Category: Berkshire Hathaway Letters

“Yardsticks seldom are discarded while yielding favorable readings. But when results deteriorate, most managers favor disposition of the yardstick rather than disposition of the manager.” “Accounting numbers are the beginning, not the end, of business valuation.” “It is our job to select businesses with economic characteristics allowing each dollar of retained earnings to be translated…

“Small portions of exceptionally good businesses are usually available in the securities markets at reasonable prices. But such businesses are available for purchase in their entirety only rarely, and then almost always at high prices.” “Most organizations, business or otherwise, measure themselves, are measured by others, and compensate their managers far more by the yardstick…

“High rates of inflation create a tax on capital that makes much corporate investment unwise – at least if measured by the criterion of a positive real investment return to owners.” “The average return on equity of corporations is fully offset by the combination of the implicit tax on capital levied by inflation and the…

“We continue to feel that the ratio of operating earnings (before securities gains or losses) to shareholders’ equity with all securities valued at cost is the most appropriate way to measure any single year’s operating performance. “ “The primary test of managerial economic performance is the achievement of a high earnings rate on equity capital…

“Successfully forecasting short term stock price movements is something we think neither we nor anyone else can do” “Obvious approaches to improved profit margins involve differentiation of product, lowered manufacturing costs………………the problem, of course, is that our competitors are just as diligently doing the same thing.” “As long as excess productive capacity exists, prices tend…

I am excited to begin this project of reviewing all of Warren Buffett’s annual Berkshire Hathaway shareholder letters, starting from 1977. There are currently over 45 of these letters, and with the benefit of hindsight, it will be interesting to see how prescient his analysis was as well as how his strategies have changed over…