Warren Buffett (Berkshire Hathaway) 2009 Letter To Shareholders


On Saturday, February 27 2010, Warren Buffett released his Berkshire Hathaway Inc. 2009 annual letter to shareholders, and 2009 annual report.

In keeping with last year’s decision, I am not going to regurgitate the letter to my readers, as there are ample news articles doing that already.  Instead, I have listed the topics that Buffett discusses in the letter.  I STRONGLY encourage investors to read the letter firsthand.  As always the information is priceless, literally.  His wisdom & principles, will continue to help investors produce more than satisfactory investment returns if they are willing to absorb his knowledge.  And for those who are already familiar with his teachings, they serve as good reminders.

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The shareholder letter discusses the following issues:

* Berkshire’s Corporate Performance vs. the S&P 500.

* How Warren Buffett and Charles Munger measure and evaluate their managerial performance.

* What they don’t do (describing their thinking at Berkshire Hathaway, and the kind of thinking they avoid).

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The letter also discusses information specifically related to Berkshire’s businesses, but also describes the industries in a general sense (valuable for non-Berkshire investors).

* Insurance Business
— How it works in general, why its profitable for Berkshire, and how it is the main engine behind their growth.

* Regulated Utility Business
— How they “shunned capital-intensive businesses such as public utilities” in the earlier days, but have invested in them now.

* Manufacturing, Service and Retailing Operations

* Finance and Financial Products
— Residential mortgage market
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* Investments
— Berkshire specific investment moves.
— Derivative contracts.
— Evaluating stock-for-stock offers.

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The reason I no longer post highlights from the letter on my site, is because investors need to read what he wrote for themselves in order to receive the knowledge directly and in its entirety.  Also by highlighting bits and pieces of what Buffett discusses and says, the entire context of information is not given.  This can often lead to distorted information.  Ironically, I will quote an important paragraph from the letter related to this very issue:

Last year we saw, in one instance, how sound-bite reporting can go wrong. Among the 12,830 words in the annual letter was this sentence: “We are certain, for example, that the economy will be in shambles throughout 2009 – and probably well beyond – but that conclusion does not tell us whether the market will rise or fall.” Many news organizations reported – indeed, blared – the first part of the sentence while making no mention whatsoever of its ending. I regard this as terrible journalism: Misinformed readers or viewers may well have thought that Charlie and I were forecasting bad things for the stock market, though we had not only in that sentence, but also elsewhere, made it clear we weren’t predicting the market at all. Any investors who were misled by the sensationalists paid a big price: The Dow closed the day of the letter at 7,063 and finished the year at 10,428.

Given a few experiences we’ve had like that, you can understand why I prefer that our communications with you remain as direct and unabridged as possible.

Any investor who is serious about making money from stocks  should read the letter.  But if you really want a highlight of the letter, then I recommend you visit The Rational Walk.  Ravi’s highlights are always a good read.  http://www.rationalwalk.com/

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Files:
You can view the official document releases from the Berkshire Hathaway website:

Berkshire Hathaway 2009 Letter to Shareholders
http://www.berkshirehathaway.com/letters/2009ltr.pdf

Berkshire Hathaway 2009 Annual Report
http://www.berkshirehathaway.com/2009ar/2009ar.pdf

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Warren Buffett recommends investors who want to learn, to read his current and past annual reports from the Berkshire Hathaway website. They have a huge amount of information in them.  He also suggests to read books that he specifically endorses & recommends. The following is a list of those specific books:

Thanks & Happy Investing! — The Investment Blogger © 2010

Author: The Investment Blogger

I’m a private investor, who developed the “function-centric investing” paradigm. I am an investor who blogs a little here and there, rather than a blogger who invests a little here and there. I'm passionate about investing and sharing investment knowledge!

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