Saturday, 2 March 2013

Warren Buffett

I have long been an admirer of legendary investor Warren Buffett who has been running Berkshire Hathaway with co-founder Charlie Munger since 1965. The fund has a large stake in such household names as Coca-Cola, IBM, American Express and Wells Fargo. Last year they increased their holding in Tesco to 5% and recently acquired Heinz Foods.

Remarkably, since 1965, they have generated an average annual return for their shareholders of 19.7%. If you had invested $200 at the start you would now be a millionaire!

The full report is well worth a read so here is a link for anyone interested  berkshire hathaway 2012 letter

A small piece from the report -

"A thought for my fellow CEOs: Of course, the immediate future is uncertain; America has faced the unknown since 1776. It’s just that sometimes people focus on the myriad of uncertainties that always exist while at other times they ignore them (usually because the recent past has been uneventful).

American business will do fine over time. And stocks will do well just as certainly, since their fate is tied to business performance. Periodic setbacks will occur, yes, but investors and managers are in a game that is heavily stacked in their favor. (The Dow Jones Industrials advanced a staggering 17,320% increase that materialized despite four costly wars, a Great Depression and many recessions. And don’t forget that shareholders received substantial dividends throughout the century as well.)

Since the basic game is so favorable, Charlie and I believe it’s a terrible mistake to try to dance in and out of it based upon the turn of tarot cards, the predictions of “experts,” or the ebb and flow of business activity. The risks of being out of the game are huge compared to the risks of being in it."

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