originally posted on February 28, 2023
One of things I did this weekend was to read Warren Buffett's 2022 letter discussing Berkshire Hathaway. A few things stood out to me:
When we open the letter, the first page is not the letter, but rather Berkshire Hathaway's performance against the S&P 500 since 1965. This cover page with two columns of data with annual percentage change is so simple yet powerful. This page tells his shareholders a lot of things - history of the company performance, S&P 500 performance, relative performance against the S&P 500 benchmark, and overall the longevity as well as stability of Berkshire Hathaway. No fancy data visualization or predictions. Just a simple and clean layout of actual performance.
Buffett talked about having an understanding of business mistakes but intolerance for personal misconduct.
He discussed ownership — ownership of businesses, ownership (a duty) in delivering returns to his shareholders, ownership (having skin in the game) in the risks undertaken by the businesses.
Invest with a long time horizon. This requires conviction, discipline, hard work, patience, and a healthy dose of optimism.
As a side note, while Warren Buffett focused on buyouts and investments in public equities in his investors letter, the same values apply to venture capital. It takes about 10 years of hard work for most businesses to become a scaled business (especially in B2B). Of course, when the market is good, discipline and value-add from investors are perceived to matter less. When the market cycle turns, the same values are perceived as more important. Regardless, the fittest companies win.
Buffett ended the letter discussing one of his businesses - See's Candies. We have all seen See’s Candies in shopping malls, airports, and other places. Berkshire Hathaway has been its owner since 1972! The product hasn't changed much for over 100 years. Talking about longevity and building something that lasts.
My writings are my opinions and not investment advice.