Warren Buffet’s Annual Letter to his Shareholders

 

I am a huge fan of Warren Buffet and always enjoy reading his annual letter to his shareholders.  I am convinced that if every CEO and company in the US had the same guiding principles and integrity that is the hallmark of Buffet, we never would have the economic problems that we do today.  Here are some of my favorite highlights, all quoted from his letter:

• Money will always flow toward opportunity and there is an abundance of that in America.  Commentators today often talk of “great uncertainty” But think back, for example, to December 6, 1941, October 18, 1987 and September 10, 2001.  No matter how serene today may be, tomorrow is always uncertain. 
• Our citizens now live an astonishing 6 times better than when I was born.  The prophets of doom have overlooked the all important factor that is certain; human potential is far from exhausted and the American system for unleashing that potential…remains alive and effective.
• A housing recovery will probably begin within a year or so. 
• If home buyers throughout the country had behaved like our buyers, America would not have had the crisis that it did.  Our approach was simply to get a meaningful down payment and gear fixed monthly payments to a sensible percentage of income..
• Home ownership makes sense for most Americans, particularly at today’s lower prices and bargain interest rates.  All things considered, the third best investment I ever made was the purchase of my home (the two best investments were wedding rings).  For the $31,500 I paid for my house, my family and I have gained 52 years of terrific memories with more to come. 
• But a house can be a nightmare if the buyer’s eyes are bigger than his wallet and if a lender—often protected by a government guarantee—facilitates his fantasy.  Our country’s social goal should not be to put families into the house of their dreams, but rather to put them into a house they can afford. 
• The fundamental principle of auto racing is that to finish first, you have to finish first.  That dictum is equally applicable to business and guides our every action at Berkshire. 
• Unquestionably, some people have become very rich through the use of borrowed money.  However, that’s also been a way to get very poor.  But leverage is addictive.  Once having profited from its wonders, very few people retreat to more conservative practices. 
• We can afford to lose money—even a lot of money.  But we can’t afford to lose reputation—even a shred of reputation.
• America’s best days lie ahead! 

Gotta love this guy!