett, he developed an interest in business and investing during his youth. He entered the Wharton School of the University of Pennsylvania in 1947 before graduating from the University of Nebraska at 19. He went on to graduate from Columbia Business School, where he molded his investment philosophy around the concept of value investing pioneered by Benjamin Graham. He attended New York Institute of Finance to focus on his economics background and soon pursued a business career. He later began various business ventures and investment partnerships, including one with Graham. He created Buffett Partnership Ltd. in 1956 and his investment firm eventually acquired a textile manufacturing firm, Berkshire Hathaway, assuming its name to create a diversified holding company. Buffett emerged as the company's chairman and majority shareholder in 1970. In 1978, fellow investor and long-time business associate Charles T. Munger joined Buffett as vice-chairman.
Since 1970, Buffett has presided as the chairman and largest shareholder of Berkshire Hathaway, one of America's foremost holding companies and world's leading corporate conglomerates. He has been referred to as the "Oracle" or "Sage" of Omaha by global media as a result of having accumulated a massive fortune derived from his business and investment success. He is noted for his adherence to the principles of value investing, and his frugality despite his wealth.
Buffett has pledged to give away 99 percent of his fortune to philanthropic causes, primarily via the Bill & Melinda Gates Foundation. He founded the Giving Pledge in 2010 with Bill Gates, whereby billionaires pledge to give away at least half of their fortunes.
Buffett was born in Omaha, Nebraska. The son of US congressman and businessman Howard Buffett, he developed an interest in business and investing during his youth. He entered the Wharton School of the University of Pennsylvania in 1947 before graduating from the University of Nebraska at 19. He went on to graduate from Columbia Business School, where he molded his investment philosophy around the concept of value investing pioneered by Benjamin Graham. He attended New York Institute of Finance to focus on his economics background and soon pursued a business career. He later began various business ventures and investment partnerships, including one with Graham. He created Buffett Partnership Ltd. in 1956 and his investment firm eventually acquired a textile manufacturing firm, Berkshire Hathaway, assuming its name to create a diversified holding company. Buffett emerged as the company's chairman and majority shareholder in 1970. In 1978, fellow investor and long-time business associate Charles T. Munger joined Buffett as vice-chairman.
Since 1970, Buffett has presided as the chairman and largest shareholder of Berkshire Hathaway, one of America's foremost holding companies and world's leading corporate conglomerates. He has been referred to as the "Oracle" or "Sage" of Omaha by global media as a result of having accumulated a massive fortune derived from his business and investment success. He is noted for his adherence to the principles of value investing, and his frugality despite his wealth.
Buffett has pledged to give away 99 percent of his fortune to philanthropic causes, primarily via the Bill & Melinda Gates Foundation. He founded the Giving Pledge in 2010 with Bill Gates, whereby billionaires pledge to give away at least half of their fortunes.
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November 12, 2020
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May 7, 2023
Mount Everest, K2 and Kangchenjunga are the 3 indisputable tallest mountain ranges out there. It is likely on the bucket list of many new and aspiring climbers, working as a backdrop siren call as they hone their skills on lesser mounds.
Book lovers have their own list but this list can never be definitive since there can be no universal consensus on what should go into “the toughest reads out there!” book list. Each person’s list, like the idea of utopia or hell, is personal and unique.
But odds are a 100 book list made by a lot of bibliophiles would likely contain gems like:
Finnegans Wake by James Joyce
Moby Dick by Herman Melville
Simulacra and Simulation by Jean Baudrillard
The Corrections by Jonathan Franzen
Infinite Jest by David Foster Wallace
These books are reputed to be very tough slogs and there is no definitive guarantee you will turn the last page and feel glad you dived in. In fact, chances are most of these books will be flung across the room well before the last chapter. A lot of them are wilting in bookshelves around the world waiting for a day when the owner inevitably bundles it into the charity box for donation.
When I purchased ‘Berkshire Hathaway Letters to Shareholders‘ on 15 November 2013 (for the pricy sum of £2.07) I was not sure what I was in for. All I knew was that I liked Warren’s way of thinking, his approach to business and investing and I wanted to read more from the man directly, not via a biographer or hired hand. I surely would have done a double take if my future self had told me I would take 865 days to finish this thick fat almost 1000 page book.
‘Berkshire Hathaway Letters to Shareholders’ is not a book really but a collection of annual letters written by Warren Buffet, the legendary investor and 2nd richest man on Earth. Each year he writes a letter to his shareholders telling them how well (or poorly) Berkshire Hathaway, the company he runs, did. So technically this books, containing 50 letters, from 1965 to 2015, took 50 years to ‘write’. (Amazon automatically updated the kindle version with the letters of the last 2 years, after I purchased the book in 2013. Go Amazon!).
But then saying this book is a collection of annual letters written by Warren Buffett is akin to saying “History is about some important dates”. ‘Letters to Shareholders’ is soooo much much more than just a collection of letters. Through these 50 letters, Buffet talks about the wider investing and business world and touches on a lot of very interesting subjects, giving the reader a solid grounding on many helpful topics that can stand in as 24 Carat practical life lessons.
The book is especially splendid at educating the reader on 3 topics:
1. Investing: Over 50 letters (sermons?) Buffet elaborates on what being a value investor is all about and how to think like a smart value investor. There are books explicitly dedicated to teaching you investing and they fail at it while this £2 book does in effortlessly. Warren talks at length on how to think about investing and then how to act on that thinking. This alone makes this book worth the time needed to read it. I envy the young reader who finishes it before his 25th birthday. He is guaranteed to have a literally richer life than he would otherwise have had, whatever his starting position weath-wise. Warren's 2005 letter has a write up on ‘How to minimize investment returns’. What a tour de force that particular one was. As was the 2013 section ‘Some thoughts on investing’.
2. Business: Berkshire Hathaway buys and oversees a boatload of companies and Buffet wades deep into what specific metrics matter when running and evaluating a firm and which are the dubious ones (spoiler : it's EBIDTA). There are many colleges around the world, esp. in third world countries , offering dubious 2 year+' MBA' and 'Business Diplomas' that fail to do what this one little book does all by itself: Give the reader an unbeatable and thorough education in the basics of thinking like a CEO/Businessman.
3. Understanding the Insurance Industry : Berkshire Hathaway at its core is an Insurance firm generating free float and as a Consultant currently embedded at one such firm, I could not have hoped for a more comprehensive overview on how to look into and understand this industry and the myriad operators in it. Insurance plays a crucial part in all economies globally and the book gives the reader superb lessons on how to evaluate the health of the industry and any firm in it. Nothing comes close.
So yes, while it took me the better part of 30 months to finish this book end to end, it was only because one should ingest this book slowly and gradually to let the lessons and Buffet’s wisdom sink in, like sand settling at the bottom of a lake. A beach read this book is most definitely not but you know what this book most definitely is : The best £2 I ever spent.
So go on, jump in and climb this Everest of a book . The view from the top is breathtaking.
Book lovers have their own list but this list can never be definitive since there can be no universal consensus on what should go into “the toughest reads out there!” book list. Each person’s list, like the idea of utopia or hell, is personal and unique.
But odds are a 100 book list made by a lot of bibliophiles would likely contain gems like:
Finnegans Wake by James Joyce
Moby Dick by Herman Melville
Simulacra and Simulation by Jean Baudrillard
The Corrections by Jonathan Franzen
Infinite Jest by David Foster Wallace
These books are reputed to be very tough slogs and there is no definitive guarantee you will turn the last page and feel glad you dived in. In fact, chances are most of these books will be flung across the room well before the last chapter. A lot of them are wilting in bookshelves around the world waiting for a day when the owner inevitably bundles it into the charity box for donation.
When I purchased ‘Berkshire Hathaway Letters to Shareholders‘ on 15 November 2013 (for the pricy sum of £2.07) I was not sure what I was in for. All I knew was that I liked Warren’s way of thinking, his approach to business and investing and I wanted to read more from the man directly, not via a biographer or hired hand. I surely would have done a double take if my future self had told me I would take 865 days to finish this thick fat almost 1000 page book.
‘Berkshire Hathaway Letters to Shareholders’ is not a book really but a collection of annual letters written by Warren Buffet, the legendary investor and 2nd richest man on Earth. Each year he writes a letter to his shareholders telling them how well (or poorly) Berkshire Hathaway, the company he runs, did. So technically this books, containing 50 letters, from 1965 to 2015, took 50 years to ‘write’. (Amazon automatically updated the kindle version with the letters of the last 2 years, after I purchased the book in 2013. Go Amazon!).
But then saying this book is a collection of annual letters written by Warren Buffett is akin to saying “History is about some important dates”. ‘Letters to Shareholders’ is soooo much much more than just a collection of letters. Through these 50 letters, Buffet talks about the wider investing and business world and touches on a lot of very interesting subjects, giving the reader a solid grounding on many helpful topics that can stand in as 24 Carat practical life lessons.
The book is especially splendid at educating the reader on 3 topics:
1. Investing: Over 50 letters (sermons?) Buffet elaborates on what being a value investor is all about and how to think like a smart value investor. There are books explicitly dedicated to teaching you investing and they fail at it while this £2 book does in effortlessly. Warren talks at length on how to think about investing and then how to act on that thinking. This alone makes this book worth the time needed to read it. I envy the young reader who finishes it before his 25th birthday. He is guaranteed to have a literally richer life than he would otherwise have had, whatever his starting position weath-wise. Warren's 2005 letter has a write up on ‘How to minimize investment returns’. What a tour de force that particular one was. As was the 2013 section ‘Some thoughts on investing’.
2. Business: Berkshire Hathaway buys and oversees a boatload of companies and Buffet wades deep into what specific metrics matter when running and evaluating a firm and which are the dubious ones (spoiler : it's EBIDTA). There are many colleges around the world, esp. in third world countries , offering dubious 2 year+' MBA' and 'Business Diplomas' that fail to do what this one little book does all by itself: Give the reader an unbeatable and thorough education in the basics of thinking like a CEO/Businessman.
3. Understanding the Insurance Industry : Berkshire Hathaway at its core is an Insurance firm generating free float and as a Consultant currently embedded at one such firm, I could not have hoped for a more comprehensive overview on how to look into and understand this industry and the myriad operators in it. Insurance plays a crucial part in all economies globally and the book gives the reader superb lessons on how to evaluate the health of the industry and any firm in it. Nothing comes close.
So yes, while it took me the better part of 30 months to finish this book end to end, it was only because one should ingest this book slowly and gradually to let the lessons and Buffet’s wisdom sink in, like sand settling at the bottom of a lake. A beach read this book is most definitely not but you know what this book most definitely is : The best £2 I ever spent.
So go on, jump in and climb this Everest of a book . The view from the top is breathtaking.
March 8, 2017
Finally! This one took awhile, but I read through all of them. The way to read this book is to read one letter a day.
Here's the 2015 letter (the book stops at 2014): 2015 Letter
The 2016 letter: 2016 Letter
Going to my first shareholder meeting this May, so reading this was a great way to get the most out of the trip.
Here's the 2015 letter (the book stops at 2014): 2015 Letter
The 2016 letter: 2016 Letter
Going to my first shareholder meeting this May, so reading this was a great way to get the most out of the trip.
May 13, 2021
Read it almost a decade ago, it's one of those collections you need to revisit every few years. Contains snippets from a 30-40 year period of Buffett's life, detailing the consistency in his actions, integrity, owning up to mistakes and his self deprecating humour.
Id say it's a must read for any long term focused investor or someone planning to enter business, most of the core points made in all std business books are present here, and it overall makes for a solid education.
Id say it's a must read for any long term focused investor or someone planning to enter business, most of the core points made in all std business books are present here, and it overall makes for a solid education.
June 4, 2016
If you have enough time, this book covers everything you need to know about the value investment, but it is a book require slow and repetitive reading and thinking. Highly Time consuming. Warren's letter and actions described needs to be related to that context of that year. Don't read those numerous related books, warren and munger's original writings are the best.
January 3, 2021
Must-read for anyone interested in investing or business. Buffett is sometimes criticized in the financial media for being "folksy" and not offering more concrete insights on investment analysis due to his refusal to recommend specific stocks. Yet in these letters he lays out precisely how he has thought about large and sometimes very complex investments that he has made over time. Some of the lesser-known of these include:
1. Preferred investments in Gillette, USAir, and Champion, all of which were in 1989. Although Gillette was very successful and has gotten a lot of attention, and USAir has been held up as an example of failure, Buffett actually made a significant profit after dividends on the USAir preferred as well (though he admits it was a mistake).
2. Bankruptcy investment in FINOVA (2000) in which Berkshire Hathaway led the plan of reorganization with Leucadia which involved a backstop bid at 70c for the takeback notes, but which Berkshire subsequently backed out of due to the September 11 attacks (which allowed the offer to be canceled and affected the value of certain aircraft leases FINOVA held).
3. Distressed debt investment and subsequent bid for Fruit of the Loom's entire business (2001)
4. Distressed debt investment in Amazon's Euro-demoninated bonds (2001 & 2002) after the popping of the tech bubble which he purchased at 57% of par and also made a substantial return on the FX rate
5. Control purchase of Clayton Homes (2007) and the usage of Berkshire's credit rating to guarantee wholly-owned mortgages issued by Clayton to help buyers finance their homes, while charging Clayton a 100bp spread for this benefit. All of this led Clayton to being able to increase its market share significantly as others in the industry got washed out as securitization financing dried up in the '08 crisis.
6. His large derivatives stakes involving sales of both single-name and tranche-based credit default swaps and long-dated equity index puts in 2008. Buffett goes to great detail to simplify these to thinking in terms of insurance contracts and float cost over their duration, as well as the importance of not being forced to put up collateral.
Buffett's investment analysis across both simple and complex investments is always anchored on the central components of net present value: 1) the size of cash flows 2) the duration of cash flows 3) the reinvestment risk/opportunity of cash flows and 4) the price paid for 1-3. His deep understanding of these ingredients undoubtedly is what drove him to the insight that insurance float creates below risk-free financing and is therefore 1) better than equity since it can pay you through underwriting profits and 2) is far less valuable as a liability than stated on the books (and in fact may be an asset). Because of his exceptional understanding of capital allocation, he knows how to properly incentivize managers and devote capital to the most effective use, despite an extremely decentralized corporate structure (with only 13 people at headquarters in Omaha). These skills have also undoubtedly helped in ensuring profitable insurance underwriting as well, where very arcane and bespoke contracts have to be priced at appropriate odds in what is effectively a commodity business with no barriers to entry.
Furthermore, what's very intriguing is that Buffett has been called a "has-been" no less than 4 times in his career, first in 1969 when he folded up the Buffett partnership in response to excessively high valuations in the stock market, then in the go-go era of the '80s, then in the dotcom bubble of the '90s, and finally again today. Yet you can see he never wavered his approach across 6 decades.
1. Preferred investments in Gillette, USAir, and Champion, all of which were in 1989. Although Gillette was very successful and has gotten a lot of attention, and USAir has been held up as an example of failure, Buffett actually made a significant profit after dividends on the USAir preferred as well (though he admits it was a mistake).
2. Bankruptcy investment in FINOVA (2000) in which Berkshire Hathaway led the plan of reorganization with Leucadia which involved a backstop bid at 70c for the takeback notes, but which Berkshire subsequently backed out of due to the September 11 attacks (which allowed the offer to be canceled and affected the value of certain aircraft leases FINOVA held).
3. Distressed debt investment and subsequent bid for Fruit of the Loom's entire business (2001)
4. Distressed debt investment in Amazon's Euro-demoninated bonds (2001 & 2002) after the popping of the tech bubble which he purchased at 57% of par and also made a substantial return on the FX rate
5. Control purchase of Clayton Homes (2007) and the usage of Berkshire's credit rating to guarantee wholly-owned mortgages issued by Clayton to help buyers finance their homes, while charging Clayton a 100bp spread for this benefit. All of this led Clayton to being able to increase its market share significantly as others in the industry got washed out as securitization financing dried up in the '08 crisis.
6. His large derivatives stakes involving sales of both single-name and tranche-based credit default swaps and long-dated equity index puts in 2008. Buffett goes to great detail to simplify these to thinking in terms of insurance contracts and float cost over their duration, as well as the importance of not being forced to put up collateral.
Buffett's investment analysis across both simple and complex investments is always anchored on the central components of net present value: 1) the size of cash flows 2) the duration of cash flows 3) the reinvestment risk/opportunity of cash flows and 4) the price paid for 1-3. His deep understanding of these ingredients undoubtedly is what drove him to the insight that insurance float creates below risk-free financing and is therefore 1) better than equity since it can pay you through underwriting profits and 2) is far less valuable as a liability than stated on the books (and in fact may be an asset). Because of his exceptional understanding of capital allocation, he knows how to properly incentivize managers and devote capital to the most effective use, despite an extremely decentralized corporate structure (with only 13 people at headquarters in Omaha). These skills have also undoubtedly helped in ensuring profitable insurance underwriting as well, where very arcane and bespoke contracts have to be priced at appropriate odds in what is effectively a commodity business with no barriers to entry.
Furthermore, what's very intriguing is that Buffett has been called a "has-been" no less than 4 times in his career, first in 1969 when he folded up the Buffett partnership in response to excessively high valuations in the stock market, then in the go-go era of the '80s, then in the dotcom bubble of the '90s, and finally again today. Yet you can see he never wavered his approach across 6 decades.
February 18, 2021
I wish I had read it earlier, fantastic reading.
May 28, 2018
Warren Buffett's letters to his shareholders for the past 50 years contain wisdom on business and investing like no other book. It is the unparalleled journey of the greatest investor of our age and the study of the unrelenting behemoth that Berkshire Hathaway has developed into, surely the best success story of capitalism.
It was one of those books that I wanted to read at least once in my life and after 77 days of patience and persistence, I'm glad to have reached the end of it! :)
It was one of those books that I wanted to read at least once in my life and after 77 days of patience and persistence, I'm glad to have reached the end of it! :)
November 6, 2020
Read every Berkshire annual letter published till now (2020). Found them dry at first, but about 100 pages into the book started to revel in the consistency, humility, rationality and financial brilliance of this guy.
October 25, 2017
Probably the best business book ever.
March 26, 2018
Common sense still wins the day. Don't fall for the pitches and salesmanship and fad and new 'investment style'.
March 11, 2020
Enjoyed the reading, I found the newsletters quite informative, with an (unexpected?) great sense of humor!
March 12, 2021
Invaluable Investing Advice mixed with great metaphors and cool stories.
Currently reading
June 24, 2018A collection of Warren Buffett's eloquently written letters to shareholders of Berkshire Hathaway 1965-2017. The first thing that struck me was his level of honesty. Compared to other investors' account of their investment performance that tends to be first and foremost self-congratulatory, Buffett makes a decent attempt giving a more nuanced picture of his investment performance.
The letters provide you with a solid understanding of Buffett's investment philosophy and that alone makes the book worthwhile. In addition, you will get a better understanding of accounting and the insurance industry.
The letters provide you with a solid understanding of Buffett's investment philosophy and that alone makes the book worthwhile. In addition, you will get a better understanding of accounting and the insurance industry.
October 1, 2020
I read through the letters from 2006 to 2012. They were excellent read. But some information, as expected, was repetitive. Post that, I read another book named The Essays of Warren Buffett - it is an excellent compilation of all the letters (without the repetition) by Lawrence A. Cunningham.
If you are going to read this book, I would recommend reading in reverse order. The later letters are much more informative.
If you are going to read this book, I would recommend reading in reverse order. The later letters are much more informative.
March 24, 2018
Fairy tale for a value investor
Reading the letters was like reading a comic that comes out in sequels. Just like a comic, the letters are fascinating to read. A good comic leaves you gasping for more after every chapter. The letters do the same. After every letter, you are keen to know by how much percentage points the co. grew, what were the new acquisitions, how were they made (some were made in 5 mins!), new accounting lessons, proverbs n phrases,country songs, jokes and so much more.
Every letter ends with AGM details. As one goes through 50 AGMs, which are like a fair, one can visualize Berkshire turn into Goliath from David. After reading about AGMs, you will add it to your bucket list.
Reading the letters was like reading a comic that comes out in sequels. Just like a comic, the letters are fascinating to read. A good comic leaves you gasping for more after every chapter. The letters do the same. After every letter, you are keen to know by how much percentage points the co. grew, what were the new acquisitions, how were they made (some were made in 5 mins!), new accounting lessons, proverbs n phrases,country songs, jokes and so much more.
Every letter ends with AGM details. As one goes through 50 AGMs, which are like a fair, one can visualize Berkshire turn into Goliath from David. After reading about AGMs, you will add it to your bucket list.
May 8, 2016
There is so much to learn from this book which is a collection of shareholders letters written by Warren Buffett for the shareholders of Berkshire Hathaway. It took me a couple of months to finish it but it was really worth every minute I spent reading it. Buffett just doesn't talks about investing, but also about business, life, ethics, accounting and many practical aspects of life. He discusses his mistakes as keenly as his triumphs. This is one book that I’ll keep referring back to from time to time.
August 31, 2018
Warren Buffett is God at understanding capitalism, and dissecting businesses. Corporate Governance, Management Biases, Investment thesis, there is no one in the world that has more breadth of knowledge on Corporate America than Warren. Great learnings on analyzing balance sheets, P&Ls, Earnings, Cash-Flows, as well as building a definite and sound investment rationale. This book will definitely make you 10x better investor.
November 27, 2016
I feel bad I kept postponing reading Oracle of Omaha's letters until now. So much to learn on investing and really gels wells with my investment philosophy. This is a must read for anyone who wants to seriously consider investing in equities.
July 31, 2019
You don’t need to read this book to get some of Buffet’s wisdom, but i enjoyed learning about his success throughout the years with a clear and simple prose he’s funny and informative now my role model for investments.
February 28, 2022
Let me start by saying that it's LONG. It's really no joke. If you are new to reading investment books, English is not your mother tongue, and your Kindle has a tendency to discharge on its own, you are not in for a treat. It took me almost 4 years to finish, but I only recently developed what it takes to drag the finish line on the horizon - daily reading. If you treat it as a full time job perhaps you can do it in 2 months. At least I took my time and didn't skip anything, and highlighted hundreds of passages that are worthy of a re-read.
While a regular book of a few hundred pages would almost "read itself" in a month if you just do a few pages even while on the toilet, the Letters span over 1750 pages and by the time you are done you'll see that new ones will have spawned, available in PDF. It does not help that many letters are repetitive like detailing the annual meeting or how Berkshire works, over and over again, with only a handful of words and values changed. Yes, a given sentence could appear like 18 times, so if you read one letter every day, it's very hard to focus because it feels like an infinite loop - if you don't skip anything. "Helped" by accounting and business verbiage, my reading speed was unusually low, in the 8-12 pages/hour range. So expect to spend as much time as watching the entire TV show Friends twice, or a 10 seasons of a full-length 42 minute show without ads, or about a week of your time (in non-stop terms). The older the letter the more complex words it has. Sometimes a sentence spans over 6 lines and by the end of it you forget how it started, forcing you to re-read constantly. Especially with today's short attention spans of people, it's not easy. But substracting a star because of the difficulty and length would be akin to complaining that a double black diamond is too steep to ski on.
It's hard to sum up what I learned but it was a good journey. I learned over many iterations how and why the corporate culture is better in Berkshire than in most other companies. How that led to better decisions. He leads the viewer from the very beginning to today's state which is an amazing transformation from a declining textile operation to a huge conglomerate holding. It is also detailed why this structure is adventageous, almost to a point where I'd want to buy a few shares. If I had completed the book earlier I would surely have bought some below 1.2 P/BV during the corona times.
He rarely comments on current world events (headlines), and is very good at focusing on just writing about the company's dealings. I learned that they are not stock pickers, they buy businesses and not tickers. The pros and cons of buying a bit of a publicly-traded company vs. owning some in full became clear. I think the smart ones can be influenced by their very prudent business selection process. It was quite instructive to learn why unproductive and currency-denominated assets are eroding one's capital, how to never trust most money managers and funds, what does "average performance" means, how fees are evil, and the future of the company and his shares.
Warren is a great guy, the kind that you'd love to have as a grandpa - and not in hopes of inheriting a fortune but as someone to learn valuable lessons from. By way of these letters he could be any long-term investor's virtual grandpa. I think those that don't shy away from owning a stock for decades will find the most value in the book, however the day traders and crypto fans will of course see it utterly boring. If the importance of sitting and sleeping comfortably with your investment is of importance you might end up heeding some of his advice or even become a shareholder.
One thing that stuck out that he is humble yet very proud at the same time. Of his partners in this enterprise, but also very much of America itself and refers to its tailwind that helped american businesses. I view him as an optimist, an attitude that certainly helps if you plan really long term. Oh, and compound interest (on retained earnings) unfolds before your eyes, year by year, as we are nearing the 60th letter (may he write many more).
The sometimes humorous read is full of wisdom, and it's a giant undertaking to read, for sure. However, it was worth it and by the end I got to develop a reading habit that will help me with the regular and much shorter books in the future.
While a regular book of a few hundred pages would almost "read itself" in a month if you just do a few pages even while on the toilet, the Letters span over 1750 pages and by the time you are done you'll see that new ones will have spawned, available in PDF. It does not help that many letters are repetitive like detailing the annual meeting or how Berkshire works, over and over again, with only a handful of words and values changed. Yes, a given sentence could appear like 18 times, so if you read one letter every day, it's very hard to focus because it feels like an infinite loop - if you don't skip anything. "Helped" by accounting and business verbiage, my reading speed was unusually low, in the 8-12 pages/hour range. So expect to spend as much time as watching the entire TV show Friends twice, or a 10 seasons of a full-length 42 minute show without ads, or about a week of your time (in non-stop terms). The older the letter the more complex words it has. Sometimes a sentence spans over 6 lines and by the end of it you forget how it started, forcing you to re-read constantly. Especially with today's short attention spans of people, it's not easy. But substracting a star because of the difficulty and length would be akin to complaining that a double black diamond is too steep to ski on.
It's hard to sum up what I learned but it was a good journey. I learned over many iterations how and why the corporate culture is better in Berkshire than in most other companies. How that led to better decisions. He leads the viewer from the very beginning to today's state which is an amazing transformation from a declining textile operation to a huge conglomerate holding. It is also detailed why this structure is adventageous, almost to a point where I'd want to buy a few shares. If I had completed the book earlier I would surely have bought some below 1.2 P/BV during the corona times.
He rarely comments on current world events (headlines), and is very good at focusing on just writing about the company's dealings. I learned that they are not stock pickers, they buy businesses and not tickers. The pros and cons of buying a bit of a publicly-traded company vs. owning some in full became clear. I think the smart ones can be influenced by their very prudent business selection process. It was quite instructive to learn why unproductive and currency-denominated assets are eroding one's capital, how to never trust most money managers and funds, what does "average performance" means, how fees are evil, and the future of the company and his shares.
Warren is a great guy, the kind that you'd love to have as a grandpa - and not in hopes of inheriting a fortune but as someone to learn valuable lessons from. By way of these letters he could be any long-term investor's virtual grandpa. I think those that don't shy away from owning a stock for decades will find the most value in the book, however the day traders and crypto fans will of course see it utterly boring. If the importance of sitting and sleeping comfortably with your investment is of importance you might end up heeding some of his advice or even become a shareholder.
One thing that stuck out that he is humble yet very proud at the same time. Of his partners in this enterprise, but also very much of America itself and refers to its tailwind that helped american businesses. I view him as an optimist, an attitude that certainly helps if you plan really long term. Oh, and compound interest (on retained earnings) unfolds before your eyes, year by year, as we are nearing the 60th letter (may he write many more).
The sometimes humorous read is full of wisdom, and it's a giant undertaking to read, for sure. However, it was worth it and by the end I got to develop a reading habit that will help me with the regular and much shorter books in the future.
January 13, 2018
Nothing better than to learn from the greatest investor of all-time! This book is a compendium of Buffett's legendary annual letters to shareholders since he took control of Berkshire Hathaway in the mid-1960s*. As expected, each letter discusses the overall performance of BH's business during the year (beginning with a focus on the original textile business, and expanding as the years pass to cover dozens of different business, insurance being the most important one), but what's most interesting is the fact that Buffett also takes time to discuss several other subjects, ranging from lessons about investment to accounting matters.
It's incredible how Buffett can teach a masterclass in value investing in just a few paragraphs and it's clear how his investment ideas were sound even several years before he became a millionaire. As expected from anyone who knows a little about his career, his focus is clear from the beginning: invest in extraordinary companies that have considerable competitive advantages, honest and competent management, and a focus on cost management. Be rational, avoid trading or speculation, and don't follow tips. Most important of all, don't be afraid of market downswings. If you plan to be a stock buyer for life, you should be happy when you're allowed to purchase portions of excellent companies at discounted prices. These lessons were all available for decades and anyone that followed them at any point in the past mid-century likely achieved good results.
I also find it very reassuring the way that he talks so clearly both about the positive aspects of his company, but also about the negative ones. In a few cases, even in years in which BH achieved very positive results, Buffett still doesn't shy away from highlighting mistakes that were committed and must be avoided in the future. There's a sense of humor and self-deprecating nature to many of his remarks that is a far cry from the general tone employed by most other companies.
The letters start fairly small in size but grow bigger each year, following the increase in size and scope of Berkshire Hathaway itself. Because of that, the book is considerably long and if you decide to read it all at once (as I did) you'll find some of the year-to-year discussions a little repetitive. This is to be expected, as each letter was originally written to be read with about a year difference, and the overall nature of the business does not usually change that much in this amount of time, but something to be mindful of nonetheless.
Overall, I feel like Berkshire Hathaway's letters are a must-read for anyone with even a slight interest in Warren Buffett or value investing, and this book provides an easy-to-access compendium for doing so!
* The letters from 1977 onward can also be accessed for free through Berkshire Hathaway's website, but the book includes letters from 1965-1977 as well as some additional documents referenced by Buffett throughout the years.
It's incredible how Buffett can teach a masterclass in value investing in just a few paragraphs and it's clear how his investment ideas were sound even several years before he became a millionaire. As expected from anyone who knows a little about his career, his focus is clear from the beginning: invest in extraordinary companies that have considerable competitive advantages, honest and competent management, and a focus on cost management. Be rational, avoid trading or speculation, and don't follow tips. Most important of all, don't be afraid of market downswings. If you plan to be a stock buyer for life, you should be happy when you're allowed to purchase portions of excellent companies at discounted prices. These lessons were all available for decades and anyone that followed them at any point in the past mid-century likely achieved good results.
I also find it very reassuring the way that he talks so clearly both about the positive aspects of his company, but also about the negative ones. In a few cases, even in years in which BH achieved very positive results, Buffett still doesn't shy away from highlighting mistakes that were committed and must be avoided in the future. There's a sense of humor and self-deprecating nature to many of his remarks that is a far cry from the general tone employed by most other companies.
The letters start fairly small in size but grow bigger each year, following the increase in size and scope of Berkshire Hathaway itself. Because of that, the book is considerably long and if you decide to read it all at once (as I did) you'll find some of the year-to-year discussions a little repetitive. This is to be expected, as each letter was originally written to be read with about a year difference, and the overall nature of the business does not usually change that much in this amount of time, but something to be mindful of nonetheless.
Overall, I feel like Berkshire Hathaway's letters are a must-read for anyone with even a slight interest in Warren Buffett or value investing, and this book provides an easy-to-access compendium for doing so!
* The letters from 1977 onward can also be accessed for free through Berkshire Hathaway's website, but the book includes letters from 1965-1977 as well as some additional documents referenced by Buffett throughout the years.
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June 25, 2022a loan policy which has produced a net charge-off ratio in the last two years of about 5% of that of the average commercial bank.
Because of the extraordinary price rises in raw materials during 1973, which show signs of continuing in 1974, we have elected to adopt the “lifo” method of inventory pricing. This method more nearly matches current costs against current revenues, and minimizes inventory “profits” included in reported earnings.
Best’s, the authoritative voice of the insurance industry, estimates that
Intense competition in the reinsurance business has produced major losses for practically every company operating in the area. We have been no exception. Our underwriting loss was something over 12%—a horrendous figure, but probably little different from the average of the industry.
making no attempt to increase volume except in areas where premiums are commensurate with risk
Our objective is a conservatively financed and highly liquid business—possessing extra margins of balance sheet strength consistent with the fiduciary obligations inherent in the banking and insurance industries—which will produce a long term rate of return on equity capital exceeding that of American industry as a whole.
(1) favorable long-term economic characteristics; (2) competent and honest management; (3) purchase price attractive when measured against the yardstick of value to a private owner; and (4) an industry with which we are familiar and whose long-term business characteristics we feel competent to judge.
textile business which, over the longer term, is unlikely to produce returns on capital comparable to those available in many other businesses.
Because of the extraordinary price rises in raw materials during 1973, which show signs of continuing in 1974, we have elected to adopt the “lifo” method of inventory pricing. This method more nearly matches current costs against current revenues, and minimizes inventory “profits” included in reported earnings.
Best’s, the authoritative voice of the insurance industry, estimates that
Intense competition in the reinsurance business has produced major losses for practically every company operating in the area. We have been no exception. Our underwriting loss was something over 12%—a horrendous figure, but probably little different from the average of the industry.
making no attempt to increase volume except in areas where premiums are commensurate with risk
Our objective is a conservatively financed and highly liquid business—possessing extra margins of balance sheet strength consistent with the fiduciary obligations inherent in the banking and insurance industries—which will produce a long term rate of return on equity capital exceeding that of American industry as a whole.
(1) favorable long-term economic characteristics; (2) competent and honest management; (3) purchase price attractive when measured against the yardstick of value to a private owner; and (4) an industry with which we are familiar and whose long-term business characteristics we feel competent to judge.
textile business which, over the longer term, is unlikely to produce returns on capital comparable to those available in many other businesses.
May 27, 2019
Buffet's letters are not just about Berkshire Hathaway. They go beyond just telling the affairs of one Company. Buffet is one of the rare business leaders who believe in passing on the wisdom that they have acquired over the years to the next generation. He does that through these letters. Though, the letters are really voluminous but the effort to complete the entire bunch is really worth it. Buffet has shared the thought process that has gone into making various investment decisions and has also tried to educate about the economics of the various industries like Insurance.
One can easily see the shift in his investment philosophy over the years, his focus shifting towards purchase of quality business from cigar-butts. Also visible, is his focus shifting in favour of operating earnings rathers that earnings from equity investments alone.
Buffet has also demystified various concepts like Economic earnings vs accounting earnings, his rationale as to when the decisions like stock repurchases make sense, why BH has never distributed dividends.
Reading Buffet's letters is a good starting point that introduces one to this entire field of shareholders letters (which is further contributed by the likes of Ray Dalio and Howard Marks), which when thoughtfully written can prove to be a rich source of wisdom for their readers.
One can easily see the shift in his investment philosophy over the years, his focus shifting towards purchase of quality business from cigar-butts. Also visible, is his focus shifting in favour of operating earnings rathers that earnings from equity investments alone.
Buffet has also demystified various concepts like Economic earnings vs accounting earnings, his rationale as to when the decisions like stock repurchases make sense, why BH has never distributed dividends.
Reading Buffet's letters is a good starting point that introduces one to this entire field of shareholders letters (which is further contributed by the likes of Ray Dalio and Howard Marks), which when thoughtfully written can prove to be a rich source of wisdom for their readers.
February 6, 2022
I didn't read all of it, but I had enough.
The letters themselves are fine, but this is routinely recommended as an investing book, and as such, I cannot recommend it. For someone looking for a historical perspective on Berkshire Hathaway's history, maybe.
While there is investing talk in the letters, most of it is wading through financial reports (unsurprisingly) and there is little novelty. These are all fairly known and respected ideas (at least today, Buffet may have been groundbreaking at the time):
Get born rich and connected, start investing early, leverage your social safety net to invest in high risk-high reward investments knowing that if you lose it all you'll be OK, learn how businesses work in the best schools in the world, use your connections to create business opportunities, create partnerships and mergers to get control of as much capital as possible, buy and hold companies with persistently successful business, live well below your means, ignore (or try to time???) stock market fluctuations, enjoy the most successful growth time and place in recorded history, buy a controlling (or close enough to controlling) part in companies to enable management to focus on long term success, live and work until a very advanced age, and you too could wield wealth to rival nation-states!
The letters themselves are fine, but this is routinely recommended as an investing book, and as such, I cannot recommend it. For someone looking for a historical perspective on Berkshire Hathaway's history, maybe.
While there is investing talk in the letters, most of it is wading through financial reports (unsurprisingly) and there is little novelty. These are all fairly known and respected ideas (at least today, Buffet may have been groundbreaking at the time):
Get born rich and connected, start investing early, leverage your social safety net to invest in high risk-high reward investments knowing that if you lose it all you'll be OK, learn how businesses work in the best schools in the world, use your connections to create business opportunities, create partnerships and mergers to get control of as much capital as possible, buy and hold companies with persistently successful business, live well below your means, ignore (or try to time???) stock market fluctuations, enjoy the most successful growth time and place in recorded history, buy a controlling (or close enough to controlling) part in companies to enable management to focus on long term success, live and work until a very advanced age, and you too could wield wealth to rival nation-states!
March 22, 2019
One word: wow. It took me over 2 years to finish this book (with many sabatticals from it) but I'm so glad I persevered. The Berkshire journey is in incredible story of rags to riches (pun intended), and the crystal clear way in which Buffet takes his shareholders through every step of that journey over 50 years is incredible.
Buffet is a master of business, accounting, investment and PR - and to see his prowess in all 4 disciplines come together in such an easy to understand and personable way makes for an enlightening and enjoyable read, which is quite obviously not the norm with annual letters to shareholders.
What other book can you read that gives you a decent understanding of so many areas? Because of Berkshire's diversification strategy you get a basic education on a plethora of industries: textile, insurance, banking, FMCG, utilities - it's all there.
Underlying the actual industry knowledge share, Buffet takes on something of a mentor role for his shareholders (again, great PR) and helps the reader avoid the pitfalls of bad investing, bad reporting and bad business practice. This strategy of train and explain means you will leave this book with a wealth of knowledge you never knew you needed.
Buffet is a master of business, accounting, investment and PR - and to see his prowess in all 4 disciplines come together in such an easy to understand and personable way makes for an enlightening and enjoyable read, which is quite obviously not the norm with annual letters to shareholders.
What other book can you read that gives you a decent understanding of so many areas? Because of Berkshire's diversification strategy you get a basic education on a plethora of industries: textile, insurance, banking, FMCG, utilities - it's all there.
Underlying the actual industry knowledge share, Buffet takes on something of a mentor role for his shareholders (again, great PR) and helps the reader avoid the pitfalls of bad investing, bad reporting and bad business practice. This strategy of train and explain means you will leave this book with a wealth of knowledge you never knew you needed.
December 31, 2022
This review is for the 50yr version (1965-2014), but should be essentially the same as this one. This book is a nonfiction collection of all of Warren Buffet's annual letters. Not only is he a great writer, but it's also a way to hold him accountable for his past thoughts. You basically get to live through his decision making through his entire Berkshire Hathway career, his mistakes, mannerisms, successes, biases, etc.
Versus reading the letters online, the appendix area references keywords like inflation, taxes, share buybacks, dividends, etc that he talks about in each letter. It's a great way to reference if you want to look something up and see how Buffet managed during that particular historical period of time. You can also just control+F his online letters I guess.
This set of letters should be part of any serious investor's collection of books.
Versus reading the letters online, the appendix area references keywords like inflation, taxes, share buybacks, dividends, etc that he talks about in each letter. It's a great way to reference if you want to look something up and see how Buffet managed during that particular historical period of time. You can also just control+F his online letters I guess.
This set of letters should be part of any serious investor's collection of books.
September 10, 2017
If you choose to read just one book on investing, this is it. Warren Buffett is the Einstein of investment, a figure so large it towers over any other. These compilation of his letters to shareholders serves as a compendium of his investment principles and how they not only shaped his company but also became sharper through the dull edge of experience.
I've read several books on Buffet, from biographies to essays and the collection of his letters is the best distilling of his philosophy you will find
This should be required reading for anyone thinking about managing theirs or other people's money.
I've read several books on Buffet, from biographies to essays and the collection of his letters is the best distilling of his philosophy you will find
This should be required reading for anyone thinking about managing theirs or other people's money.
June 20, 2020
Thoroughly enjoyed Buffett's words over the first 47 years of Berkshire after his partnership took over ownership. Look forward to a revised edition with as much Buffett writing as can be organized into it.
One learns a lot reading these letter, about Berkshire, business, ethics, many different industries, people of mostly high caliber, and how business and financial minutiae do or don't make sense.
Impressively, most all of the content is enjoyable to read too. I'm a bit sad having concluded it though of course can find more subsequent letters to enjoy and learn more.
Grateful Olson stitched this together and Buffett has shared so much. It's a rich wealth of knowledge.
One learns a lot reading these letter, about Berkshire, business, ethics, many different industries, people of mostly high caliber, and how business and financial minutiae do or don't make sense.
Impressively, most all of the content is enjoyable to read too. I'm a bit sad having concluded it though of course can find more subsequent letters to enjoy and learn more.
Grateful Olson stitched this together and Buffett has shared so much. It's a rich wealth of knowledge.
November 23, 2021
Read this along with Aswath Damodaran’s valuation. Took me like 2 months for the letters and another 2 months for valuation( i took the class). I would suggest to read both, as the former sets the arena or mental framework required and the latter throws you into the field and make you wear your own damn jersey. I was taking unpaid leaves to finish these and almost lost my job😂. Later, I reread it couple of times to etch into my brain. Got it for like ~$10 bucks and probably I will carry these on my death bed as well.
Best line for me:
When a manager with a reputation for brilliance tackles a business with a reputation for bad economics, the reputation of the business remains intact.
Best line for me:
When a manager with a reputation for brilliance tackles a business with a reputation for bad economics, the reputation of the business remains intact.
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