A.I. Summarizes the 3,787,464% Gain in Shareholders of Berkshire Hathaway Letter
These two guys made a 3,787,464% return since 1964.
The advice is worth 3,787,464% because if you’d of stuck with him from 1964 to 2022 that’s how much of a return you’d made. As much as my ego can’t stand it. I’ll bite.
The man above in the meme is named is Charles Munger, the partner of Warren Buffet of Berkshire Hathaway Inc. He’s old but not quite dead yet, he said this, “You can learn a lot from dead people. Read of the deceased you admire and detest.” We’ll start today.
The investor letter summarized
Berkshire Hathaway's performance has consistently outperformed the S&P 500 over the years. Berkshire invests in two categories of ownership: businesses it controls and publicly traded stocks.
The company's financial strength enables its insurance subsidiaries to adopt valuable and enduring investment strategies.
Berkshire's contribution to the US Treasury in corporate income taxes was almost a tenth of one percent of all money collected by the Treasury over a decade.
Buffett advises investors to have a long attention span, learn from the deceased, and not to bail away in a sinking boat if they can swim to one that is seaworthy.
Berkshire's performance vs. the S&P 500 from 1965-2022
Compounded Annual Gain (1965-2022): 19.8% vs. 9.9% for S&P 500
Overall Gain (1964-2022): 3,787,464% vs. 24,708% for S&P 500
Charlie and Warren allocate savings at Berkshire between two forms of ownership:
Invest in businesses they control, usually buying 100% of each Berkshire directscapital allocation
Buy publicly traded stocks through which they passively own pieces of businesses
Berkshire's investment in Coca Cola:
Completed purchase of 400 million shares of Coca Cola in 1994 for $1.3 billion
Received $75 million in cash dividend from Coke in 1994
By 2022, dividend had increased to $704 million
Berkshire's insurance subsidiaries:
Unmatched financial strength allows its insurance subsidiaries to follow valuable and enduring investment strategies
Aided by Alleghany, insurance float increased during 2022 from $147 billion to $164 billion
Berkshire's transformation from a textile operation to a diversified business:
In 1965, Berkshire was the owner of a doomed New England textile operation
Now, it has major ownership in an unmatched collection of huge and diversified businesses
Berkshire's contribution to US Treasury:
Corporate income tax contribution during the decade ending in 2021 was $32 billion, almost exactly 1/10 of 1% of all money that the Treasury collected
Warren Buffett's investment advice:
Having a long attention span and the ability to concentrate on one thing for a long time is a huge advantage
Learn from dead people you admire and detest
Don't bail away in a sinking boat if you can swim to one that is seaworthy
Other Facts found in the Investor Letter
Berkshire Hathaway's performance has surpassed the S&P 500 index's performance for several years.
Berkshire allocates savings between businesses they control and publicly traded stocks in which they passively own pieces of businesses.
Berkshire has a significant ownership in a diverse collection of businesses and is financially strong with an insurance float of $164 billion.
Berkshire's corporate income tax contribution was $32 billion, nearly a tenth of 1% of all the money that the US Treasury collected in the decade ending in 2021.
Buffett advises that having a long attention span and the ability to concentrate on one thing for a long time is a significant advantage in investing, and that investors can learn from both the deceased they admire and those they detest.
Summarizing the Summary
Here are some key take aways to think about in your daily life from the 3,787,464% men.
Investing in businesses that you control can be more profitable than passively owning pieces of businesses.
Growth in investments, like dividends, occurs every year just as certain as birthdays.
Having financial strength can provide valuable and enduring investment strategies.
Having a diversified portfolio of businesses can lead to success.
Taxes are necessary, and paying your fair share is important.
Patient investing and concentration are significant advantages.
Learning from both the successes and failures of others can help improve your own decision-making.
Don't give up on sinking boats, find a seaworthy one to swim to.