11
Warren Buffett’s 2008 Berkshire Hathaway Shareholder Letter

Warren Buffett, in addition to being the most successful investor in modern history, is also a terrific writer. His annual shareholder letters are highly informative, clear, and to-the-point. E.g., regarding the sub-prime mortgage fiasco:

Investors should be skeptical of history-based models. Constructed by a nerdy-sounding priesthood using esoteric terms such as beta, gamma, sigma and the like, these models tend to look impressive. Too often, though, investors forget to examine the assumptions behind the symbols. Our advice: Beware of geeks bearing formulas.

And a willingness to humbly admit and take responsibility for his own mistakes:

I told you in an earlier part of this report that last year I made a major mistake of commission (and maybe more; this one sticks out). Without urging from Charlie or anyone else, I bought a large amount of ConocoPhillips stock when oil and gas prices were near their peak. I in no way anticipated the dramatic fall in energy prices that occurred in the last half of the year. I still believe the odds are good that oil sells far higher in the future than the current $40-$50 price. But so far I have been dead wrong. Even if prices should rise, moreover, the terrible timing of my purchase has cost Berkshire several billion dollars.

Sunday, 1 March 2009