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Highlights from the Berkshire Letter 2022
Each year, investors eagerly await the latest shareholder letter from Buffett's Berkshire Hathaway.
With a 4% return (vs -18.1% for the S&P) in 2022, $BRKA has compounded at 19.8% since 1965 vs the S&P's 9.9%.
Here are the 14 key takeaways from this year's letter.
- Be a business picker, not a stock picker.
- Efficient markets only exist on paper.
- Never underestimate the importance of good luck, and you only need a few great decisions to pay for the bad ones.
- Being a long-term investor pays dividends, literally.
• In 1994, the $KO position had a cost basis of $1.3b and yielded $75m annually.
• By 2022 it was valued at $25b and kicked off $704m per anum.
- Water the flowers, not the weeds.
- Creative destruction.
- Share repurchases can be wonderful.
- But not all share repurchases are created equal.
- Be wary of the rise in imaginative accounting.
• Buffett calls this practice "disgusting".
- Focus on what you can know.
• Buffett doesn’t know how the US Government’s deficit will cause problems, just that it will eventually.
- Berkshire pays…. a lot of tax.
• But Buffett claims he'd like to pay even more in the future.
- Advice on finding an investment partner.
• "Find a very smart high-grade partner – preferably slightly older than you – and then listen very carefully to what he says”.
- The future of Berkshire has no finish line.
- Lastly, here are some sage pieces of advice from Buffett's right-hand man, Charlie Munger.
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