© Reuters. FILE PHOTO: Warren Buffett, CEO of Berkshire Hathaway, attends the annual Allen and Co. Sun Valley media conference, in Sun Valley, Idaho, U.S., July 6, 2022. REUTERS/Brendan McDermid/Photo by archive
By Jonathan Stempel
(Reuters) – Billionaire investor Warren Buffett said on Saturday that he has lost none of his longstanding confidence in the US economy and his company. Berkshire Hathaway Inc. . (NYSE:)
In his annual letter to Berkshire shareholders, Buffett, 92, urged investors to focus on the long-term big picture, rather than higher inflation and other factors that in 2022 depressed stock prices. although not those of Berkshire.
He also urged Americans not to be convulsed by “self-criticism and doubt,” saying the country’s dynamism has benefited Berkshire in his 58 years at the helm from Omaha, Nebraska, and will do so after he passes. the reins.
“We have the American Tailwind, and while it has subsided from time to time, its propelling force has always returned,” Buffett wrote.
“I have yet to see a time when it makes sense to make a long-term bet against the United States. And I highly doubt any reader of this letter will have a different experience in the future.”
The letter was accompanied by Berkshire’s year-end results, which Buffett said reflected a “good” year for Berkshire despite supply chain disruptions and rising inflation, including a record $30.8 billion operating profit. of dollars.
Berkshire owns dozens of operating businesses, including the Geico auto insurer, the BNSF railroad, and many well-known consumer brands such as Dairy Queen and Fruit of the Loom.
It also posted a year-over-year net loss of $22.8 billion as prices for Apple Inc (NASDAQ:) and many other stocks in its broad investment portfolio declined. Buffett downplays bottom lines because they are volatile and affected by accounting standards.
Multiple observers said, however, that Buffett seemed cautious, almost contrite, about his own difficulties navigating the markets, even though he is arguably the most famous American investor alive.
“Buffett is very humble in assessing his own investment prowess, and unnecessarily so,” said Thomas Russo, a partner at Gardner Russo & Quinn and a longtime Berkshire investor. “Investors have benefited from it for decades.”
Anyone who held Berkshire from 1965 to 2022 saw their shares gain 3,787,464% in value. The increase of 24.708% including dividends during that period.
MUNGER ‘MAKES ME LAUGH’
Buffett said most of his capital allocation decisions have been merely “so-so” and that Berkshire’s “satisfactory” results over time were due to only a dozen “really good” decisions.
“‘Efficient’ markets only exist in textbooks,” Buffett said. “In truth, traded stocks and bonds are perplexing, their behavior usually only understood in hindsight.”
Buffett also said that “trust and rules are essential” to running great companies, even amid inevitable disappointments.
Cathy Seifert, an analyst at CFRA Research, said Buffett delivered a “subtle jab” at critics who wanted him to reveal more than a few paragraphs about Berkshire’s biggest companies and invest more aggressively.
“The current market climate has been, for lack of a better word, very schizophrenic,” Seifert said. “Buffett is expressing that frustration.”
Despite paying $11.5 billion in October for insurance company Alleghany (NYSE:) Corp, Berkshire ended the year with $128.6 billion in cash.
It also became a big seller of shares, including Taiwanese semiconductor maker TSMC, at the end of the year, while increasing buybacks of its own shares.
Buffett, a Democrat, appeared to indirectly criticize President Joe Biden, who this month called for a quadrupling of the 1% corporate share buybacks he signed into law last year.
While Biden did not call for an end to buybacks, Buffett said those who do are “economic illiterates or silver-tongued demagogues.”
Buffett also urged investors not to dwell on near-term market conditions: He said Berkshire offers “modest protection against runaway inflation, but this attribute is far from perfect.”
He also tried to remind them how much Berkshire returns to the US Treasury, saying it paid $32 billion in corporate taxes in the last decade.
“We at Berkshire expect to pay much more in taxes over the next decade,” Buffett wrote. “We owe the country no less.”
Buffett also demonstrated effusive affection for his friend and business partner Charlie Munger, the 99-year-old vice president of Berkshire.
He said the two plan to attend Berkshire’s annual meeting in early May, which is known as “Woodstock for Capitalists” and draws tens of thousands of people to Omaha.
“I never have a phone call with Charlie without learning something,” Buffett said. “And while he makes me think, he also makes me laugh.”
