Letter to shareholders reveals how Warren Buffett 'won the game'.

Now, at nearly 96 years old, Warren Buffett has won in life in terms of wealth, longevity, and reputation. His letters to shareholders contain many meaningful messages.

Photo: Bloomberg

Berkshire Hathaway Letters to Shareholders: 1965-2024 is unlike any other book. Structured around Warren Buffett's letters to shareholders in his annual reports, the book is a chronicle of six decades of capital allocation in American business history.

Buffett's extraordinary book

While the annual reports of famous companies often contain clichés and embellishments, Warren Buffett wants his letters to offer timeless truths and enduring value. These 940 pages of letters have been compiled into a complete book, promising lessons on business, ethics, and even some humorous messages.

Buffett believes that Berkshire Hathaway should be viewed as "a movie in progress, not a still photograph," and he writes each letter assuming the reader has already read previous letters.

Carol Loomis, a veteran writer for Fortune , began editing the letters in 1979. For the first few decades, Loomis and Buffett often sent drafts to each other via FedEx to avoid arguments over the phone. Journalist Alice Schroeder, in her 2008 biography, *The Snowball *, quoted Buffett as saying, "Carol quickly became my closest friend, aside from Charlie Munger, Berkshire's vice chairman."

After Buffett's investment fund voluntarily closed in 1969, Buffett and Munger were left with only Berkshire Hathaway, a struggling textile manufacturer, and two other companies. Fifteen years later, Buffett remarked that the three businesses he acquired were in the following states: “(1) existing but barely making any money, (2) shrinking while incurring significant losses, and (3) sales down to about 5% of what they were when we joined.”

Regarding why Buffett chose a dying company as the foundation for building his conglomerate, he wrote in 2014: "I've had 48 years to think about that question, and I still haven't found a satisfactory answer."

But the difficulties didn't stop him from achieving success. The letters explain how that seemingly hopeless beginning transformed into a corporation with nearly 400,000 employees and a market capitalization of $1 trillion .

Buffett's formula for success

Instead of making money by making great investments, Buffett built a great business with diversified operations. Notably, his insurance business not only generates huge profits from premiums but also creates a massive source of capital to invest in other areas.

These letters offer a way to gain insight into Buffett's extraordinary life. Photo: Bloomberg.

In addition to possessing vast financial resources, Berkshire has also built a reputation for fair play and foresight. As a result, they are a preferred partner for many private companies and capital providers, especially during times of crisis.

Third is autonomy. Buffett doesn't pay much attention to quarterly targets and also ignores conventional business practices, such as issuing shares. He knows people laugh when he stubbornly accumulates mountains of cash. However, he usually has the last laugh when he has cash, while others don't.

Fourth is the flexibility in changing strategies. As Berkshire grew too large, Buffett shifted towards diversifying the companies he invested in to create multiple income streams. Berkshire's strategy is to "find an excellent business at a reasonable price to buy and invest in, rather than looking for a mediocre business at a bargain price."

The final, and most important, strategy was compound interest. He shrewdly held shares in highly profitable companies for decades, such as American Express and Coca-Cola. This was the source of returns that offset his poor investment decisions.

In 2022, Buffett acknowledged that "In 58 years of managing Berkshire, most of my capital allocation decisions have been only average" and attributed Berkshire's growth to "a few truly good decisions" and the power of compound interest.

It must be said that these letters are not a book to read before bed, given their large size and considerable weight. Max Olson, the editor of this collection, reprinted the letters on 8.5 x 11 inch (21.59 x 27.94 cm) paper, staying true to the annual report format.

However, readers can enjoy them pleasantly throughout the year, with one or two letters each week.

Now, at nearly 96 years old, Warren Buffett has won in life—in terms of wealth, longevity, and the reputation of a respectable man. These letters offer a way to understand the path to these victories.

Source: https://znews.vn/thu-gui-co-dong-tiet-lo-cach-warren-buffett-thang-doi-post1655861.html