Stock prices and value converge over time
“Monthly or yearly movements of stocks are often erratic and not indicative of changes in intrinsic value. Over time, however, stock prices and intrinsic value almost invariably converge.”
Investing
Warren Buffett's 2014 letter to Berkshire shareholders, one of the letters in Berkshire Hathaway Shareholder Letters, 1971–2025.
Making local managers owner-partners
“Larry and his dad, Cecil, spent 62 years building [the company], following a strategy that made owner-partners of all local managers. Creating this mutuality of interests proved over and over to be a winner.”
America's untapped treasures dwarf past finds
“Though we will always invest abroad as well, the mother lode of opportunities runs through America. The treasures that have been uncovered up to now are dwarfed by those still untapped.”
Investee buybacks raise our share free
“The earnings these investees retain are often used for repurchases of their own stock – a move that enhances Berkshire’s share of future earnings without requiring us to lay out a dime.”
Market dynamism works, though not smoothly
“The dynamism embedded in our market economy will continue to work its magic. Gains won’t come in a smooth or uninterrupted manner; they never have.”
Poor underwriting can drown float's benefits
“[Underwriting profitably] is the daily focus of all of our insurance managers, who know that while float is valuable, its benefits can be drowned by poor underwriting results.”
Lasting float differs from ordinary debt
“Owing $1 that in effect will never leave the premises – because new business is almost certain to deliver a substitute – is worlds different from owing $1 that will go out the door tomorrow and not be replaced.”
A weak reinsurer returns the liabilities
“Choosing a reinsurer, therefore, that down the road proves to be financially strapped or a bad actor threatens the original insurer with getting huge liabilities right back in its lap.”
Depreciation is a real cost
“Depreciation charges, we want to emphasize, are different: Every dime of depreciation expense we report is a real cost. That’s true, moreover, at most other companies.”