Gems From Buffett’s Letters
Billionaire Warren Buffett is ready to teach you a lot about money, investing and life — and a great place to learn is in his annual letters to shareholders, archived at
berkshirehathaway.com. Here are a few nuggets:
• 1978: “We make no attempt to predict how security markets will behave; successfully forecasting short-term stock price movements is something we think neither we nor anyone else can do.”
• 1979: “Both our operating and investment experience cause us to conclude that ‘turnarounds’ seldom turn, and that the same energies and talent are much better employed in a good business purchased at a fair price than in a poor business purchased at a bargain price.”
• 1997: “Only those who will be sellers of (stocks) in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.”
• 2007: “A truly great business must have an enduring ‘moat’ that protects excellent returns … competitors will repeatedly assault any business ‘castle’ that is earning high returns. Therefore, a formidable barrier such as a company’s being the low-cost producer … or possessing a powerful worldwide brand … is essential for sustained success.”
• 2008: “Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”
• 2013: “My advice to the trustee (of my estate) could not be more simple: Put 10 percent of the cash in short-term government bonds and 90 percent in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors — whether pension funds, institutions or individuals — who employ high-fee managers.”
• 2016: “American business — and consequently a basket of stocks — is virtually certain to be worth far more in the years ahead. Innovation, productivity gains, entrepreneurial spirit and an abundance of capital will see to that. Ever-present naysayers may prosper by marketing their gloomy forecasts. But heaven help them if they act on the nonsense they peddle.”