Coffee with Warren

Another annual report package in yesterday’s mail  hidden in a plain blue wrapper. Which one would it be?  It’s as if the ‘invisible hand’ of my portfolio is created by my letter carrier.

Finance wonk excitement ensues –  it’s the Berkshire Hathaway report! I made a cup of coffee (high-test), grabbed my yellow highlighter and made myself comfortable. Time to read with Warren Buffett, the CEO of Berkshire Hathaway. (See all shareholder letters at their website.)

 

Warren (aka The Oracle) Buffet, is known for his annual letters to shareholders. Results  are explained in plain English and it feels as if he is sitting on the proverbial couch with you – explaining capitalism.

Warren Buffett speaking to a group of students...

Warren Buffett speaking to a group of students from the Kansas University School of Business Image is cropped and flipped. See original image http://commons.wikimedia.org/wiki/Image:Warren_Buffett_KU_Visit.jpg (Photo credit: Wikipedia)

Some things to keep from this year’s letter:

Page 4: “I totally miscalculated…when I purchased the bonds.” admits Mr Buffett. [How many CEO’s say they failed so directly?]

Page 5 “Housing will come back…living with in-laws can quickly lose its allure.”

Page 7  “The logic is simple: If you are going to be a net buyer of stocks in the future, either directly with your own money or indirectly (through your ownership of a company that is repurchasing shares), you are hurt when stocks rise. You benefit when stocks swoon. Emotions, however, too often complicate the matter.

[Remember the Nordstrom anniversary sale suggestion here] Mr. Buffett reminds all of us to pay attention to company earnings, not the stock price.

Page 19  His discussion of gold vs another purchase with a comparable value is fascinating.

Someday, I will attend ‘my’ annual meeting in Omaha, aka “Woodstock for Capitalists”. This year, in addition to the furniture sales, there will be a blindfolded US chess champion, Brooks “Berkshire Hathaway Running Shoes” (to outrun the S & P maybe) for sale,  and at least 54 questions answered by Mr. Buffett and Mr. Munger. Next year!

And please be happy that your tax return is not 17,839 pages.

Note: I own ‘B’ shares of Berkshire Hathaway and do not contemplate any trades in the near future.

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1 Comment

Filed under Learning About Finance

One response to “Coffee with Warren

  1. You got a really useful blog. I have been here reading for about an hour. I am a newbie and your success is very much an inspiration for me.

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