Buffett's Annual Letter to Berkshire Shareholders

On Saturday, February 27th, Warren Buffett released his 51st annual letter to Berkshire Hathaway shareholders.  Every year, the letter is highly anticipated by investors around the world looking to gain insights and wisdom from the 85 year old Oracle of Omaha.  This year, in his 31 pages of remarks, Mr. Buffett touches on a variety of issues ranging from the operational results of Berkshire Hathaway to his general optimism for the future of the United States.

Each year I read the annual letter, it’s like sucking in a huge breath of fresh air.  I say that not necessarily because of what is in the annual letter, but what is not.  This may come as a surprise to many who have never read Buffett’s annual remarks, but there is hardly a mention of investment performance or discussion around the direction of the economy or financial markets.  Buffett largely views these issues as a waste of time.  What he cares about is the actual operational results of the subsidiary companies Berkshire owns.  He knows that if the companies are more profitable over time, by definition, they will be more valuable. 

Consider this; Berkshire Hathaway experienced an increase in net worth and profits by 6.4% and 21% respectively in 2015.  Anyone owning the stock of a private company would likely consider that a good year.  But here’s what’s interesting, Berkshire’s stock price actually declined by 12.5% in 2015.  Does that all of a sudden make it a bad year?  To me the answer is obvious, “Of course not!” 

Public markets are great for a lot of reasons, but the daily price action of financial assets really warps the way people think and causes them to do crazy things.  This is why reading Buffett’s annual letter is so refreshing.  He has an amazing way of cutting through all of the fog that is created by financial media and Wall Street marketing departments, and focusing on the things that really matter.    

If you want direct insight into how the most successful investor in history thinks, I would encourage you to read Buffett’s most recent letter to shareholders.  It is available to anyone online at the company’s website: http://www.berkshirehathaway.com/.  If you enjoy it, all of Buffett’s letters going back to 1977 are also available. 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.

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