Wall Street News
02-25 23:30
Buffett suggested that shareholders should pay attention to the company’s long-term profits and pay attention to stock dividends, and emphasized that the “efficient market” of stocks only exists in textbooks. The future will always hold a lot of cash and US debt, because Berkshire’s success is riding on the “American tailwind”, while also expressing concerns about the large and entrenched US fiscal deficit.
On February 25th, Buffett published his annual open letter to shareholders on the official website of Berkshire Hathaway.seven key pointswhich are:
1. capitalism has two sides
Buffett said in the shareholder letter that capitalism has two sides. On the one hand, the system produces more and more losers, but at the same time it also produces a large number of improved goods and services. Schumpeter called this phenomenon “creative destruction.”
2. “Efficient markets” for stocks exist only in textbooks
Buffett said that stocks will trade at stupid prices from time to time, which may be high or low, and that “efficient markets” only exist in textbooks.
3. Shareholders should pay attention to stock dividends and long-term profits of the company
Shareholders attach great importance to the dividends of stocks, which will form great wealth over time, but they don’t have to pay too much attention to the failure of a certain investment.
And Buffett suggested that investors should focus on profits, but don’t take quarterly data seriously because of its volatility.
When summarizing Berkshire’s performance in 2022, Buffett emphasized that after the acquisition of the insurance company Alleghany Corporation, the company’s insurance float in 2022 will increase from $147 billion to $164 billion, an 8,000-fold increase since 1976. Become an important “ammunition” for Berkshire’s investment.
4. The secret of the company’s success is that it rides on the “American Tailwind”
When Buffett talked about Berkshire’s road to success, he said that it relied on the owner’s continuous savings, the power of compound interest, avoiding major mistakes, and most importantly-taking the “American Tailwind” (American Tailwind).
America would be fine without Berkshire Hathaway. The opposite is not true.
5. Companies will always have a lot of cash and Treasuries
Buffett said that in the future, Berkshire will always hold a large amount of cash and U.S. Treasury bonds, as well as various other broader businesses.
In addition, the company will keep its cash flow healthy at all times and avoid any reckless actions that would lead to a cash flow crunch at critical times, even in times of financial panic and unprecedented insurance losses.
6. Entrenched large U.S. fiscal deficits could have dire consequences
When Buffett talked about the current state of the US fiscal deficit, he expressed a lot of concern.
Looking back over the past decade, Berkshire contributed $32 billion in federal income taxes, nearly one-tenth of all the Treasury’s income. But on the whole, the US fiscal deficit at this stage is not only huge but also deeply rooted, which may bring serious consequences.
7. The annual shareholder meeting will be held in Omaha, USA on May 5-6
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