Key Points of Warren Buffett's Shareholder Letter:
1. The importance of capital gains is unquestionable. However, it would be foolish to judge the value of $Berkshire Hathaway-A(BRK.A.US$ 's investment on the basis of "return," which encompasses the vagaries of the stock market day and night, and even the volatility of the stock market year after year. As Ben Graham taught me, "In the short run, the market is like a voting machine; in the long run, it becomes a weighing machine.
2. In capitalism, some businesses thrive over the long term, while others prove to be "bottomless pits". Predicting which businesses will be winners and which will be big losers is more difficult than you might think. Those who claim to know the answers are either fooling themselves or are just charlatans.
3. $Berkshire Hathaway-A(BRK.A.US$ $Berkshire Hathaway-B(BRK.B.US$ now accounts for nearly 6% of the $S&P 500 Index(.SPX.US$ companies. Trying to double our massive base in five years is impossible, especially since we are so opposed to issuing stock.
4. Like $Coca-Cola(KO.US$ and $American Express(AXP.US$ , Buffett expects Berkshire Hathaway to remain invested in $Occidental Petroleum(OXY.US$ and five Japanese trading companies indefinitely.
5. For whatever reason, the market is behaving more like a casino now than it did in my youth, and casinos now exist in many homes, seducing their inhabitants on a daily basis.
6. Wall Street wants its clients to make money, but it is the frenzy of the market that really gets its clients' blood pumping. One of Berkshire's investment rules has never changed and will never change: never risk permanent loss of capital.
7. When economic turmoil occurs, Berkshire's goal will be to be an asset to the nation - as it was in 2008-2009 in a very small way - and help put out the financial fires, not to be one of the many companies that inadvertently or intentionally ignited the fires.
8. All share buybacks should be price dependent. It would be foolish to buy back stock at a price higher than its commercial value.
9. when you find a really great business, stick with the investment. Patience always pays off, and choosing a great business can hedge out many of the inevitable bad decisions.
10. Given $Berkshire Hathaway-A(BRK.A.US$ 's current size, building a position through open market purchases requires a great deal of patience and a long period of "friendly" pricing. This process is akin to turning a battleship, which is a significant disadvantage that Berkshire did not encounter in its early years.
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