In all the hubbub of international intrigue, political hay making, and domestic violence filling our deliberations recently, we completely missed the release Saturday of Warren Buffett’s annual letter to shareholders of Berkshire Hathaway.

For those who are interested in such things, here it is.

Buffett has been writing these letters since the mid-60’s. They have come to be eagerly anticipated by the investment community, filled with not only the boring details of his growing investment operation but all sorts of valuable insights into business, investment principles, etc.

I found them so valuable I printed out each one and had them bound into volumes about twenty years ago. Now, I have them in a book form on my Kindle, much easier and cheaper than printing all of them out. The Kindle version updates itself each year, gratis.

If one were to read and understand them all, it would be a very good education in business, maybe equivalent to an MBA without all the quant stuff.

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The $65 billion gain is nonetheless real – rest assured of that. But only $36 billion came from Berkshire’s operations. The remaining $29 billion was delivered to us in December when Congress rewrote the U.S. Tax Code.(Details of Berkshire’s tax-related gain appear on page K-32 and pages K-89 – K-90.

Can Warren say thank you President Trump. So much for him wanting to pay more taxes.

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Originally posted by JALLEN:
Now, I have them in a book form on my Kindle, much easier and cheaper than printing all of them out. The Kindle version updates itself each year, gratis.

Now that is interesting, indeed! How did you set that up?

Mr. Buffett's letters are always fun reads. I think 20 of them in one place might constitute critical mass, though.....

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Originally posted by joel9507:

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Originally posted by JALLEN:
Now, I have them in a book form on my Kindle, much easier and cheaper than printing all of them out. The Kindle version updates itself each year, gratis.

Now that is interesting, indeed! How did you set that up?

Mr. Buffett's letters are always fun reads. I think 20 of them in one place might constitute critical mass, though.....

I bought my copy in December 2014, and it now has the 2016 (last years) letter in it. In researching how this happened jist now, I looked at the Amazon listing and in comments see that somebody was able to do this as an update but now Amazon prohibits updates to add material, only to correct mistakes. The Kindle version is $2.99, so I guess each year we get a new one.

Or upload the letter in .pdf form for free.

Buffett has an amazing track record and has built a great investment house. What happens when he dies? How do you replace that kind of talent?

I've never seen one of his annual letters. Thanks for posting!

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Originally posted by Out West:
Buffett has an amazing track record and has built a great investment house. What happens when he dies? How do you replace that kind of talent?

I've never seen one of his annual letters. Thanks for posting!

The succession has been a subject of discussion over the years. Buffett is 87, Munger in his 90’s.

Buffett hired two young guys several years ago to manage parts of the investment portfolio. They are mentioned in letter. In additon he is very keen on a couple of other men who have proven themselves running various portions of the business. Actual details are closely guarded but that seems to be the way it is headed.

Buffett is a remarkable collection of talents, ideally suited for what he has been doing. It seems to be all he has ever been interested in. That laser like concentration can pay off, I guess. He reputedly has an incredible memory, very handy I imagine. He received the only “A” in Ben Graham’s course at Columbia.

I’m not sure I would want to trade places with him, though. He has never owned a boat, or flown a plane, never coached a Little League team or Boy Scouts, hiked Grand Canyon, run a marathon or triathlon. He did serve in the National Guard, apparently honorably, and plays ukelele passibly.

He had the benefit of mastering the investment basics at a time when the markets heavily favored such an approach. It took a great deal more effort and time to ferret out reliable information back then, too. That style seems to have come to an end by the 70’s, except Charles Brandes met Graham in the early ‘70’s, became a disciple and has done pretty well.

They have their annual fan fest in Omaha each year. Owned the stock for a while, but never made it to the party. It is quite a shindig as they rent basically all the hotel rooms in Omaha.

RMD

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Originally posted by rduckwor:
They have their annual fan fest in Omaha each year. Owned the stock for a while, but never made it to the party. It is quite a shindig as they rent basically all the hotel rooms in Omaha.

Also have group outings to Nebraska Furniture, Borsheims and usually a ball game. Nothing like a new sofa, some jewelry and a ballpark dog to set the theme!

Used to have a client there, always was mindful of that time of year along with CWS. Have some B-shares, but don't plan to go for that blue-hair Woodstock. Speaking of that, one of clients' goals was to meet up with some Berkshire babe and retire a kept man. He wasn't particular about the age.....

I have to think folks who have worked years with Mr. B will have picked up on his style and approach. I will be sad to hear of a changing of the guard there. I think Mr. B must enjoy the heck out of his job, but I think he deserves some time to enjoy what he's done.

They buy and hold good businesses, buying them when they're cheap, using other people's money. Not rocket science, except the 'knowing when they are cheap' bit and deciding which are 'good businesses'. Both of those bits are learnable, and I expect the team there has learned a thing or two at the feet of the master.

So I don't worry about the eventual transition, other than to hope it's a happy event for Mr. Buffett and not an involuntary thing.

JAllen said:

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Buffett hired two young guys several years ago to manage parts of...

As I recall he was once asked about how he made hiring decisions especially since he hires so few people every one is very important.

His answer was that he had three criteria:
*That they be honest
*That they be smart
*That they be hard working.

And if he was wrong on the first one he hoped he was wrong on the other two as well.

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Originally posted by joel9507:
I have to think folks who have worked years with Mr. B will have picked up on his style and approach. I will be sad to hear of a changing of the guard there. I think Mr. B must enjoy the heck out of his job, but I think he deserves some time to enjoy what he's done.

They buy and hold good businesses, buying them when they're cheap, using other people's money. Not rocket science, except the 'knowing when they are cheap' bit and deciding which are 'good businesses'. Both of those bits are learnable, and I expect the team there has learned a thing or two at the feet of the master.

So I don't worry about the eventual transition, other than to hope it's a happy event for Mr. Buffett and not an involuntary thing.

Buffett seems to be the epitome of that old saying, “Find something you love, and never work a day in your life.”

I can’t imagine that he will step down to go fishing, etc. I guess he plays golf, and bridge. Those are both great time fillers.

He has a pretty good salary, $100,000 a year. Don’t forget that!

He owns ~40% of BHA, or used to. He’s been giving it away to the Gates Foundation. Many shareholders are friends of his, and he likely feels a responsibility to them.

Another thing. His style is “lethargy bordering on sloth.” If he has an idea he does something. Otherwise he sits on his ass. Even a legacy chairman can do that!

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Originally posted by wishfull thinker:

“If you don't have the first, the other two will kill you,” Buffet has famously said. “If you hire somebody without [integrity], you really want them to be dumb and lazy.”

Good plan.

Those who are interested in paying for professional investment advice might want to read the details of a Buffett wager betting that a bunch of pro managed funds would beat the S&P over a ten year period.

You can find his report on this in the annual letter at the link above, pages 11-13.