Many investors love to attend Berkshire Hathaway annual shareholder meeting. Warren Buffett is the greatest investor ever afterall. In order not to miss out altogether, you can actually read about his writing to shareholders HERE. There are no other written accounts by Warren himself except for these letters. You get it right from the horse’s mouth, including his candor in reporting his mistakes. This is as pure as it can get.
I shall also share some interesting/useful quotes from his letters:
Extracted from Berkshire Hathaway 2008 Shareholder Letter
Without fail, however, we’ve overcome them. In the face of those obstacles – and many others – the real standard of living for Americans improved nearly Industrials rose from 66 to 11,497. Compare the record of this period with the dozens of centuries during which humans secured only tiny gains, if any, in how they lived. Though the path has not been smooth, our economic system has worked extraordinarily well over time. It has unleashed human potential as no other system has, and it will continue to do so. America’s best days lie ahead.
When investing, pessimism is your friend, euphoria the enemy.
Additionally, the market value of the bonds and stocks that we continue to hold suffered a significant decline along with the general market. This does not bother Charlie and me. Indeed, we enjoy such price declines if we have funds available to increase our positions. Long ago, Ben Graham taught me that “Price is what you pay; value is what you get.” Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.
Our long-avowed goal is to be the “buyer of choice” for businesses – particularly those built and owned by families… In the regulated utility field there are no large family-owned businesses. Here, Berkshire hopes to be the “buyer of choice” of regulators. It is they, rather than selling shareholders, who judge the fitness of purchasers when transactions are proposed.
The present housing debacle should teach home buyers, lenders, brokers and government some simple lessons that will ensure stability in the future. Home purchases should involve an honest-to-God down payment of at least 10% and monthly payments that can be comfortably handled by the borrower’s income. That income should be carefully verified. Putting people into homes, though a desirable goal, shouldn’t be our country’s primary objective. Keeping them in their homes should be the ambition.
If merely looking up past financial data would tell you what the future holds, the Forbes 400 would consist of librarians.
Investors should be skeptical of history-based models. Constructed by a nerdy-sounding priesthood using esoteric terms such as beta, gamma, sigma and the like, these models tend to look impressive. Too often, though, investors forget to examine the assumptions behind the symbols. Our advice: Beware of geeks bearing formulas.
Without urging from Charlie or anyone else, I bought a large amount of ConocoPhillips stock when oil and gas prices were near their peak. I in no way anticipated the dramatic fall in energy prices that occurred in the last half of the year. I still believe the odds are good that oil sells far higher in the future than the current $40-$50 price. But so far I have been dead wrong. Even if prices should rise, moreover, the terrible timing of my purchase has cost Berkshire several billion dollars.
Clinging to cash equivalents or long-term government bonds at present yields is almost certainly a terrible policy if continued for long. Holders of these instruments, of course, have felt increasingly comfortable – in fact, almost smug – in following this policy as financial turmoil has mounted. They regard their judgment confirmed when they hear commentators proclaim “cash is king,” even though that wonderful cash is earning close to nothing and will surely find its purchasing power eroded over time.
Approval, though, is not the goal of investing. In fact, approval is often counter-productive because it sedates the brain and makes it less receptive to new facts or a re-examination of conclusions formed earlier. Beware the investment activity that produces applause; the great moves are usually greeted by yawns.
You may also like:
- Warren Buffett is buying American stocks now
- Warren Buffett – "Be fearful when others are greedy…"
- Warren Buffett – "Never count on making a good sale…"
- The Warren Buffett Way – Robert Hagstrom
- Who will be Warren Buffett’s successor?
- Warren Buffett – “I’d be a bum on the street with a tin cup if the markets were always efficient.”
- The Winning Investment Habits of Warren Buffett & George Soros by Mark Tier
- Warren Buffett – "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."
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