Warren Buffett’s Annual Letter to Shareholders
Warren Buffett released his letter to Berkshire Hathaway shareholders yesterday morning. Like many I look forward to reading his letter every year. His letters are filled with great information and insights on the inner workings of Berkshire Hathaway, the economy, and life in general.
In his previous shareholder letters there has been a wealth of information. For example, in 2006 he made a prediction of a housing melt-down. This same melt down is largely responsible for our current economic state. Warren has a lifetime of experience and his company Berkshire Hathaway owns over 70 companies in widely varying industries. His knowledge and diversification give him a unique ability to see business trends. Below are some experts from the letter that I thought were interesting:
“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.”
“By the fourth quarter, the credit crisis, coupled with tumbling home and stock prices, had produced a paralyzing fear that engulfed the country. A freefall in business activity ensued, accelerating at a pace that I have never before witnessed. The U.S. – and much of the world – became trapped in a vicious negative-feedback cycle. Fear led to business contraction, and that in turn led to even greater fear.”
“Moreover, major industries have become dependent on Federal assistance, and they will be followed by cities and states bearing mind-boggling requests. Weaning these entities from the public teat will be a political challenge. They won’t leave willingly.”
“Home ownership is a wonderful thing. My family and I have enjoyed my present home for 50 years, with more to come. But enjoyment and utility should be the primary motives for purchase, not profit or refi possibilities. And the home purchased ought to fit the income of the purchaser.”
“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 percent and monthly payments that can be comfortably handled by the borrower’s income. That income should be carefully verified.”
Give it a read. Perhaps you can soak up some wisdom. While there you may check out some of the older letters as well. They are all filled with good, timeless information. Click here to download Warren Buffett’s 2008 letter to shareholders and click here to read previous letters to shareholders.
No related posts.
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
thats unfortunate….but cant help it ..