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Warren Buffett Letter to Berkshire Hathaway Shareholders 2021



โœ‰๏ธ Warren Buffett published his annual letter to Berkshire Hathaway $BRK.B Shareholders this weekend. Here are the key takeaways:


๐Ÿ’ธReturns of 20.0% annually vs 10.2% for the S&P 500 $SPX500 in the last 56 years

Returning about 10% more than the market may not look so big but because of compound interest, it makes a big difference over time. $10 000 invested in the S&P 500 56 years ago is worth $2 million but $276 million in Berkshire Hathaway. ๐™„๐™ฃ๐™ซ๐™š๐™จ๐™ฉ๐™ž๐™ฃ๐™œ ๐™ž๐™จ ๐™– ๐™ก๐™ค๐™ฃ๐™œ-๐™ฉ๐™š๐™ง๐™ข ๐™œ๐™–๐™ข๐™š.


๐Ÿ’ผEven if according to GAAP, only earnings of the companies they own at 100% and dividends from their stock investments should be counted as earnings of Berkshire Hathaway. Warren Buffett believes that this should not be the case. Even retained earnings from a company they have a minority ownership in should be counted as earnings to the shareholders of Berkshire since these earnings will be used by the business to grow in the future. In short, even if you own a few shares of a company, ๐™ฎ๐™ค๐™ชโ€™๐™ง๐™š ๐™–๐™ฃ ๐™ค๐™ฌ๐™ฃ๐™š๐™ง ๐™ค๐™› ๐™ฉ๐™๐™š ๐™˜๐™ค๐™ข๐™ฅ๐™–๐™ฃ๐™ฎ, ๐™„๐™ฉ ๐™ž๐™จ ๐™ฃ๐™ค๐™ฉ ๐™Ÿ๐™ช๐™จ๐™ฉ ๐™จ๐™ค๐™ข๐™š ๐™ฃ๐™ช๐™ข๐™—๐™š๐™ง๐™จ ๐™ค๐™ฃ ๐™– ๐™˜๐™ค๐™ข๐™ฅ๐™ช๐™ฉ๐™š๐™ง ๐™จ๐™˜๐™ง๐™š๐™š๐™ฃ.


๐Ÿ’ฐBonds are bad investments with the low interest rate environment. Unlike other insurance businesses, Berkshire Hathaway have been able to ๐™ช๐™จ๐™š ๐™ฉ๐™๐™š ๐™›๐™ก๐™ค๐™–๐™ฉ ๐™ฉ๐™ค ๐™—๐™ช๐™ฎ ๐™ค๐™ฉ๐™๐™š๐™ง ๐™—๐™ช๐™จ๐™ž๐™ฃ๐™š๐™จ๐™จ๐™š๐™จ ๐™ž๐™ฃ๐™จ๐™ฉ๐™š๐™–๐™™ ๐™ค๐™› ๐™—๐™ช๐™ฎ๐™ž๐™ฃ๐™œ ๐™—๐™ค๐™ฃ๐™™๐™จ. Here there are four main businesses, Warren Buffett talks about:

1. The insurance business

2. BNSF (railroad)

3. Berkshire Hathaway Energy

4. Apple $AAPL of which they own 5.4% (initial purchase was 5.2% but because of buybacks and they even took some profits, it is now 5.4%)


๐Ÿ‡บ๐Ÿ‡ธ Another interesting investment of Berkshire Hathaway is BYD $01211.HK . A $232 million investment in 2008 is now worth over $5 billion. Although some of the largest investments are now in China and Japan, Warren Buffett still believes in American Exceptionalism and to ๐™‰๐™š๐™ซ๐™š๐™ง ๐˜ฝ๐™š๐™ฉ ๐˜ผ๐™œ๐™–๐™ž๐™ฃ๐™จ๐™ฉ ๐˜ผ๐™ข๐™š๐™ง๐™ž๐™˜๐™–.


Watch the full video on YouTube:

https://www.youtube.com/watch?v=BpbKXmV_VRg&list=UUPO3uUyoXSaFWG-Ldq1mqEQ&index=1


ย 

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