Berkshire Letter by Warren Buffett – 1994 (Part 1)
Mar 6th, 2007 by Martin Lee
In 1994, Berkshire has a networth of $11.9 billion compared to $22 million when they first started. While their investment strategies will continue to work (and there are as many good businesses as ever), it is now useless for them to make purchases that are too small.
Any investment amount worth less than $100 million won’t even be considered. As such, Berkshire’s investment universe has shrunk significantly.
One major distraction for many investors are political and economical forecasts and events.
No one could have predicted the Vietnam War, oil shocks, dissolution of the Soviet Union, resignation of a president and so on.
Despite all these events, Benjamin Graham’s principles still hold true. Some of Warren Buffett’s best purchases were made when fear about some macro event were at a peak.
Other major shocks are sure to occur in the future. These cannot be predicted with any certainty. As long as Warren Buffett can continue to identify businesses similar to what he has purchased in the past, these external surprises will have little effect on his long term results.
Share prices will continue to fluctuate; and the economy will hav its ups and downs. Over time, good businesses will continue to increase in value.
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