22 Feb Advice for Trump, 60 years at Berkshire helm
Legendary investor Warren Buffett opined on a wide range of topics in his much-anticipated annual letter to shareholders, including the U.S.’ worsening fiscal problems, advice for the Trump administration as well as his 60-year career at Berkshire Hathaway . Here are the best highlights from Buffett’s 2024 annual letter: The “Oracle of Omaha” revealed that Berkshire last year paid $26.8 billion in taxes, about 5% of what all of corporate America paid. He urged the current administration to spend taxpayers’ money wisely and maintain a stable currency. So thank you, Uncle Sam. Someday your nieces and nephews at Berkshire hope to send you even larger payments than we did in 2024. Spend it wisely. Take care of the many who, for no fault of their own, get the short straws in life. They deserve better. And never forget that we need you to maintain a stable currency and that result requires both wisdom and vigilance on your part. Buffett also brought attention to the country’s spiraling fiscal problems. The budget deficit topped $1.8 trillion in fiscal 2024, with interest expense topping $1 trillion for the first time ever due to high long-term yields. Paper money can see its value evaporate if fiscal folly prevails. In some countries, this reckless practice has become habitual, and, in our country’s short history, the U.S. has come close to the edge. Fixed-coupon bonds provide no protection against runaway currency. The 94-year-old Berkshire CEO stressed that he still prefers owning equities to cash despite his recent aggressive stock-selling spree. The Omaha-based conglomerate net sold equities for a ninth consecutive quarter in the final period of last year, while amassing a record cash pile of $334 billion . Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities. That preference won’t change. Berkshire shareholders can rest assured that we will forever deploy a substantial majority of their money in equities – mostly American equities although many of these will have international operations of significance. Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses, whether controlled or only partially owned. In this year’s letter , Buffett endorsed designated successor Greg Abel in his ability to pick equity opportunities, even comparing him to the late Charlie Munger. He added that Abel will carry on the tradition of writing annual letters when Buffett is no longer at the helm. Often, nothing looks compelling; very infrequently we find ourselves knee-deep in opportunities. Greg has vividly shown his ability to act at such times as did Charlie. At 94, it won’t be long before Greg Abel replaces me as CEO and will be writing the annual letters. Greg shares the Berkshire creed that a “report” is what a Berkshire CEO annually owes to owners. And he also understands that if you start fooling your shareholders, you will soon believe your own baloney and be fooling yourself as well. Reflecting on his admirable career of more than 60 years at Berkshire, Buffett pointed out a few crucially winning decisions that helped transform the conglomerate, including acquiring auto insurer Geico and hiring Ajit Jain to oversee its insurance business. I’ve also had many pleasant surprises in both the potential of the business as well as the ability and fidelity of the manager. And our experience is that a single winning decision can make a breathtaking difference over time. (Think GEICO as a business decision, Ajit Jain as a managerial decision and my luck in finding Charlie Munger as a one-of-a-kind partner, personal advisor and steadfast friend.) Mistakes fade away; winners can forever blossom. The famed value investor noted that Berkshire will be a long-term investor in the five Japanese trading houses he began buying nearly six years go. He revealed that Berkshire has reached an agreement with the companies to own beyond the initial 10% ceiling. Our holdings of the five are for the very long term, and we are committed to supporting their boards of directors. From the start, we also agreed to keep Berkshire’s holdings below 10% of each company’s shares. But, as we approached this limit, the five companies agreed to moderately relax the ceiling. Over time, you will likely see Berkshire’s ownership of all five increase somewhat.