Annual Letter to Berkshire Shareholders (2019) [pdf] • Hacker News Board

Re: Annual Letter to Berkshire Shareholders (2019) [pdf]

#21

Post by SuoDuanDao » Sat, Feb 22, 2020, 5:11 PM UTC

pmohun wrote: post #19

yuy910616 wrote: post #15

Any book recommendations for someone who would like to learn more about GAAP, accounting, operational earnings, and/or how to evaluate stocks?

Read the last twenty years of Buffet's letters. No snark intended. His letters intended for investors are the best use of your time rather than a book someone wrote for vanity.

Whenever someone asks me about sources on investing, I say the same thing - though I phrase it as 'buy one share of Berkshire Hathaway, it comes with a lifetime subscription to the thoughts of the most successful investor alive today'

Re: Annual Letter to Berkshire Shareholders (2019) [pdf]

#22

Post by SuoDuanDao » Sat, Feb 22, 2020, 5:12 PM UTC

ms512 wrote: post #20

pmohun wrote: post #19

Earlier quoted context omitted.

Read the last twenty years of Buffet's letters. No snark intended. His letters intended for investors are the best use of your time rather than a book someone wrote for vanity.

The Intelligent Investor by Benjamin Graham is a classic. Graham's approach shaped Buffett's. Personally, I found The Intelligent Investor to be more clearly written than Buffett's letters. It more clearly left me with a framework for how to approach value investing.

Excellent book, and a timeless classic to be sure. I do find Buffet's letters very useful for making sense of the current landscape though.

Re: Annual Letter to Berkshire Shareholders (2019) [pdf]

#23

Post by reaperducer » Sat, Feb 22, 2020, 5:14 PM UTC

SuoDuanDao wrote: post #21

pmohun wrote: post #19

Earlier quoted context omitted.

Read the last twenty years of Buffet's letters. No snark intended. His letters intended for investors are the best use of your time rather than a book someone wrote for vanity.

Whenever someone asks me about sources on investing, I say the same thing - though I phrase it as 'buy one share of Berkshire Hathaway, it comes with a lifetime subscription to the thoughts of the most successful investor alive today'

Whenever someone asks me about sources on investing, I say the same thing - though I phrase it as 'buy one share of Berkshire Hathaway, it comes with a lifetime subscription to the thoughts of the most successful investor alive today'

Since one share of BRK is almost $350,000 my guess is that not a lot of people you've said that to have followed your advice.

Re: Annual Letter to Berkshire Shareholders (2019) [pdf]

#24

Post by gshubert17 » Sat, Feb 22, 2020, 5:17 PM UTC

SuoDuanDao wrote: post #21

pmohun wrote: post #19

Earlier quoted context omitted.

Read the last twenty years of Buffet's letters. No snark intended. His letters intended for investors are the best use of your time rather than a book someone wrote for vanity.

Whenever someone asks me about sources on investing, I say the same thing - though I phrase it as 'buy one share of Berkshire Hathaway, it comes with a lifetime subscription to the thoughts of the most successful investor alive today'

One share of BRKB, Berkshire Hathaway class B, is around $230, which makes it much more affordable than the A shares.

Re: Annual Letter to Berkshire Shareholders (2019) [pdf]

#25

Post by reaperducer » Sat, Feb 22, 2020, 5:17 PM UTC

bravura wrote: post #12

trcollinson wrote: post #9

Earlier quoted context omitted.

I'm missing your point here. Do you not like marriage analogies? Or you don't think his analogy and very well known life experience doesn't apply (he has an interesting personal experience with marriage)? Or do you think most of the people who read his letter have no background in marriage? I find the analogy very appropriate and well stated. Much like a marriage he can't just give back a portion of an entity he's in…

I guess what’s strange to me is not the idea that, as you become more committed to a person you discover their flaws and the relationship gets worse. That seems self evident to me and seems to be a common theme both in theory and in practice. But how many marriages resolve with discovering the person is way better than you imagined? I’m not familiar with this, either through the idealism of poetry or romantic movies,…

That seems self evident to me and seems to be a common theme both in theory and in practice.

Only if everything you know about marriage and family you learn from television and the internet.

But how many marriages resolve with discovering the person is way better than you imagined?

My guess is almost all of them, because as people grow older, they grow wiser, more interesting, smarter, and have more life experiences on which to draw.

My wife today is not the person I married, and I'm happy for that because I've had the privilege of seeing her grow and become a better person. I the person I was back then met her today, I wouldn't even consider her in my league.

Re: Annual Letter to Berkshire Shareholders (2019) [pdf]

#26

Post by Reedx » Sat, Feb 22, 2020, 5:21 PM UTC

Proziam wrote: post #4

After having seen so much nonsense accounting in the books of so many startups (especially recently, it feels like a growing trend) it's refreshing to see GAAP. The difference in standards between the startup universe and the 'real world' is actually scary. There have been far too many instances of people getting taken for a ride based on EBITDA when the company's financials were far from healthy. Am I alone in think…

Not alone. Indeed Charlie Munger straightforwardly refers to EBITDA as a bullshit earnings metric.

“I don’t like when investment bankers talk about EBITDA, which I call bulls--- earnings”

“Think of the basic intellectual dishonesty that comes when you start talking about adjusted EBITDA. You’re almost announcing you’re a flake.”

Re: Annual Letter to Berkshire Shareholders (2019) [pdf]

#27

Post by SuoDuanDao » Sat, Feb 22, 2020, 5:22 PM UTC

reaperducer wrote: post #23

SuoDuanDao wrote: post #21

Earlier quoted context omitted.

Whenever someone asks me about sources on investing, I say the same thing - though I phrase it as 'buy one share of Berkshire Hathaway, it comes with a lifetime subscription to the thoughts of the most successful investor alive today'

Whenever someone asks me about sources on investing, I say the same thing - though I phrase it as 'buy one share of Berkshire Hathaway, it comes with a lifetime subscription to the thoughts of the most successful investor alive today' Since one share of BRK is almost $350,000 my guess is that not a lot of people you've said that to have followed your advice.

BRK.B costs only 1/1000th of the A class shares, and you still get the letters. I couldn't afford an A class share either if that was all that was available.

Re: Annual Letter to Berkshire Shareholders (2019) [pdf]

#28

Post by basch » Sat, Feb 22, 2020, 5:23 PM UTC

Talyen42 wrote: post #8

Proziam wrote: post #4

After having seen so much nonsense accounting in the books of so many startups (especially recently, it feels like a growing trend) it's refreshing to see GAAP. The difference in standards between the startup universe and the 'real world' is actually scary. There have been far too many instances of people getting taken for a ride based on EBITDA when the company's financials were far from healthy. Am I alone in think…

Buffett thinks GAAP is almost useless now, and doesn't think accountants have a clue. He follows own "owners earnings" model, which is not a standard of any kind.

"Berkshire’s 2018 and 2019 years glaringly illustrate the argument we have with the new rule. In 2018, a down year for the stock market, our net unrealized gains decreased by $20.6 billion, and we therefore reported GAAP earnings of only $4 billion. In 2019, rising stock prices increased net unrealized gains by the aforementioned $53.7 billion, pushing GAAP earnings to the $81.4 billion reported at the beginning of this letter. Those market gyrations led to a crazy 1,900% increase in GAAP earnings!

Meanwhile, in what we might call the real world, as opposed to accounting-land, Berkshire’s equity holdings averaged about $200 billion during the two years, and the intrinsic value of the stocks we own grew steadily and substantially throughout the period."

Re: Annual Letter to Berkshire Shareholders (2019) [pdf]

#29

Post by CapriciousCptl » Sat, Feb 22, 2020, 5:27 PM UTC

yuy910616 wrote: post #15

Any book recommendations for someone who would like to learn more about GAAP, accounting, operational earnings, and/or how to evaluate stocks?

* Best introduction: Financial Intelligence, Revised Edition: A Manager's Guide to Knowing What the Numbers Really Mean (Berman, Karen, Knight, Joe, Case, John, imusti)

* Then read this, all of it, except perhaps most of the exhibits: Most recent Costco annual report (10-k).

* Berkshire Hathaway annual letters, Transcripts from Berkshire annual meetings

* Great follow-up: Financial Shenanigans, Fourth Edition: How to Detect Accounting Gimmicks and Fraud in Financial Reports (Schilit, Howard, Perler, Jeremy, Engelhart, Yoni, McGraw-Hill Education)

* Absolute classic (but needs to be updated): The Intelligent Investor: The Definitive Book on Value Investing. (Graham)

* On investing in general: Margin of Safety (Seth Klarman)

* Great intro to valuation, with the caveat that modern finance and concepts like WACC may not necessarily be useful to your investing strategy: Valuation: Measuring and Managing the Value of Companies (Tim Koller, Marc Goedhart, David Wessels)

* Another classic (but needs to be updated): Security Analysis (Graham and Dodd)

I've read those in more-or-less that order, interspersed with plenty of other useful books that you'll discover depending how deep you go. The most important thing is reading 10-ks.

Re: Annual Letter to Berkshire Shareholders (2019) [pdf]

#30

Post by yuy910616 » Sat, Feb 22, 2020, 5:28 PM UTC

ms512 wrote: post #20

pmohun wrote: post #19

Earlier quoted context omitted.

Read the last twenty years of Buffet's letters. No snark intended. His letters intended for investors are the best use of your time rather than a book someone wrote for vanity.

The Intelligent Investor by Benjamin Graham is a classic. Graham's approach shaped Buffett's. Personally, I found The Intelligent Investor to be more clearly written than Buffett's letters. It more clearly left me with a framework for how to approach value investing.

thank you