Berkshire letter landed today! As has been my tradition for the last several years, I pour over the letter and try to highlight my key takeaways!

On Performance: Berkshire handily beat S&P 500 in 2022, producing annualized 4 % returns to negative 18.1 returns for S&P for the same year.

On Disposition of Berkshire shareholders: The disposition of money unmasks humans. Charlie and I watch with pleasure the vast flow of Berkshire-generated funds to public needs and, alongside, the infrequency with which our shareholders opt for look-at-me assets and dynasty-building

Expectations of Berkshire managers: We are understanding about business mistakes; our tolerance for personal misconduct is zero

Business Pickers: Please note particularly that we own publicly-traded stocks based on our expectations about their long-term business performance, not because we view them as vehicles for adroit purchases and sales. That point is crucial: Charlie and I are not stock-pickers; we are business-picker

On Capitalism: Capitalism has two sides: The system creates an ever-growing pile of losers while concurrently delivering a gusher of improved goods and services. Schumpeter called this phenomenon “creative destruction.

On Capital Allocation: In 58 years of Berkshire management, most of my capital-allocation decisions have been no better than so-so“…

Our satisfactory results have been the product of about a dozen truly good decisions….

A few great investments and longevity: The weeds wither away in significance as the flowers bloom. Over time, it takes just a few winners to work wonders. And, yes, it helps to start early and live into your 90s as well. ….

At yearend 2022, Berkshire was the largest owner of eight of these giants: American Express, Bank of America, Chevron, Coca-Cola, HP Inc., Moody’s, Occidental Petroleum and Paramount Global. In addition to those eight investees, Berkshire owns 100% of BNSF and 92% of BH Energy, each with earnings that exceed the $3 billion mark noted above ($5.9 billion at BNSF and $4.3 billion at BHE).

Insurance Float: Aided by Alleghany, our insurance float increased during 2022 from $147 billion to $164 billion. With disciplined underwriting, these funds have a decent chance of being cost-free over time. Since purchasing our first property-casualty insurer in 1967, Berkshire’s float has increased 8,000-fold through acquisitions, operations and innovations. Though not recognized in our financial statements, this float has been an extraordinary asset for Berkshire.

On Stock Buybacks: When you are told that all repurchases are harmful to shareholders or to the country, or particularly beneficial to CEOs, you are listening to either an economic illiterate or a silver-tongued demagogue (characters that are not mutually exclusive)

Finally, a few Charlie gems: Buffet lists 15, and my favorite amongst those are

• Early on, write your desired obituary – and then behave accordingly.
• Patience can be learned. Having a long attention span and the ability to concentrate on one thing for a long time is a huge advantage.
• You can learn a lot from dead people. Read of the deceased you admire and detest.
• There is no such thing as a 100% sure thing when investing. Thus, the use of leverage is dangerous. A string of wonderful numbers times zero will always equal zero. Don’t count on getting rich twice.
• You don’t, however, need to own a lot of things in order to get rich
• “Warren, think more about it. You’re smart and I’m right.