Warren Buffett’s annual letter to Berkshire Hathaway shareholders paid tribute to his longtime business partner and friend Charlie Munger, who died in November.
Famed investor Warren Buffett”s annual letter to Berkshire Hathaway shareholders paid tribute to his longtime business partner and friend Charlie Munger, who died in November.
Investors have long sought wisdom from the Oracle of Omaha on markets, the economy and life in general. But Buffett opened Berkshire’s 2023 annual report on a personal note with a dedication to Munger, who died in November at age 99, just 33 days before the milestone birthday.
Excerpts
On investing in stocks:
I can’t remember a period since March 11, 1942 — the date of my first stock purchase — that I have not had a majority of my net worth in equities, U.S.-based equities. And so far, so good. The Dow Jones Industrial Average fell below 100 on that fateful day in 1942 when I pulled the trigger.I was down about $5 by the time school was out. Soon, things turned around and now that index hovers around 38,000. America has been a terrific country for investors. All they have needed to do is sit quietly, listening to no one.
On picking winners:
Our goal at Berkshire is simple: We want to own either all or a portion of businesses that enjoy good economics that are fundamental and enduring. Within capitalism, some businesses will flourish for a very long time while others will prove to be sinkholes. It’s harder than you would think to predict which will be the winners and losers. And those who tell you they know the answer are usually either self-delusional or snake-oil salesmen.
On market panics:
Markets can and will unpredictably seize up or even vanish as they did for four months in 1914 and for a few days in 2001. If you believe that American investors are now more stable than in the past, think back to September 2008. Speed of communication and the wonders of technology facilitate instant worldwide paralysis, and we have come a long way since smoke signals. Such instant panics won’t happen often but they will happen.
“Berkshire’s ability to immediately respond to market seizures with both huge sums and certainty of performance may offer us an occasional large-scale opportunity. Though the stock market is massively larger than it was in our early years, today’s active participants are neither more emotionally stable nor better taught than when I was in school. For whatever reasons, markets now exhibit far more casino-like behavior than they did when I was young. The casino now resides in many homes and daily tempts the occupants.
On Berkshire’s prospects, for shareholders like his sister, Bertie:
Berkshire should do a bit better than the average American corporation and, more important, should also operate with materially less risk of permanent loss of capital. Anything beyond slightly better,though, is wishful thinking. This modest aspiration wasn’t the case when Bertie went all-in on Berkshire but it is now. There remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others.