๐๐๐ง๐ง๐๐ฃ ๐ฝ๐ช๐๐๐๐ฉ๐ฉ: ๐๐๐ง๐๐ฌ๐๐ก๐ก ๐ฉ๐ค ๐๐๐จ ๐ก๐ค๐ฃ๐-๐ฉ๐๐ง๐ข ๐ฅ๐๐ง๐ฉ๐ฃ๐๐ง ๐๐ฃ๐ ๐ฌ๐๐จ๐๐ค๐ข ๐๐ซ๐๐ง๐ฎ๐ฌ๐๐๐ง๐
This year Berkshireโs letter to shareholders has been especially emotive. As it has been the year that Charlie Munger has passed, Warren has stated that Charlie has been the architect of $BRK.B (Berkshire Hathaway Inc) . What the company is today couldnโt have been accomplished without him.
Beyond the letter, I think that Warren has been particularly generous on his teachings. So let me quote here what Iโve highlighted from the letter. I hope you enjoy this as much as I have:
โI canโt remember a period since March 11, 1942 โ the date of my first stock purchase โ that I have not had a majority of my net worth in equities, U.S.-based equities. And so far, so good.โ
Warren makes a clear statement about how important it is to stay invested in stocks.
โAmerica has been a terrific country for investors. All they have needed to do is sit quietly, listening to no one.โ
Just sit and wait for good businesses to compound.
โAs Ben Graham taught me, โIn the short run the market acts as a voting machine; in the long run it becomes a weighing machine.โโ
โOur goal at Berkshire is simple: We want to own either all or a portion of businesses that enjoy good economics that are fundamental and enduring. Within capitalism, some businesses will flourish for a very long time while others will prove to be sinkholes. Itโs harder than you would think to predict which will be the winners and losers. And those who tell you they know the answer are usually either self-delusional or snake-oil salesmen.โ
It is a tough job, isnโt it?
โNever deal with a rascal under the expectation that you can prevent him from cheating you.โ
Apply it to bubbles, too.
โThere remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others. Some we can value; some we canโt. And, if we can, they have to be attractively priced.โ
Basically, they donโt see attractive opportunities in the market, both because of size restrictions and price sensitivity.
โOccasionally, markets and/or the economy will cause stocks and bonds of some large and fundamentally good businesses to be strikingly mispriced. Indeed, markets can โ and will โ unpredictably seize up or even vanish as they did for four months in 1914 and for a few days in 2001. If you believe that American investors are now more stable than in the past, think back to September 2008. Speed of communication and the wonders of technology facilitate instant worldwide paralysis, and we have come a long way since smoke signals. Such instant panics wonโt happen often โ but they will happen.โ
Crashes will happen, and Berkshire is patient enough to wait for them to deploy huge amounts of cash. They have happened in the past, and they will inevitably happen in the future.
โOne investment rule at Berkshire has not and will not change: Never risk permanent loss of capital.โ
Think about the downside, too. Mistakes can be fatal if you forget this.
โWe did not predict the time of an economic paralysis but we were always prepared for one.โ
Being prepared all the time pays out.
โAll stock repurchases should be price-dependent. What is sensible at a discount to business value becomes stupid if done at a premium.
The lesson from Coke and AMEX? When you find a truly wonderful business, stick with it. Patience pays, and one wonderful business can offset the many mediocre decisions that are inevitable.โ
Pure wisdom.
โNeither Greg nor I believe we can forecast market prices of major currencies. We also donโt believe we can hire anyone with this ability.โ
How poorly he sees forecasters is inspiring.
As I said before, I hope you enjoy these lines as much as I have.
And if youโve read this far, you may be interested in value investing. If so, take a peek at my profile, you may like our returns! As a summary, here you have some numbers:
๐ต๐ฑ.๐ณ๐ฌ% ๐๐๐๐ผ๐ ๐๐๐๐๐๐ (๐ฐ ๐ฎ๐๐๐ง๐จ)
๐ญ๐ณ.๐ด๐ณ% ๐๐๐ผ๐๐๐ ๐๐๐๐๐๐
๐ข 2024 YTD: 12.68%
๐ข 2023: 35.02%
๐ด 2022: -8.81%
๐ข 2021: 2.78%
๐ข 2020: 33.51%
โ We buy good companies for less than what they're worth.
โ We maintain a focus on the process since it's the only thing we can control in investing.
โ We focus on the downside of our investments, not only the potential upside. Thus, we perform a risk-reward analysis, investing only when the rewards are much greater than the risk we assume.
๐ ๐ This is a rational approach to investing with an Annual Rate of Return of over 17%, currently.
โ โFollow for more.
โ โCopy to benefit from a proven value investing philosophy.
๐พ๐ง๐๐จ๐ฉ๐๐ฬ ๐พ๐๐ก๐ก๐ ๐๐๐ง๐๐๐๐ค,
๐๐๐๐๐๐๐๐ก ๐๐๐ค๐ง๐ค ๐๐๐ก๐ช๐ ๐๐ฃ๐ซ๐๐จ๐ฉ๐ค๐ง
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