To understand Progressive’s stellar performance, you have to go back to 1965, when Peter B. Lewis, son of one of the co-founders, Joseph Lewis, took over the company. At the time, insurers commonly accepted that they would break even on their policies, and the actual returns would come from their investment portfolios. Lewis rejected this notion and instead set a goal that Progressive would earn an underwriting profit on its policies, even if it meant forgoing drivers who wanted lower-cost policies. Investor Whitney Tilson has attended the past 26 years of Berkshire Hathaway annual meetings for the chance to learn from Munger and Buffett, who doled out life lessons along with investing tips.
But Munger also often offered sharp answers that cut straight to the heart of an issue, such as the advice he offered in 2012 on spotting a good investment. “He will be greatly missed by many, perhaps by nobody more than Mr. Buffett, who relied heavily on his wisdom and counsel. They challenged each other yet seemed to really enjoy being in each other’s company,” Edward Jones analyst Jim Shanahan said. During the entire time they worked together, Buffett and Munger lived more than 1,500 miles (2,400 kilometers) apart, but Buffett said he would call Munger in Los Angeles or Pasadena to consult on every major decision he made. Munger gave an extended interview to CNBC earlier this month in preparation for his 100th birthday, and the business network showed clips from that Tuesday. In his characteristic self-deprecating manner, Munger summed up the secret to Berkshire’s success as avoiding mistakes and continuing to work well into his and Buffett’s 90s.
- During the entire time they worked together, Buffett and Munger lived more than 1,500 miles (2,400 kilometers) apart, but Buffett said he would call Munger in Los Angeles or Pasadena to consult on every major decision he made.
- Mr. Buffett and Mr. Munger were the faces of Berkshire’s annual meeting in Omaha, what became known as the Woodstock of Capitalism.
- He was a major benefactor of the University of Michigan, giving more than $23 million over the course of his life, as well as 10 Class A shares of Berkshire Hathaway, worth more than $4 million more.
- Berkshire has a policy of acquiring companies and leaving the existing management in place, which allows Berkshire to be the “destination of choice” for owners who do not wish to see their company levered up and sold for a profit.
The insurance operation is the engine that drives Berkshire Hathaway’s profits. Berkshire first entered the insurance industry in 1967 with the acquisition of National Indemnity and National Fire and Marine Insurance Company. Berkshire’s presence in the insurance industry has grown enormously over the years, especially with the acquisition of GEICO at the beginning of 1996 and General Re in 1998.
Charlie Munger, Berkshire Hathaway vice-chair, 1924-2023
The letter was one page long and dealt with topics that included liquidating the assets of one textile mill and changes in Berkshire’s inventory. In 2012, forty-eight years later, Buffett berkshire hathaway letters to shareholders discusses his 50% purchase of a holding company that will own 100% of H.J. Heinz, paying $4 billion for common stock and another $8 billion for additional preferred shares.
- To put it simply, The Berkshire Hathaway Letters to Shareholders allow you to follow along with Warren Buffet from day 1.
- Having the letters in front of you in print is much better than skimming them in PDF format on a screen.
- Munger also served on the boards of Good Samaritan Hospital and the private Harvard-Westlake School in Los Angeles.
- Warren E. Buffett first took control of Berkshire Hathaway Inc., a small textile company, in April 1965.
- Check if your university or organisation offers FT membership to read for free.
When an investor intends to invest over the long term, he must be assured that the companies in which he invests will continue to operate over the long term as well. In this chapter, Graham characterizes the market as a manic-depressive who comes each day to offer prices at which he will buy from and sell to the investor, whichever one the investor chooses. On some days, Mr. Market will offer obscenely low prices to the investor and on others Mr. Market will offer him inexplicably high prices. I learned most of the ideas in this investment discussion from Ben’s book The Intelligent Investor, which I bought in 1949.
About the Book
Readers gain a framework for how to view risk, markets, and investing, as well as an understanding of how truly great businesses should operate. Buffett makes it clear that investing is far from a science and that there is much more to being a successful investor than being the smartest person in the room. Retained earnings can be worth considerably more or less than 100 cents on the dollar, and managers should adopt dividend policies that reflect that fact.
Berkshire Hathaway Letters to Shareholders 1965 to 2018
The opinions expressed herein are those of the publisher and are subject to change without notice. It may become outdated an there is no obligation to update any such information. Munger also served on the boards of Good Samaritan Hospital and the private Harvard-Westlake School in Los Angeles. And Munger served on the board of Costco Wholesale Corp. and as chairman of the Daily Journal Corp.
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But Buffett always credited Munger with pushing him beyond his early value investing strategies to buy great businesses at good prices like See’s Candy. A combination of traits is required, including an understanding of true risk and market fluctuations. Above all, readers see the “Oracle of Omaha” at work each year, shaping an investing career that may not ever be replicated. The answers to these three questions will allow the investor to rank all of his possible investments in different “bushes.” According to Buffett, “Aesop’s investment axiom, thus expanded and converted into dollars, is immutable. It applies to outlays for farms, oil royalties, bonds, stocks, lottery tickets, and manufacturing plants. After all, even a dormant savings account will produce steadily rising interest earnings each year because of compounding.” On top of employing capital at high rates of return, Buffett requires that companies operate from a position of low leverage.
Additionally, Berkshire owns over fifty non-insurance subsidiaries in a wide variety of industries including furniture, jewelry, bricks, and many more. Berkshire has a policy of acquiring companies and leaving the existing management in place, which allows Berkshire to be the “destination of choice” for owners who do not wish to see their company levered up and sold for a profit. The Little Book of Common Sense Investing by John Bogle There are some investment managers, of course, who are very good – although in the short term, it’s hard to tell whether a great record is due to luck or skill.
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Graham had his own list of various criteria that had to be met in order to ensure a company’s financial strength, and one of them was consistent strong earning power in the past. Neither Graham nor Buffett place any sort of value on market forecasts, and while past performance is no indication of future success, it is still a far better indicator than any market forecast previously produced. Each letter typically begins with the change in book value over the course of the year. Berkshire has averaged a book value growth rate of 19.7% compounded annually from $19 per share in 1965 to $114,214 per share in 2012.
In his letters, Buffett often speaks of how investors should respond to fluctuations in market prices. Market” concept illustrated in chapter eight of Graham’s The Intelligent Investor. Following this discussion, Buffett spends the majority of each letter detailing the operations of Berkshire’s subsidiary companies as well as the results of its major non-controlling investments. Occasionally, Buffett will choose to include special topics in his letters on whatever topic he feels that his shareholders should be aware.
It’s been claimed by many that you’ll learn more reading these letters than getting an MBA. These are his actual words; a “lesson plan” of his views on business and investing. You can find most of the letters for free on Berkshire’s website, but this compiles them into a well-designed, easily readable format. It has been claimed by many that you will learn more from reading these letters than getting an MBA. These are his true words; “lesson plan” of his views on business and investment. You can find most of the fonts for free on Berkshire’s website, but this one compiles them into a well-designed, easy-to-read format.
These two were the best management duo – both in what they achieved and how they did it – that Charlie and I have ever witnessed. When you buy books using these links the Internet Archive may earn a small commission. Whether or not you buy The Berkshire Hathaway Annual Letters to Shareholders, you can always access the most recent ones on BerkshireHathaway.com But this book is the only way you can get the complete Berkshire story, from start to presence. The downside is that it takes about 700 pages to summarize and analyze all of Berkshires behavior throughout that time frame.
Mia And Sebastian’s Theme Piano Notes Letters
The third-largest auto insurance company is Berkshire Hathaway’s own GEICO, which it acquired in 1996. Berkshire Hathaway’s (BRK.A -0.64%) (BRK.B -0.81%) legendary performance is undeniable. Since CEO Warren Buffett took over the failing textile business in 1965, the stock has returned investors 20% compounded annually — doubling the S&P 500’s average annual return in the same period. Buffett took over Berkshire Hathaway in 1965, but it wasn’t until 1978 that Munger joined the company as vice chairman. Despite their decades of working together in a high-stress field, the two never had a single argument, despite not always agreeing on investments like Costco, they told shareholders in 2021.
He would buy stock in companies that were selling cheaply for less than their assets were worth, and then, when the market price improved, sell the shares. The two men shared investment ideas and occasionally bought into the same companies during the 1960s and ’70s. They became the two biggest shareholders in one of their common investments, trading stamp maker Blue Chip Stamp Co., and through that acquired See’s Candy, the Buffalo News and Wesco. Munger became Berkshire’s vice chairman in 1978, and chairman and president of Wesco Financial in 1984.