Words of wisdom from the oracle of Omaha in the 2017 letter to shareholders of Berkshire Hathaway.
2017 Berkshire Performance
- Stock performance: +21.9% (+23% if using Buffett’s preferred book value methodology).
- $36b from Berkshire operations.
- $29b from US tax code changes.
- $3b loss from hurricanes ($2b after tax).
- $116b in cash and cash equivalents (+$87b).
- No major deals in 2017 as unable to find a company with durable competitive advantage, excellent management, good returns, opportunities for growth, and at a sensible purchase price.
“That last requirement proved a barrier to virtually all deals we reviewed in 2017, as prices for decent, but far from spectacular, businesses hit an all-time high. Indeed, price seemed almost irrelevant to an army of optimistic purchasers.”
- Stocks are actual companies and businesses not just ticker symbols.
- A mix of modest returns, superb performance and expensive mistakes.
- Overall and over time investors should get decent results.
- Stick with a simple investment strategy.
- Wasteful fees will cost you.
“Performance comes, performance goes. Fees never falter.”
- Don’t use borrowed money to buy stocks.
- Don’t be rattle by scary headlines – an unsettled mind will not make good decisions.
- Bonds can be risky too, even high-grade bonds.
- Don’t risk what you have to obtain what you don’t need.
“Investing is an activity in which consumption today is foregone in an attempt to allow greater consumption at a later date. “Risk” is the possibility that this objective won’t be attained.”
If- by Rudyard Kipling
If you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or being lied about, don’t deal in lies,
Or being hated, don’t give way to hating,
And yet don’t look too good, nor talk too wise:
If you can dream—and not make dreams your master;
If you can think—and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
If you can bear to hear the truth you’ve spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build ’em up with worn-out tools:
If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breathe a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: ‘Hold on!’
If you can talk with crowds and keep your virtue,
Or walk with Kings—nor lose the common touch,
If neither foes nor loving friends can hurt you,
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds’ worth of distance run,
Yours is the Earth and everything that’s in it,
And—which is more—you’ll be a Man, my son!
- Shareholder Letter 2017 (berkshirehathaway.com)
- Upcoming Annual Shareholder’s Meeting May 5 in Omaha (Yahoo lifestream in English and Mandarin)