Warren Buffett’s Annual Shareholder Letters: Key Takeaways

Listed below are LCM Capital Administration’s takeaways from Warren Buffett’s Annual Letter to Shareholders.

Everyone seems to be human and makes errors so personal them – Nobody is ideal not even the Oracle of Omaha and he stated so, he has made loads of errors and has the phrases “mistake” or “error” 16 occasions in his letters to shareholders between 2019-2023. Most significantly he says is what he discovered from Charlie Munger was, “Issues can’t be wished away. They require motion, nevertheless uncomfortable that could be.”

The dying of the 60/40 portfolio is very exaggerated, diversification issues and boring boring investments needs to be part of everybody’s portfolio – Ever because the Federal Reserve started their unprecedented rate of interest climbing spree, first speaking about it in January 2021, there have been loads of “consultants” who’ve both questioned or acknowledged that the normal 60% shares/40% bonds portfolio is doomed or useless or questioned why anybody would personal bonds. I might say Mr. Buffett would disagree, “we have been aided by a predictable giant achieve in funding earnings as Treasury Invoice yields improved….”

Investing is a marathon not a dash – Sure, it is a cliché typically utilized in my trade however one which my agency, LCM Capital Administration lives by and clearly Mr. Buffet believes the identical, “over time, we predict it extremely probably that positive factors will prevail”

Shares Rock – Even when the inventory market is down, as it’s so far in 2025, shares ought to all the time be part of one’s portfolio and never simply home equities. The truth is most Fortune 500 corporations are multi-national conglomerates and that diversification can assist because the U.S. will not be all the time the main inventory market performer. In keeping with Mr. B, “an important majority of our cash stays in equities.  That desire will not change” and whereas these corporations could also be domestically primarily based “many have worldwide operations of significance”

Do not Speculate – Whereas it is perhaps enjoyable and thrilling, most traders haven’t got the abdomen nor the pocket e-book to take a position or what my agency likes to name “guesses.” Purchase good corporations and maintain them (please see above). Mr. Buffett stated concerning their Japan investments and yen-denominated borrowings- “all are at mounted charges no “floaters.” Greg Abel (CEO in ready) and I’ve no view on future overseas change charges and subsequently search a place roughly currency-neutrality”  

Its okay to pay lots in taxes, it means you made some huge cash – “Berkshire final 12 months made 4 funds to the IRS that totaled $26.8 billion.”  I’ve but to search out anybody in my 37 years on this enterprise who enjoys paying taxes, nevertheless, when you do, greater than probably it means you made cash. I say greater than probably solely as a result of in case you have learn or adopted any of our earlier posts on Benzinga you understand my agency hates mutual funds, as a matter of truth, we name them the Nice American Rip-Off. One of many causes is taxes. Most mutual fund traders are unaware of the truth that when you purchase a fund and it is held in a taxable account (i.e. non- IRA) and it makes a distribution, you owe the taxes on it even when you simply purchased it or by no means participated within the achieve of the fund.

Household First and Name, Do not Textual content – “My clever handsome sister Bertie and I discuss usually on Sunday’s utilizing old-fashion telephones for communications.” If you’re lucky sufficient to have siblings, kids or dad and mom nonetheless round, name them, do not textual content or e mail, positive that is simpler however as Theodore Roosevelt stated, “Nothing price having comes simple.” Personally, I’ve misplaced two superb pals in addition to just a few kids of superb pals in the previous couple of years and I miss them dearly. Do not go up the chance to name a member of the family or pal even when it is simply to say “hello”, belief me, neither of you’ll remorse it!