Drum roll please, the Oracle of Omaha has spoken! In his latest shareholder letter published over the weekend, Warren Buffett shared his outlook on stocks, what it takes to own a great business, and his usual dose of timeless investing wisdom.
I have finished reading the letter, and as someone who has followed Buffett’s annual musings for years, I can say that the man may be 94, but his insights age like fine wine (unlike some market predictions). One day, I plan to attend his annual gathering in Omaha because if there is one place where investing wisdom flows as freely as the Coca-Cola at the event, it is there.
I came across this MarketWatch article covering some of the key points from his latest letter. While summaries are helpful, nothing beats reading Buffett’s words directly.
Here is a section:
Rest assured, Warren Buffett would always prefer putting money into equities over holding cash instruments. That said, a big pile of cash in Treasury bills has not exactly been painful, the billionaire investor wrote Saturday in his annual letter to shareholders of Berkshire Hathaway Inc.
“Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities. That preference won’t change,” Buffett said.
Indeed, Berkshire’s growing pile of cash has been a source of fascination for shareholders and other investors, who read Buffett’s annual missive and pay close heed to his remarks for signals on how he might deploy cash or whether the accumulation points to concerns about the broader market.
Here is another section:
“We were aided by a predictable large gain in investment income as Treasury Bill yields improved and we substantially increased our holdings of these highly-liquid short-term securities.”
That said, Buffett emphasized that Berkshire would never prefer ownership of cash-equivalent assets over the ownership of “good businesses” either through controlling or partial ownership.
“Paper money can see its value evaporate if fiscal folly prevails. In some countries, this reckless practice has become habitual, and, in our country’s short history, the US has come close to the edge,” Buffett wrote. “Fixed-coupon bonds provide no protection against runaway currency.”