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It has been some time since my last post. Last weekend, Warren Buffett released his annual letter to shareholders for the 2008 performance of Berkshire. Thought I would do a quick summary here.

The start of the letter shows a comparison of Berkshire versus the S&P. Since 1965, the per-share book value of Berkshire has only gone down twice (on an annual basis). 2001 saw a 6.2% drop while 2008 saw a 9.6% drop. The book value has risen from $19 to $70,530, or 20.3% compounded annually. $2000 invested with Berkshire in 1965 would have grown to almost $7 million today.

…Continue reading » Warren Buffett’s Letter – 2008

Last Saturday morning at Berkshire Hathaway’s annual meeting, CEO Warren Buffett and vice chairman Charlie Munger answered questions from the Berkshire shareholders. Here are some of their comments.

On Future Returns 

Buffett: We would be very happy if we earned 10%, pre-tax. Anyone that expects us to come close to replicating the past should sell their stock; it isn’t going to happen. We’ll get decent results over time, but not indecent results.

…Continue reading » Buffett to Investors – Think Small

It has been a while since I last sumarised the annual letters that Warren Buffett writes to his shareholders. I was halfway through the 2001 letter, and will attempt to round it up here.

In that year, Warren Buffett had lukewarm feelings about stocks for the rest of the decade. He felt that the market had outperformed the business for a long period of time, and that had to end. Any investor buying in at that time would likely be disappointed.

…Continue reading » Berkshire Annual Letters 2001

Warren Buffett has just released his latest annual letter to his Berkshire shareholders a few days ago. While I haven’t read through the entire thing yet, a quick scan shows Warren critisising pension funds for their over-optimistic projections of their returns.

…Continue reading » Warren Buffett’s Letter to Shareholders for 2007

Berkshire Annual Letter 2001 (Part 3)

Warren Buffett recommended reading Jack Welch’s book, Jack, Straight from the Gut.

In the words of Warren Buffett, Jack Welch is smart, energetic, hands-on, and expects much of both himself and his organisation.

In investing (just like insurance), you can produce outstanding long term results primarily by avoiding dumb decisions, rather than by making brilliant ones.

…Continue reading » Loss Development in Insurance Accounting

Berkshire Annual Letter 2001 (Part 2)

To understand Berkshire, it is necessary to understand how to evaluate an insurance company.

The key factors are:

  1. The amount of float that the company generates.
  2. Its cost.
  3. The long term outlook of both the above factors.

Usually, it is not the size or brand that determines whether an insurance company is profitably. What is important is whether the company adopts these three principles:

…Continue reading » Principles of Insurance Underwriting

Berkshire Annual Letter 2001 (Part 1)

When Warren Buffett first setup his investment partnership on May, 1956, he gave his other founding partners a short paper called “The Ground Rules“.

One of the ground rules stated that their performance would be measured relative to the general market performance, rather than on an absolute level.

…Continue reading » A Few of Warren Buffett Ground Rules For Investors

Berkshire Annual Letter 2000 (Part 4)

In the annual letter to his shareholders in year 2001, Warren Buffett reminded us again not to believe everything we read in the press about Berkshire.

Reports with incorrect information can be very dangerous when circulated by highly regarded media.

Even Wall Street Journal reported incorrectly in the 29th Dec 2000 issue that Warren Buffett was buying bonds of both Conseco (NYSE: CNO) and Finova (OTC:FNVG) .

…Continue reading » Do Not Believe Everything Your Read About Warren Buffett

Berkshire Annual Letter 2000 (Part 3)

At Berkshire, full reporting means giving all the important facts about current operations as well as the CEO’s frank view of the long-term economic characteristics of the business.

There is neither vague accounting methodolody, nor messages prepared by the public relations department.

…Continue reading » Full and Fair Reporting

Berkshire Annual Letter 2000 (Part 2)

Warren Buffett prefers to buy entire businesses rather than just a portion of a listed stock.

One reason is that their managers tend to be more rational and owner-oriented than at many public companies.

The main reason, however, is because of the tax benefits. Without going into details, owning 100% of a company ensures that Berkshire will only be taxed once and not twice on the holding.

All assets can be valued using an investment philosophy laid out in 600 B.C.

…Continue reading » Inefficient Bush Theory

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