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

Post by csomar » Sat, Feb 25, 2017, 10:06 PM UTC

sethev wrote: post #21

otalp wrote: post #4

"In Berkshire’s 2005 annual report, I argued that active investment management by professionals – in aggregate – would over a period of years underperform the returns achieved by rank amateurs who simply sat still. I explained that the massive fees levied by a variety of “helpers” would leave their clients – again in aggregate – worse off than if the amateurs simply invested in an unmanaged low-cost index fund. ” He…

"My calculation, admittedly very rough, is that the search by the elite for superior investment advice has caused it, in aggregate, to waste more than $100 billion over the past decade."

Post by pcrh » Sat, Feb 25, 2017, 10:14 PM UTC

gizmo wrote: post #149

pg314 wrote: post #81

Earlier quoted context omitted.

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 bel…

If active investment were negative-sum in aggregate then society would be better off if there were no active investors at all and everybody would invest in passive index funds instead. Unfortunately you need active investors to keep the market honest, without active investors index funds wouldn't work! Index funds are needed so investment funds don't overcharge their customers, and investment funds are needed to keep…

Post by gigatexal » Sat, Feb 25, 2017, 10:16 PM UTC

gigatexal wrote: post #69

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…

Note the positive ton towards immigration. I too found this part interesting.

Post by digitalmaster » Sat, Feb 25, 2017, 10:19 PM UTC

Post by desas » Sat, Feb 25, 2017, 10:30 PM UTC

lordnacho wrote: post #194

CPLX wrote: post #146

Earlier quoted context omitted.

I've got a degree in economics as well. There are a few more big ones, including the advent of the joint stock company (or more generally, the ability to effectively pool capital) and the common law, specifically the ability to enforce business contracts. Those two are fundamental.

This is a good point, under the rubric "institutions girdling trust". Quite relevant as a set of innovations in the time when people started having to do business with strangers, particularly ones with different ecological positions. You can imagine having lived in agricultural societies there would be a big question of how exactly you're going to have a business relationship with say a factory owner or delivery comp…