This week I’ve got one sell in the Real Money Portfolio, and one new entry-level buy, but we’ll save that good stuff for a bit later — I’ll start with some thoughts on the Berkshire Hathaway Annual Letter, including a slight adjustment to my “buy” prices, and a couple earnings-related updates from other companies, then we’ll get into the portfolio shifts.
No real zingers or shocking moments from Warren Buffett’s Annual Letter to Shareholders this time around… it’s fairly short, as these things go, and reads a bit like an old man trying to sum up his investment philosophy and revisit some of his successes (and failures), which actually makes it a pretty nice entree into the world of reading Warren Buffett, if you’re new to that game. If you want to understand the idea of investing in businesses, instead of trading stocks, this would be a good letter to start with… then go back and read all of the Annual Letters for the past few decades, the most recent 46 years’ worth are all easily available on Berkshire’s charmingly anachronistic website. That collection of letters is still better than most business books…. want to know what to do in a crisis? Read the 2008 and 2009 letters. Want to know how to avoid being in the popular crowd? Read the 2000 or 2001 letters. Want to know what it’s like to run an investment portfolio and insurance company during a period of high inflation? Read the letters from the late 1970s (1979 is a good one).
The letter is not just shorter than usual, it’s also much less about the ins and outs of Berkshire’s specific businesses than it often has been… and that might be because it was a pretty “meh” year for some of their larger operations, even though the company did post a new record high in operating earnings (that is, the earnings if you ignore the ups and downs of the investment portfolio). GEICO had maybe its worst underwriting loss ever, which probably deserves more attention from Warren, if I’m going to look for an area of criticism (they’ve been playing catch-up with Progressive for a few years now, and losing), and the railroad’s profits were pretty weak to end the year.
Still, though the Berkshire machine keeps chugging along — and thanks to solid investment returns and decent operating results, ...