Author Topic: Warren Buffet's Investment Letter  (Read 550 times)

PonoBill

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Warren Buffet's Investment Letter
« on: February 25, 2017, 08:14:26 AM »
Warms my heart. I've spent a bit of time every few days over the last few years writing a book on retirement, inspired mostly by the egregious actions of the financial advisor business. The letter appeared today, and in Mr. Buffet's inimitable pithy style, says pretty much what I've said--though I'm up to about 350 pages to do so.

It's a great letter. Mr. Buffet is also about to win his million dollar bet that a straightforward index investment would beat a basket of hedge funds over a ten year period. It's not just small investors that would profit from listening to Mr. Buffet.

Of course Berkshire Hathaway outperformed both of the two investments in the bet. When I first selected two investment advisors to manage my money a decade or so ago, I said "why shouldn't I just put this money into Berkshire Hathaway". The answers were not convincing, but I went with them anyway. I should have gone with Warren.
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surfafrica

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Re: Warren Buffet's Investment Letter
« Reply #1 on: February 25, 2017, 08:31:59 AM »
Scary that we're approaching the finish line on that 10 year bet! 

http://berkshirehathaway.com/letters/2016ltr.pdf
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deepmud

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Re: Warren Buffet's Investment Letter
« Reply #2 on: February 26, 2017, 06:46:09 PM »
Bill - I'm halfway thru "Thinking, Fast and Slow" - and of course the stuff on investing is fascinating to me.......he's pretty much saying "luck" is FAR more prevalent in EVERYTHING than I ever considered...

I'm going to have to listen twice, maybe 3 times.....

So is Warren Buffet doing a good job with his System 2?

Beasho

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Re: Warren Buffet's Investment Letter
« Reply #3 on: February 28, 2017, 01:57:54 PM »
Warren Buffett is bad-ass.  He came to speak to my business school in 1997.  When asked (then) if he was just "A lucky coin flipper" he responded:

"I was lucky to be born into a time when my skills were incredibly valuable.  I am good at what I do but if I had been born 50 years earlier or later I might have been forced to live on porridge."

There was no ambiguity, defensiveness or arrogance in his statement.  Just a matter of fact.  1 year later having joined a high-tech firm (before it was cool) I bought a bunch of Berkshire as a hedge against technology.  I remember an astute friend saying "Berkshire Hathaway is overvalued."

While that purchase today may appear to have been a slam dunk there were enough counter cyclical moves, with BRK.B, to make anyone wonder if it was the right thing to do (see the returns vs market in 1999, 2000 . . ). 

All this said the best thing I ever did was to read A Random Walk Down Wall Street in 1994 and start buying index funds.  Buffett's letter reads like an excerpt from this 45 year old book, 

The single best investment book ever that articulated 1) Why Vanguard has been so successful and 2) Spawned the ETF market among other things.

Having graduated from Harvard Business School, worked through 2 tech bubbles, started a hedge fund and with loads of friends in Private Equity and at Hedge funds my advice is this:

To outstrip market returns you have to start something new and make it your full time 50 hrs+++ per week job (like PonoBill) or work for Goldman Sachs.  Beating the market is not impossible but your chances are ~ 3%. 

For everyone else Burton Malkiel, John Bogle (founder of Vanguard), Warren Buffett and Beasho advise to Buy: VTI and go surfing  8)

https://www.amazon.com/Random-Walk-down-Wall-Street/dp/0393352242/ref=cm_cr_arp_d_product_top?ie=UTF8

« Last Edit: February 28, 2017, 02:28:48 PM by Beasho »

PonoBill

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Re: Warren Buffet's Investment Letter
« Reply #4 on: March 01, 2017, 04:41:18 PM »
Yup.

The simple truth about Berkshire Hathaway is that it is essentially investing in some guys spending all their waking hours refining strategy to buy well-run companies with good market position and keep them rolling. It has little to do with investment in the normal sense.

If I had followed my instincts and bought BH I would have about 3X the money I have now. If I had stuck with my two advisors I'd be a greeter at Walmart in five years. As it is, I buy index funds and go surf.
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Foote 10'4X34", SIC 17.5 V1 hollow and an EPS one in Hood River. Foote 9'0" x 31", L41 8'8", 18' Speedboard, etc. etc.

 


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