Warren Buffet wrote annual letters elaborating the ideas he espoused which resulted into the extraordinary performance of his company Berkshire Hathway. He was not the pioneer of many of these ideas but borrowed them from Benjamin Graham, author of the Intelligent Investor. Warren Buffet would not continue this annual writing exercise — the Berkshire letter. He is relinquishing his post of Chief Executive at the end of the year and will pass on this tradition to his successor Greg Abel. It is an end of an era.
Buffet expected everyone to do the homework and focus on intrinsic value. In 1987, he pointed out that the market did face emotional problems – it is either euphoric and bullish or depressed and bearish. Investors can disregard it or take it seriously. The key factor is the homework you do. It was necessary to exercise discipline in an unpredictable market. Investments should be in the firms you understand. You should not be lured by Wall Street esoteric. He explained Berkshire’s performance as if he was doing this to the lay people not good at economics or finance.
He believed making investments with a margin of safety — buying at a price cheaper than the estimate of intrinsic value. He expected investors to consider long time horizon. He expected minimal trading of his firm’s stock.
Buffet was not oly an executive but a public intellectual. And he is quitting. Berkshire is cash rich. He feels that certain actions bring pay offs later. He feels that one should allow a time frame of five years for the investments to show the results. By 2030, we shall know whether Berkshire is still living up to his expectations.
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