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Warren Buffett's Annual Letter to Berkshire Hathaway Shareholders [pdf]

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Re: Warren Buffett's Annual Letter to Berkshire Hathaway Shareholders [pdf]

#81

Post by pg314 »

gizmo wrote: post #64
pg314 wrote: post #50

Earlier quoted context omitted.

No, he isn't reading it incorrectly. Buffett is claiming that on aggregate, because of the fees, the passive investors will be better off than the active investors. From page 23: A lot of very smart people set out to do better than average in securities markets. Call them active investors. Their opposites, passive investors, will by definition do about average. In aggregate their positions will more or less approxima…

Yes, but Buffett is not claiming that active investing (as opposed to passive index investing) is negative-sum in aggregate! That would be ludicrous, because Buffett is an active investor himself and the Buffett Annual Report is a long form sales letter to persuade people to buy more Berkshire shares.

Buffett, as an active investor, can outperform the market, while active investors as an aggregate might not. I fail to see any ludicrousness.

> Buffett Annual Report is a long form sales letter to persuade people to buy more Berkshire shares.

Nonsense. Buffett doesn't care one whit about people buying more Berkshire Hathaway shares. If anything, he wouldn't mind people selling shares and driving the price down to below 1.2 x book value, so he can buy them back at a discount.

Re: Warren Buffett's Annual Letter to Berkshire Hathaway Shareholders [pdf]

#82

Post by stagbeetle »

mrfusion wrote: post #37
lotsofpulp wrote: post #30

Earlier quoted context omitted.

>If your business makes toilet paper you have it easy because no matter what happens demand for your product won't collapse overnight. Until people figure out the magic of bidets! https://www.amazon.com/Luxe-Bidet-Neo-120-Non-Electric/dp/B0...

You still need some paper right?

They have a built-in dryer.

Re: Warren Buffett's Annual Letter to Berkshire Hathaway Shareholders [pdf]

#83

Post by graeme »

dv35z wrote: post #66
defenestration wrote: post #20

It took me 30 minutes to read the complete letter. It was time well spent. I learned why the property/casualty insurance business has a really good business model. It also reminds me to walk away from deals where the financial fundamentals are wrong, but our competition is eager to sign. And finally, I feel that his humble tone is honest and that he is trying teach by showing his considerations, successes and failure…

If you enjoyed that - take the time and get the book compilation of all BH's annual letters to shareholders - starting 1960s to present. Some of the most valuable reading I have done in years - strongly recommend.

Link: https://www.amazon.com/Berkshire-Hathaway-Letters-Shareholde...

Re: Warren Buffett's Annual Letter to Berkshire Hathaway Shareholders [pdf]

#84

Post by stagbeetle »

differentView wrote: post #42
gizmo wrote: post #18

Earlier quoted context omitted.

Warren Buffett is an expert salesperson, and this tone is the exquisitely crafted product of 70 years of salesmanship. Buffett has worked tirelessly to build his public image, and his "aw-shucks" act is a critical part of that. His image of a down-to-earth person with unquestionable integrity* has enabled him to lock down investment deals under the most favorable possible terms. *) read one of his biographies to see…

What's the worst he's done?

Off-hand, I can't give specifics. Lehman is one situation that comes to mind.

Another, not WS-based, is that he disowned his granddaughter for talking about the family in a documentary about the ultra-rich.

Re: Warren Buffett's Annual Letter to Berkshire Hathaway Shareholders [pdf]

#85

Post by devonkim »

padobson wrote: post #45
oh_sigh wrote: post #34

Earlier quoted context omitted.

The areas that used slaves the most are now some of the poorest areas of the USA. Maybe slavery didn't have that big of an impact?

While it's true that there is a bit of incumbent/disruption element involved - the American south was probably the most advanced agricultural civilization ever, while the north invested heavily in the very disruptive industrial revolution - I'd say having broad swaths of their entire society burnt to the ground and then effectively confiscated by Northerners has much more to do with any present-day economic troubles.…

Tennessee originally wanted to fight for the North and much of Western North Carolina didn't want to join the confederacy because most of the people in these regions owned no slaves and were rather poor Irish, Scottish, etc. immigrants rather than aristocracies and industrial tycoons like a lot of the Deep South and didn't see any benefit to supporting slavery. However, they did always wonder what'd happen if they didn't join the rich Southerners and the union lost. There's a lot more factors obviously but lumping in Appalachia with the south is an oversight that is pretty misplaced.

Tennessee and much of Appalachia has been historically on the side against slavery and corporate interests until somewhere around 60 years ago. I don't know how it happened besides hand-waving "Southern Strategy."

Re: Warren Buffett's Annual Letter to Berkshire Hathaway Shareholders [pdf]

#86

Post by akvadrako »

arjie wrote: post #79
pg314 wrote: post #46

Earlier quoted context omitted.

> if a hedge fund is actually worth investing in (and there are quite a few) Apparently it is hard to come up with a collection of 5 of them that would beat the S&P 500 over 10 years. At least Buffett had a hard time finding counterparties for a bet.

Renaissance Technologies claims 71% annualised from 1994 to 2014.

It's easy to find funds that had great performance in the past. If anybody knows how to pick those that will perform in the future, they are keeping it a secret.

And you might not be able to invest directly in rentec, but their holdings are public [1]. So if they really had a good secret, it could be replicated.

[1] https://www.holdingschannel.com/all/stocks-held-by-renaissan...

Re: Warren Buffett's Annual Letter to Berkshire Hathaway Shareholders [pdf]

#87

Post by tim333 »

ryanmarsh wrote: post #16

"This team efficiently deals with a multitude of SEC and other regulatory requirements, files a 30,450-page Federal income tax return" 30,450 pages holy crap

Plus I hadn't realised they had 3,580 state tax returns as well so that's probably like 100k pages.

Re: Warren Buffett's Annual Letter to Berkshire Hathaway Shareholders [pdf]

#89

Post by wokky »

dsacco wrote: post #17

There's one particular passage I'd like to point out, on page 5: Our efforts to materially increase the normalized earnings of Berkshire will be aided – as they have been throughout our managerial tenure – by America’s economic dynamism. One word sums up our country’s achievements: miraculous. From a standing start 240 years ago – a span of time less than triple my days on earth – Americans have combined human ingenu…

I don't often see this sort of pride in America. Normally the flavors I do observe are hyper-nationalistic and filled with bravado...

I'd go even further: our current presidential administration spends a lot of energy telling us that America sucks because the people in it suck, the government they built sucks, and the ideals they aspire to suck, and that the solution is to deal out cruelty to the right kinds of people.

I don't understand how anyone can listen to that bilge and interpret it as any kind of patriotism at all, but they do. The hyper-nationalism and bravado are a natural result of an underlying emotional condition apparently shared by about a quarter of the populace: an inability to feel pride in anything but the capacity to dominate.

This is why a few sentences by Warren Buffet feel like such a breath of fresh air. It wasn't always like this, Buffet's far more constructive and positive sentiment is perfectly normal.

Re: Warren Buffett's Annual Letter to Berkshire Hathaway Shareholders [pdf]

#90

Post by wz1000 »

thedevil wrote: post #54
jdavis703 wrote: post #29

Earlier quoted context omitted.

they all represent a net gain for Americans from the barren lands, primitive structures and meager output of 1776. Starting from scratch, America has amassed wealth totaling $90 trillion. This was a gain that was achieved not by starting from scratch but by stealing lands from indigenous people and forcing Africans to work that land. I'm not sure if you can describe the kidnapping, murder, rape and ultimately genocid…

While I think it's important to remember these atrocities, I think that for economic understanding it's important to note that these were not the major drivers of growth. Remember that atrocities like that happened in many places that did not grow into giant economies. Stealing land and enslaving people may have given a head start, but clearly something else delivered the big gains. If you look at the history and the…

> the big boost was started by the industrial revolution

Exactly. Now, lets look at some of the causes of the first Industrial Revolution

First, large tracts of lands in Britain, largely held in the commons, were stolen from the peasantry and given to private individuals and landlords, as part of the Enclosure movement. This forced the peasants to look for work in cities en masse, providing cheap labor for the capitalists.

Second, Britain's African Slave trade constituted a big part of the early accumulation of capital that made the revolution possible.

Cheap cotton from the colonization of India as well that produced by the slave labor in North America fueled the textile industry, which was at the heart of the industrial revolution. India's share of the world economy fell from 20% to less than 5%, chiefly because the capital required for industrialization was siphoned off to England

https://en.wikipedia.org/wiki/Enclosure

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