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“What Buffett wouldn’t do”

Warren Buffett (@WarrenBuffett) | TwitterInvesting:

  • Don’t be too fixated on daily moves in the stock market (from Berkshire letter published in 2014)
  • Don’t get excited about your investment gains when the market is climbing (1996)
  • Don’t be distracted by macroeconomic forecasts (2004)
  • Don’t limit yourself to just one industry (2008)
  • Don’t get taken by formulas (2009)
  • Don’t be short on cash when you need it most (2010)
  • Don’t wager against the U.S. and its economic potential (2015)

Management:

  • Don’t beat yourself up over wrong decisions; take responsibility for them (2001)
  • Don’t have mandatory retirement ages (1992)
  • “Don’t ask the barber whether you need a haircut” because the answer will be what’s best for the man with the scissors (1983)
  • Don’t dawdle (2006)
  • Don’t interfere with great managers (1994)
  • Don’t succumb to the attitudes that undermine businesses (2015)
  • Don’t be greedy about compensation, if you’re my successor (2015)

Last, Buffett advises “Don’t worry about my health” — because Berkshire’s future success is is tied to reinsurance lieutenant Ajit Jain. “Worry about his.” (2001)

BUFFETT'S ANNUAL LETTER IS OUT: Here Are The Key Points!

Here’s the link to this year’s letter.  Feel free to point out anything you might like to discuss or anything you think might be worthy of a post.

Here are the key points:

  • For just the 9th time, Berkshire’s book value rose less than the S&P 500. Buffett calls the year subpar.
  • Berkshire pursued a couple of “elephants” but mostly came up empty, until the recent big Heinz deal.
  • Buffett explains his five guidelines for increasing shareholder value: “In summary, Charlie and I hope to build per-share intrinsic value by (1) improving the earning power of our many subsidiaries; (2) further increasing their earnings through bolt-on acquisitions; (3) participating in the growth of our investees; (4) repurchasing Berkshire shares when they are available at a meaningful discount from intrinsic value; and (5) making an occasional large acquisition. We will also try to maximize results for you by rarely, if ever, issuing Berkshire shares.”
  • Berkshire’s five biggest non-insurance companies (BNSF, Iscar, Lubrizol, Marmon Group and MidAmerican Energy) broke the goal of having over $10 billion in income this year.
  • Berkshire’s new portfolio managers Todd Combs and Ted Weschler both had portfolios that beat the S&P 500 in 2012.
  • Both Combs and Weschler now have portfolios of $5 billion to invest.
  • Buffett expects Berkshire to buy more Coca-Cola, American Express, Wells Fargo and IBM in the future.
  • CEOs who whine about “uncertainty” are silly (see more here)
  • Contrary to Buffett’s expectations, the “float” from Berkshire’s insurance businesses continues to grow. He doesn’t expect it to continue, but it grew another $2.5 billion last year. (more…)