Canadian Capitalist Logo Dark
No Result
View All Result
Saturday, September 30, 2023
  • Login
  • Register
  • Home
  • Economy
  • Investing
  • Markets
  • Real Estate
  • Retirement
  • Tax Savings
  • Trivia
  • Resources
Subscribe
Canadian Capitalist Logo Light
  • Home
  • Economy
  • Investing
  • Markets
  • Real Estate
  • Retirement
  • Tax Savings
  • Trivia
  • Resources
No Result
View All Result
Canadian Capitalist Logo Mobile
No Result
View All Result
Home Uncategorised

Notes from the 2008 Berkshire Hathaway Annual Report

by Ram Balakrishnan
March 1, 2009
Reading Time: 2 mins read
124 9
0
investing in healthcare
152
SHARES
1.9k
VIEWS
Share on FacebookShare on TwitterShare on Linkedin

I must admit that I don’t always thoroughly read the annual reports of the stocks I actually own, but I religiously read the annual report of Berkshire Hathaway as soon as it is published. With all the turmoil in the financial markets, I was anticipating this year’s report more eagerly than usual and Warren Buffet did not disappoint. You can find the entire report here and I strongly encourage you to read it in its entirety (it is only 25 pages long and lucidly written, as always).

  • Buffet acknowledges that we are facing unprecedented economic times and Government did not have an option – it had to take action on a massive scale. If you recall, the intervention came for criticism over bailouts but Buffet reminds us: “Like it or not, the inhabitants of Wall Street, Main Street and the various Side Streets of America were all in the same boat.”
  • He suspects that the intervention will “almost certainly bring on unwelcome aftereffects” with inflation a likely consequence.
  • Buffett is optimistic that America will overcome the latest obstacle like it has done many times before. “America’s best days like ahead.”
  • He cautions readers from leaping to conclusions about stock market returns based on current economic conditions. “We’re certain, for example, that the economy will be in shambles throughout 2009 – and, for that matter, probably well beyond – but that conclusion does not tell us whether the stock market will rise or fall.”
  • “Beware of geeks bearing formulas”, Buffet often likes to say. The huge losses in mortgage-backed securities are a direct result of investors, rating agencies and Wall Street extrapolating the loss experience of a past housing market with modest price appreciation and negligible speculation to a diametrically different market.
  • Buffett calls his purchase of ConocoPhillips when oil and gas prices were at a peak “a major mistake of commission”. Berkshire purchased fixed-income securities in Wrigley, Goldman Sachs and General Electric and sold some of investments in Johnson & Johnson, Proctor & Gamble and ConocoPhilips.
  • From underpricing risk, the market has swung completely the other way and is now overpricing it. In fact, Buffett goes as far as calling a bubble in US treasuries and reiterates the point he made in a New York Times Op-ed: “Clinging to cash equivalents or long-term government bonds at present yields is almost certainly a terrible policy if continued for long. Holders of these instruments, of course, have felt increasingly comfortable – in fact, almost smug – in following this policy as financial turmoil has mounted. They regard their judgment confirmed when they hear commentators proclaim “cash is king,” even though that wonderful cash is earning close to nothing and will surely find its purchasing power eroded over time.”
  • Buffett shows that the Black-Scholes formula for pricing options can produce absurd results if it is applied to extended time periods.

The entire archive of Buffet’s letter to shareholders is available here.

Related posts:

  1. Finding a Financial Advisor, Part 1
  2. Carnival of Debt Reduction # 19
  3. The Income Tax Cut is Better
  4. This and That
Share61Tweet38Share11

Get real time update about this post categories directly on your device, subscribe now.

Unsubscribe
Previous Post

This and That: Hunters becoming the hunted edition

Next Post

Results of Dollar Cost Averaging for the TSX Composite

Ram Balakrishnan

Ram Balakrishnan

Related Posts

Why you cant afford a house in Canada

Why You Can’t Afford A Home In Canada?

January 24, 2022
444
investing benefits
Investing

Finding a Financial Advisor, Part 1

June 19, 2021
2.1k
investing in bitcoin

Is it time to invest in Bitcoins again?

May 13, 2019
2k
when do reits liquidate
Uncategorised

Performance of Currency-Neutral S&P 500 Index Funds

January 19, 2014
2k
is mortgage interest tax deductible
Uncategorised

The 2013 Sleepy Portfolio Report Card

January 12, 2014
2k
how to buy individual stocks in canada
Uncategorised

Asset Class Returns for 2013

January 5, 2014
1.9k
Next Post
investing in rental properties

Results of Dollar Cost Averaging for the TSX Composite

Please login to join discussion
Canadian Capitalist

© 2022 Canadian Capitalist

Navigate Site

  • Home
  • Disclaimer
  • Privacy Policy
  • Advertisement
  • Contact Us

Follow Us

No Result
View All Result
  • Home
  • Economy
  • Investing
  • Markets
  • Real Estate
  • Retirement
  • Tax Savings
  • Trivia
  • Resources

© 2022 Canadian Capitalist

Welcome Back!

Sign In with Facebook
Sign In with Google
Sign In with Linked In
OR

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Sign Up with Facebook
Sign Up with Google
Sign Up with Linked In
OR

Fill the forms below to register

*By registering into our website, you agree to the Terms & Conditions and Privacy Policy.
All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
two man and woman standing on doorway
The man who does not read has no advantage over the man who cannot read - Mark Twain