Every year around this time, a good portion of the investing population waits breathlessly for The Letter, which is released at 8am on Saturday morning. How many investors download The Letter escapes me but it must be enormous. I have read The Letter religiously for the past 30 odd years, normally joining the rush at 8am to get my copy. This year, I took my granddaughter out for breakfast so I had to wait until noon to download my copy. By then The Letter had been analysed, discussed and dissected ad nauseam.
The Letter I refer to is Warren Buffet’s annual Chairman’s letter. It is always interesting reading and this year was no different. It can be accessed on the Berkshire website if you want to read it. What inspires me to comment on it is not in the details but in the overriding sense of optimism that he conveys especially during these difficult markets. We always face obstacles and problems, but it is comforting to hear someone who believes fervently in America, capitalism and in the ability of the human spirit to overcome the negativity that surrounds us. Fear is the greatest destroyer of wealth. Every year Warren reminds us that these fears are unfounded. Keep in mind that Warren has said over and over again that he loves to jump in when everyone else is afraid.
Here are a few points and quotes to remember:
Don’t be too fixated on daily moves in the stock market; “Games are won by players who focus on the playing field-not by those whose eyes are glued to the scoreboard. If you can enjoy Saturdays and Sundays without looking at stock prices, give it a try on weekdays.”
Don’t be distracted by macroeconomic forecasts; “The cemetery for seers has a huge section set aside for macro forecasters. We have in fact made few macro forecasts at Berkshire and we have seldom seen others make them with sustained success.”
Warren’s message and strategy does not change, and is very straightforward. Buy companies that you understand, that have favourable long-term economics, that have able and trustworthy management and are available at a reasonable price.
Long term competitive advantages in a stable industry is what Warren seeks in business, as we do at Holdun.