Warren Buffett's final shareholder letter [pdf]
berkshirehathaway.com
berkshirehathaway.com
>I write this as one who has been thoughtless countless times and made many mistakes but also became very lucky in learning from some wonderful friends how to behave better (still a long way from perfect, however). Keep in mind that the cleaning lady is as much a human being as the Chairman.
>I wish all who read this a very happy Thanksgiving. Yes, even the jerks; it’s never too late to change. Remember to thank America for maximizing your opportunities. But it is – inevitably – capricious and sometimes venal in distributing its rewards.
>Choose your heroes very carefully and then emulate them. You will never be perfect, but you can always be better.
God speed, dearest Oracle of Omaha.
Considering the Warren Buffett wisdom-industrial complex this might be the best place to share these nuggets. And I know his heart is in the right place, but the fact that you need to spell this kind of thing out is somehow extremely depressing.
Keep also in mind that the cleaning lady and the receptionist usually know way way more about the insides of a company than an entire board of directors and managers ever will.
It is also extremely beneficial to your own health to be nice and friendly to the people who clean, prepare your food and aid your medical well being. They will remember. They will decide how to help you when you absolutely need it.
In general please always follow Wheaton's Law.
In Buffet's time maybe. Nowadays the sanitation staff more likely to be a contractor from some form of MSP on an exploitative contract with a 3-6 month lifespan. All the more reason to be nice, but don't expect an 'Inside Baseball' level of insight. That sort of thing is generally the realm of Executive Assistants in contemporary offices.
You want to know when how much shit new GTA developers take by managers pressing them on deadlines - guy doesn’t have to spell it out he just needs to nag a bit here and there while having a beer.
Then you can know if they are not pressing them all goes smooth and they really will release when they want - if they are pressed much most likely product is in shambles and they most likely will not hit any targets or promises.
Truth is they generally don't and they also don't care. Why would they? They literally are not paid enough to care.
I heard from folks in the room that the way 3G and Buffett came in to do layoffs at Tim Hortons was one of the most cold blooded things they've ever seen.
Still, he avoided political scrutiny (say comparing to Musk or Bezos) by maintaining this image. That was wise.
Find a better dictionary.
Buffet is a bigamist. By all intents and purposes he lived with two wives. The legal status was not that of bigamy, to be clear. He married his other wife after his first wife died.
https://en.wikipedia.org/wiki/Warren_Buffett
The personal section here is not exactly false, but is a great example of how one should not trust Wikipedia outright. A careful reading of it shows his lifelong relationships/marriage with two women at the same time.
Look, I'm not going to yuck his yum. Do whatever you want man. But the homely aww shucks image is very intentional. And very much against his actual life choices. Homespun he ain't.
In modern America peoples marriages breaking down and then them getting together with someone else is pretty common.
Had a wife, they split up, but didn't get divorced because he had no prenup and he was one of the wealthiest people in the country.
After she died he married again.
Say what you want, but the list of billionaires who have donated such large amounts of money while still alive (or dead) is small.
Cherry picking events like layoffs, without truly knowing how much was he involved (Berkshire directors notoriously enjoy lots of autonomy) or if the layoffs made sense, etc, seems a stretch when we're drowned with sociopath world-ruling-ambitious CEOs, from Musk to Altman, through Thiele.
How much money has he saved dodging taxes over the years[1]?
[1]: https://www.propublica.org/article/the-secret-irs-files-trov...
In any case, what am I looking at here? There's no tax dodging. He gets paid 100Mish per year and pays taxes on those amounts.
You don't get taxes on your stock appreciation until you sell.
https://www.forbes.com/sites/forbeswealthteam/2025/02/03/ame...
I don't want billionaires to donate anything, I don't want them to use their money to shape the world to their liking. I want them to pay their fair share of taxes and a functional government that properly allocates those extra funds instead of funding the bare minimum.
To take a recent example, the median income in New York City is about $79k/year (before taxes), while Bill Ackman alone essentially threw away 21.5x that in his failed attempt to influence the mayoral election.
I could've also mentioned Ackman personally calling Trump in 2020 to beg him to shut down the economy for a month and my argument would be just the same: I don't want billionaires using their money to shape the world to their liking.
Which all coincidentally tax billionaires a lot to the point there might not be billionaire, but it's not the 'fair share' that people thought of. It's not asking the rich people to pay more because they make more, but because they owned non-reproducible privileges or because they imposed a cost on our shared environment such as CO2 emission.
Don't tax what people produce, but what they took.
The tax revenue collected would be then be invested by government to boost the economy or else return to the people via the Citizen's Dividend.
I’m not the best basketball player, but I can admire the game of the best players without being jealous of them.
False in the general case - with inherited wealth, someone who starts with a lot but grows more slowly will beat a fast grower who started with nothing, at least on short time scales.
In other words, you can build a better OS than Windows today, and have better business sense than Bill Gates, but it'll still take you years to catch up to him wealth wise if you're starting at zero.
> I’m not the best basketball player, but I can admire the game of the best players without being jealous of them.
I agree with that - with any art/practice (business, programming, music, sports, etc), it's always inspiring to see the best play.
However, I'd argue that in our current business culture, many players will
1) do things I'm not comfortable doing morally - the sports equivalent of Maradonna's Mano de Dios [0] - so I'm not really comfortable using them as role models (I just tell myself I can do better by playing fair). Examples include Elon Musk and Peter Thiel, so-called libertarians with entire business that consist of "use your friends in government to get juicy government contracts and grow rich off that sweet, sweet taxpayer money" (SpaceX, Palantir), Jobs, Zuckerberg and Gates ripping off their friends and co-founders, products that are intentionally addictive (cigarette companies), etc.
2) not actually be that good but just be in a good position - many rich people are honestly just lucky. Yes, you have the serial entrepreneurs that make _several_ billion dollar fortunes like Jim Clark, you have the wise investors like Warren Buffet, but you also have people like Adam Neumann [1]or any New York real estate tycoon who got started with a small million-dollar loan from their millionaire parents/Saudi oil princes who just got lucky.
In particular, I firmly believe I've got more money-making talent than a random Saudi oil prince, even if my bank account doesn't reflect that.
Or to use the sports metaphor, I believe I'm a better player than a lot of people currently in the big leagues, even if it's taking a while for the rest of the world to realize that :)
Not true regarding SpaceX, they were just cheaper and better than the competitors. They had to sue the government to even be able to compete against Boeing/Lockheed for military contracts. Who had more friends in the government in the 2010s, SpaceX or Boeing/Lockheed? In 2014, NASA awarded two contracts to develop spacecrafts for transporting astronauts to the ISS (at the time, American astronauts flew to the ISS only on Russian Soyuz). SpaceX received $2.6B (for Dragon), Boeing received $4.2B (for Starliner). Since that time, SpaceX has made 11 operational flights with astronauts to the ISS, while Boeing has made 0 (they're still working on it). It's not friends in the government, it's delivering services faster and for a lower price.
Elon Musk is a tenderprenuer, as we call them in africa.
however what made him a billionaire was gvt contracts. I guess all i'm tryna say if you wanna be a fat cat (rich) gvt contracts is a lucrative way to do it.
Which are responsible among other things for the quasi-total eradication of polio from this planet, provided vaccines for billions (literally) people across the globe in poor countries and have been major contributors in malaria and hiv treatment, prevention and research.
Also, they provided funds to millions of small rural farmers in third world countries to improve productivity and yields.
When I traveled Madagascar, plenty of villages had water and waste infrastructure built with the aid of that foundation too.
By the way, their balance sheets are public, and audited every year.
I'm baffled by the low-level conspirationism encountered on HN, it feels more and more like reading boomer's facebook everyday.
You're saying that WB was not shy to give away money. I'm saying that he was not shy to make it.
>The specific phrase was noted in a recent online discussion related to Warren Buffett, where a user commented, "Warren Buffett is a great investor but nobody in finance buys his folksy image. Everybody knows he's an animal," to suggest he is a ruthless, cold-blooded businessman, likely in reference to aggressive business tactics like mass layoffs.
Anyway I don't think he's a ruthless cold-blooded type, although he is educated and very hard working. Also sometimes layoffs happen in business.
1. CEOs have become very greedy. (Elon's pay package) 2. America will experience a downturn and the market could go down > 50%. 3. He's not giving a penny more to The Gates' foundation.
> Our stock price will move capriciously, occasionally falling 50% or so as has happened three times in 60 years under present management. Don’t despair; America will come back and so will Berkshire shares.
Apropos of this particular scenario, acting like an individual shareholder with your 5% of a company's stock is helpless to exert influence on the board is not at all accurate. Realistically, at that scale, anyone who holds even 1% is someone you better listen to (not necessarily follow, to be clear) when they pick up the phone.
And that's when its someone who is also not someone who opens their mouth and has millions of followers who also hold stock, like Buffett.
[1]https://www.cnn.com/2022/05/17/investing/berkshire-hathaway-...
The "white knight" purchase of Salomon Bros stake to "save" them from a hostile takeover was a redistribution of wealth from the existing shareholders who would have accepted the deal to him & his fund. Is that evil? No, I don't think so. Is it perfect ethics, that's a personal ethical call. Colluding with management to redistribute wealth from the shareholders professional managers are meant to serve to yourself? Certainly profitable. Salomon managers kept their jobs and bonuses too. Buffet spoke about how impressed with their ethics he was and that being his motivation. Ok.
The purchase of the Goldman's stake during the GFC at what was it a 20% discount to market? Evil? Again no. Did he insist instead of just taking a huge windfall, on underwriting an offer at that price and throwing it open to small investors so anyone who would back the bank in the crisis collects 20% on top of buying on market? That would be hugely admirable, democratic and patriotic but less profitable.
Going to the start, moving Berkshire's pension fund from debt to equity. Did he get the approval of all the pension plan's beneficiaries for that change in risk? He was right, fine, sure. Was that his risk to take on their behalf? Worked out great. Do you want your pension fund manager going against the accepted wisdom on risk? Well you do if it works, but you can't take on the risk in hindsight. There are no shortage of managers who /know/ they're right and the market is wrong, like he did then. Do you want them to act on that with your assets without your full and informed consent? You (and I) do if it's Warren Buffet but he was not Warren Buffet yet.
On the standards of investment managers he is pretty good, as I said. Is he this perfect paragon of ethics. Well his fans seem to think so (and loudly) and they are allowed to. As am I to differ with that assessment. This is worlds away from declaring that Buffet is in league with both Darth Vader and Sauron to torture innocent babies to an early death and a fate of never having heard of Benjamin Graham. I would say he is far more on the right side of things than wrong and has been largely a force for good in the investment industry. "Which of his perfections impresses you the most?" Give me a break. Critical faculties are worth keeping.
https://www.cnbc.com/2015/05/02/warren-buffett-defends-clayt...
"Moon River" is appropriate. I've seen him a few times in Omaha at the stadium. I guess that forgiveness is best for most everything.
After all, that's what I want for myself.
To be washed in an addiction, in his case, money, is to give up so much of life.
I hope that his end is free of regret, and that his passing is memory of the wonderful things that he was able to build for so many people that he didn't even know he touched.
I'm sure that the way will be found to do this, as it will be for us all.
Let’s not forget Buffet also funded BYD significantly and is responsible for their growth, which basically is undermining his own country and European industry as well. Ultimately it’ll be responsible for putting masses of auto industry workers out of a job. I don’t see integrity as much as just basic private equity style capitalism.
What is this weird nationalism? Investing in a company from a foreign country does not make you a bad (or good) person. There is no moral duty to make your own country the most economically powerful one.
No? Then why do we ask people to give their lives to make it a safe one?
Look at Bhutan with their Gross National Happiness as an alternative.
For other countries, it’s because the nation state is the current agreed upon divider for certain things like borders.
To moralize nationalism is weird and anti-humanity.
Maybe you don’t agree, but I think there is a moral duty to not make the literal enemies of the free world into a superpower. Do you think the Chinese government believes in basic human rights like free speech? No. Buffet could have invested in many other countries. He chose China because he doesn’t have the moral compass he pretends to have.
The people to blame for the predicament of the US auto industry are the.. US auto industry.
Perhaps turning every vehicle into a luxury car and getting rid of affordable vehicles is not a good long term solution.
BYD is a fantastic investment, they are not undermining us, we are undermining ourselves and we need to stop being victims.
My point is that Buffet spent his fortune earned in America, on undermining America and its allies. He has effectively given a strategic boost to the CCP and its past and future abuses.
> including adopting children from Ukraine and get them out of a war zone. Maybe you should talk to more people.
Is this AI?
Is this the new ad hominem?
Is your reply AI?
I’ve worked with and known former engineers who left, took lower paying jobs in other industries and not one has ever said I miss it there.
Let’s not even get started on what that industry has evolved into with precision scheduled railroading and the dramatic increase in risk and real derailments that have followed.
Nothing wrong with any one investing in BYD or similar tech (vs any other investing). If anything, investing in non-“imperial core” companies seems to be a good thing to balance out unequal exchange and the global north and global south divide.
> But Lady Luck is fickle and – no other term fits – wildly unfair. In many cases, our leaders and the rich have received far more than their share of luck – which, too often, the recipients prefer not to acknowledge. Dynastic inheritors have achieved lifetime financial independence the moment they emerged from the womb, while others have arrived, facing a hell-hole during their early life or, worse, disabling physical or mental infirmities that rob them of what I have taken for granted. In many heavily-populated parts of the world, I would likely have had a miserable life and my sisters would have had one even worse.
> I was born in 1930 healthy, reasonably intelligent, white, male and in America. Wow! Thank you, Lady Luck. My sisters had equal intelligence and better personalities than I but faced a much different outlook.
> [...] A Few Final Thoughts [remaining 7 paragraphs possibly directed at current events]
Yes, this sounds unfair to our individualist ear. However, I am also cognizant that there could be another lens that is more top down, not acknowledging our sense of individuality, but rather a layer at the species level with crests and troughs distributed and fluctuating across the individuals that come into existence and whose offspring HAS to be affected by the uneven environment in which they find themselves.
An organic feature of the natural world?
Storing more of a thing than can (reasonably) be used in hundreds, or thousands of lifetimes?
I don't know of any (others) that do so, and then pass the hoard down through the generations.
They hoard until it gets too cold, then they hibernate/hunker down until it gets warm.
I suppose the trillionaire analogy would be they themselves investing money.
They end up eating food buried by other squirrels as well as their own.
Acorn woodpeckers, beavers, and corvids exhibit true, generational hoarding behavior.
Younger generations learn and maintain the same caches, structures, or techniques as their elders.
Conversely there's a lot of unsuccessful entrepreneurs who blame bad luck entirely for their failures. There's a lot of "I didn't deserve that. I worked hard, I made smart decisions. I should have succeeded".
You can't emulate luck, you can't control luck, you can't explain luck.
I suspect luck has less to do with Buffet's fortune than most billionaires since he's in investments, so he gets compared to other hedge funds with similar starting resources. He seems to have made it work over the long term and not just had one lucky break.
Apparently he started his first investment at age 11. 8 decades is a long time to compound even at low rates.
Compounding ensures that he will probably have a lot of money either way, which is why total $$ is a bad proxy for luck vs skill.
Luck is the crossroad of opportunity and preparation. The "opportunity" here is basically "luck" with a tiny bit of sway. Sometimes opportunity is missed or never comes from no fault of your own. If more people saw it this way they may not cast it off purely as happenstance.
I've seen people attributing Taylor Swift' success entirely to luck. But eventhough of course she has inherent advantage, she still has to defeat tons of people who also has the same or even more inherent advantage as her. The numbers are arbitrary and a spectrum, and I've seen too many people treating it as black and white.
Billionaires optimize for very different goals than most other people. You don't become one by accident, while you are actually focused solely on your work. That will at most get you to a few million, maybe tens of millions. At higher wealth, you need to focus on the wealth itself. I don't think that that is something good if (even) more people tried to do.
People getting better like Taylor Swift is IMHO much better than people trying to be like a billionaire. The latter is all about controlling more and more important aspects of important parts of society, from production to sales, and in the end politics in general.
Taylor Swift getting really good does not negatively influence others, or force them how to live. Billionaires controlling more and more does. It's a tradeoff. Having more centralized control, like creating a Walmart or an Amazon, has advantages, but it also has disadvantages.
Also, the reason there even is the option of becoming that wealthy, controlling so much value, is almost entirely outside the hands of the individual. Like every human, billionaires too rely almost entirely on the context they live in. The vast majority of what we have was created by the dead, knowledge, infrastructure, culture. Even the most capable human only adds a very tiny amount. Mostly billionaires are good at gaining control over already existing things and other people.
Not necessarily a negative, a central control is essential for anything higher level. The point is that one, they did NOT create most of the things they use, second, there are only so many "chief" positions available in the human network to begin with (even if that number is somewhat flexible).
However, I think the laws of competition don't work for those positions of central power like they do in other "markets". I doubt billionaires are so rich (meaning just the resources they use for themselves) because there is little supply and competition for those positions (you may have trouble finding another Warren Buffett, but many billionaire positions are about the right time and place, especially when it's about resource control and not about innovation). I think there is plenty, and many would be just as capable as many currently holding those spots, but that does not cause their "wages" to fall.
Humanity is all about specialization, but those of us close to or inside of the controlling system - i.e. closer to the money - use their positions to get a much larger share. We also have a lot of circular reasoning and justifications: It's just, otherwise the (finance) system would not have created that outcome! Which makes questioning that very system impossible, because it tautologically justifies itself no matter what.
Deterministic chaos in the sense of "fixed, non-random rules producing outcomes that are unpredictable in the long term due to extreme sensitivity to initial conditions".
A life lottery of initial conditions and then it plays out via deterministic chaos is just such an unacceptable idea to the modern protestant self conception.
Instead we will continue to pretend the harder you work the luckier you get because at least then we have some free will in the situation.
Buffet is a great example and has made this point practically. Won the life lottery to not have been born in the year 1400 and the idea of buying 6 packs of coke to sell to my friends for a profit as a little boy is just not in my nature, again because of my initial conditions.
More than third of Berkshire valuation is now cash. Berkshire has $350 billion USD in cash and cash equivalents. They accumulate cash because they don't find enough things worth buying (all stocks seem too expensive for them). When the bubble bursts, there will be undershoot and Berkshire starts buying.
Is Warren Buffett getting into the meme too?
6 7
Now get off my lawn, Shorty... or pick up the phone.
A linguist goes into the meme and it's history:
* https://www.youtube.com/watch?v=laZpTO7IFtA
You not getting it is the main point of the saying: it's slang term that young folks (in-group) are using to differentiate themselves from the not-young folks (out-group).
I'm just waiting for Sesame Street to declare 6 and 7 the numbers of the day.
> There's class warfare, all right, but it's my class, the rich class, that's making war, and we're winning.
Huh.
https://www.nytimes.com/2006/11/26/business/yourmoney/26ever...
Combine it with the fact that the only real asset you have is your time.
Imagine getting a tailwind at the age of 50 and being financially illiterate. AND, being partially blind.
I was literally too busy to not realize what really mattered. Decades gone by!
He does also own holiday homes and farms but for the most part he doesn't go in for the typical billionaire lifestyle. On the surface it seems less awful than Musk or Zuckerberg but to hoard that kind of wealth while people suffer is unethical. He may have pledged to give away his wealth, but now he's giving it to his children to give away. What's stopped him from giving it away for the last 30 years?
Which consumables do you think billionaires should spend their money on?
And how would this improve the world?
Obviously there is something going on there, magic, lots of minerals in the water, something...
With so much money why do his kids care either?
For goodness sake, stop working, try and solve global warming or world hunger or something.
Or buy a small country. Make yourself president. Create a utopia for its population.
But more of the same.. more of the same.. $300B or $301B when you finally kick the bucket? How shallow.
If you think world hunger and global warming can be solved purely with financial means, you live in a damn simple fantasy.
Because they would literally be multiple times better than the next most competent person on Earth of a similar age, and literally dozens of times better than even the median unicorn founder.
So it seems like a given that the relatively paltry sum that Berskhire controls would be insignificant in comparison.
That’s why I used the word “opportunities” and not “guarantees”.
And on top of that, it's possible -- perhaps even easy -- to deploy vast sums of money in well-meaning ways that turn out to have disastrous unintended consequences. I don't think I'd want that kind of responsibility.
Or you can waste it on a year of AI development. It's not ironclad.
>it's possible -- perhaps even easy -- to deploy vast sums of money in well-meaning ways that turn out to have disastrous unintended consequences. I don't think I'd want that kind of responsibility.
Given my current life, I'd rather try something different than have decades more of statis quo.
If picking as a starting poker position, I'd definitely want to be the 25 year old with a thousand because you'll be able to play more hands and have more experiences and hopefully have more fun even if you'll most likely end up very average or lose your entire chip-stack. I guess what I'm saying is there's no virtue in poverty and no guarantee wealth will bring you ultimate satisfaction either. Your choice is a false mutual exclusivity imho (in that everyone is 25 AND 95 [assuming that that they in everyone lives to 95], someone wanting to be 25 again doesn't imply that their previous journey to 95 is somehow intrinsically worth less - like an adrenaline junkie wanting to ride again the rollercoaster he just got off from).
At 95 you're a lot closer to the end of everything than the start, your body is really giving up and it is exceedingly difficult to enjoy anything much.
The speculation is that buffet would likely give up his entire wealth and have his expertise wiped to wind back his biological clock 70 years. Would he? I don't know, ask him maybe.
What can you do with $100m at 95 you would actually enjoy? Again ask him. Or any elderly friend or relative. It is unlike to be a fun conversation, at least in my experience.
At 25 if you have a windfall of only $1000 you've likely got some ideas!
At 95 with 100m, it's less about what I can do with that time left and more about how to make the world better off by the time I croak. I lived my life, as far as I'm concerned.
Putting it another way: I'm out the door in 2 weeks, some people would spend it relaxing. I'd make sure to document as much as I can and keep the transition as low friction as possible.
The only thin you can do with that money is give it away in charity or politics.
So what has he done with that time? He doesn't seem to be into frivolous spending much at all as far as is reported.
You have a trillion dollars, but not the life experiences to look back upon, or any actual personal accomplishments.
But in all seriousness, if I had to choose, I think I'd rather be 25 with $1k.
I really don't need a trillion dollars, at any point in my life (and certainly not with too few years left to do anything with but the tiniest fraction of it). I don't need a billion dollars, even. I figure $20M would allow me to do anything I wanted to do, with a healthy cushion in case anything went wrong. (Well, with $20M, even if I were to triple my spending habits, I'd likely still die with more money than I started with.)
I'm not sure that I fear death, but I do recognize at middle age that time is finite, and there are so many things to do in this world. Even with close to nothing as a $1k-holding 25-year-old, I could strive to make things better for myself, and likely look forward to a lifetime of experiences. At 95 that would nearly all be behind me.
Put another way: if I was 95 and had a trillion dollars, and there was some highly advanced, crazy-expensive procedure I could undergo to reduce my biological age down to 25, even if I'd only have $1k left over afterward, I expect I'd do it.
So, 95 with 1k?
25 with a thousand is out on the streets unless you have good famili connections. I'll be long dead before that money starts making money for me anyway.
While the 95 year old trillionaire is really just deeply in debt with the creditor about to collect any day now.
Time is valuable and they are taking it from us.
TLDR: have his cake and eat it.