Operating earnings count most
“Operating earnings are what count most, even during periods when they are not the largest item in our GAAP total.”
Investing
Warren Buffett's 2020 letter to Berkshire shareholders, one of the letters in Berkshire Hathaway Shareholder Letters, 1971–2025.
Stock holdings as a collection of businesses
“As I’ve emphasized many times, Charlie and I view Berkshire’s holdings of marketable stocks – at yearend worth $281 billion – as a collection of businesses.”
Unrecorded retained earnings still build value
“Under GAAP, the huge sums that investees retain on our behalf become invisible. What’s out of sight, however, should not be out of mind: Those unrecorded retained earnings are usually building value – lots of value – for Berkshire.”
Great businesses rarely want to be taken over
“[One conglomerate problem] was unsolvable: Most of the truly great businesses had no interest in having anyone take them over. Consequently, deal-hungry conglomerateurs had to focus on so-so companies that lacked important and durable competitive strengths.”
Investing illusions can last surprisingly long
“Investing illusions can continue for a surprisingly long time. Wall Street loves the fees that deal-making generates, and the press loves the stories that colorful promoters provide.”
No business points for degree of difficulty
“In contrast to the scoring system utilized in diving competitions, you are awarded no points in business endeavors for ‘degree of difficulty.’”
Risky loans are no answer to low rates
“Risky loans, however, are not the answer to inadequate interest rates. Three decades ago, the once-mighty savings and loan industry destroyed itself, partly by ignoring that maxim.”
CEOs buy back more when prices are high
“I emphasize [price] because American CEOs have an embarrassing record of devoting more company funds to repurchases when prices have risen than when they have tanked. Our approach is exactly the reverse.”
Repurchases compound slowly but powerfully
“The math of repurchases grinds away slowly, but can be powerful over time. The process offers a simple way for investors to own an ever-expanding portion of exceptional businesses.”
For non-essential products, the customer is boss
“When a business manufactures and distributes a non-essential consumer product, the customer is the boss. And, after 100 years, the customer’s message to Berkshire remains clear: ‘Don’t mess withmy candy.’”
Satisfied customers sell businesses too
“Every retailer knows that satisfied customers are a store’s best salespeople. That’s true when businesses are changing hands as well.”
Entrepreneurs needed America's framework for prosperity
“[Entrepreneurs] needed America’s framework for prosperity – a unique experiment when it was crafted in 1789 – to achieve their potential.”
Never bet against America
“Our unwavering conclusion: Never bet against America.”
Corporate in form, partnership in attitude
“The first principle began: ‘Although our form is corporate, our attitude is partnership.’ That defined our relationship in 1983; it defines it today.”
Hoping for minimal shareholder turnover
“Of course, some turnover in ‘partners’ will occur. Charlie and I hope, however, that it will be minimal. Who, after all, seeks rapid turnover in friends, neighbors or marriage?”
Time, calm and low fees reward owners
“Most owners of [productive assets] will be rewarded. All that’s required is the passage of time, an inner calm, ample diversification and a minimization of transactions and fees.”
Asset-light businesses produce the best results
“The best results occur at companies that require minimal assets to conduct high-margin businesses – and offer goods or services that will expand their sales volume with only minor needs for additional capital.”