巴菲特致股东的信1997.docx

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1、巴菲特致股东的信19971997ChairmansLetterTotheShareholdersofBerkshireHathawaylnc.:1.AllfiguresusedinthisreportapplytoBerkshiresAshares,thesuccessortotheonlystockthatthecompanyhadoutstandingbefore1996.TheBshareshaveaneconomicinterestequalto130ththatoftheA.Givenourgainof34.1%,itistemptingtodeclarevictoryandmove

2、on.Butlastyearsperformancewasnogreattriumph:Anyinvestorcanchalkuplargereturnswhenstockssoar,astheydidin1997.Inabullmarket,onemustavoidtheerrorofthepreeningduckthatquacksboastfullyafteratorrentialrainstorm,thinkingthatitspaddlingskillshavecausedittoriseintheworld.Aright-thinkingduckwouldinsteadcompar

3、eitspositionafterthedownpourtothatoftheotherducksonthepond.Sowhatsourduckratingfor1997?Thetableonthefacingpageshowsthatthoughwepaddledfuriouslylastyear,passiveducksthatsimplyinvestedintheS&PIndexrosealmostasfastaswedid.Ourappraisalof1997sperformance,then:Quack.Whenthemarketbooms,wetendtosufferincomp

4、arisonwiththeS&PIndex.TheIndexbearsnotaxcosts,nordomutualfunds,sincetheypassthroughalltaxliabilitiestotheirowners.Lastyear,ontheotherhand,Berkshirepaidoraccrued$4.2billionforfederalincometax,orabout18%ofourbeginningnetworth.BerkshireW川alwayshavecorporatetaxestopay,whichmeansitneedstoovercometheirdra

5、ginordertojustifyitsexistence.Obviously,CharlieMunger,BerkshiresViceChairmanandmypartner,andIwon,tbeabletolickthathandicapeveryyear.ButweexpectovertimetomaintainamodestadvantageovertheIndex,andthatistheyardstickagainstwhichyoushouldmeasureus.WewillnotaskyoutoadoptthephilosophyoftheChicagoCubsfanwhor

6、eactedtoastringoflacklusterseasonsbysaying,Whygetupset?Everyonehasabadcenturynowandthen.,Gainsinbookvalueare,ofcourse,notthebottomlineatBerkshire.Whattrulycountsaregainsinper-shareintrinsicbusinessvalue.Ordinarily,though,thetwomeasurestendtomoveroughlyintandem,andin1997thatwasthecase:Ledbyablow-outp

7、erformanceatGEICO,Berkshiresintrinsicvalue(whichfarexceedsbookvalue)grewatnearlythesamepaceasbookvalue.Formoreexplanationoftheterm,intrinsicvalue,youmaywishtorefertoourOwnersManual,reprintedonpages62to71.Thismanualsetsforthourowner-relatedbusinessprinciples,informationthatisimportanttoallofBerkshire

8、sshareholders.Inourlasttwoannualreports,wefurnishedyouatablethatCharlieandIbelieveiscentraltoestimatingBerkshiresintrinsicvalue.Intheupdatedversionofthattable,whichfollows,wetraceourtwokeycomponentsofvalue.Thefirstcolumnlistsourper-shareownershipofinvestments(includingcashandequivalents)andthesecond

9、columnshowsourper-shareearningsfromBerkshiresoperatingbusinessesbeforetaxesandpurchase-accountingadjustments(discussedonpages69and70),butafterallinterestandcorporateexpenses.Thesecondcolumnexcludesalldividends,interestandcapitalgainsthatwerealizedfromtheinvestmentspresentedinthefirstcolumn.Ineffect,

10、thecolumnsshowwhatBerkshirewouldlooklikewereitsplitintotwoparts,withoneentityholdingourinvestmentsandtheotheroperatingallofourbusinessesandbearingallcorporatecosts.Pre-taxEarningsPerShareYearInvestmentsPerShareExcludingAllIncomefromInvestments1967$41$1.09197737212.4419873,910108.14199738,043717.82Pu

11、nditswhoignorewhatour38,000employeescontributetothecompany,andinsteadsimplyviewBerkshireasadefactoinvestmentcompany,shouldstudythefiguresinthesecondcolumn.Wemadeourfirstbusinessacquisitionin1967,andsincethenourpre-taxoperatingearningshavegrownfrom$1millionto$888million.Furthermore,asnoted,inthisexer

12、cisewehaveassignedallofBerkshirescorporateexpenses-overheadof$6.6million,interestof$66.9millionandshareholdercontributionsof$15.4million-toourbusinessoperations,eventhoughaportionofthesecouldjustaswellhavebeenassignedtotheinvestmentside.Herearethegrowthratesofthetwosegmentsbydecade:Pre-taxEarningsPe

13、rShareInvestmentsExcludingAllIncomefromDeCadeEndinqPerShareInvestments197724.6%27.6%198726.5%24.1%199725.5%20.8%AnnualGrowthRate,1967-199725.6%24.2%During1997,bothpartsofourbusinessgrewatasatisfactoryrate,withinvestmentsincreasingby$9,543pershare,or33.5%,andoperatingearningsgrowingby$296.43pershare,

14、or70.3%.Oneimportantcaveat:Becausewewereluckyinoursuper-catinsurancebusiness(tobediscussedlater)andbecauseGEICO,sunderwritinggainwaswellabovewhatwecanexpectinmostyears,our1997operatingearningsweremuchbetterthanweanticipatedandalsomorethanweexpectfor1998.Ourrateofprogressinbothinvestmentsandoperation

15、siscertaintofallinthefuture.Foranyonedeployingcapital,nothingrecedeslikesuccess.Myownhistorymakesthepoint:Backin1951,whenIwasattendingBenGrahamsclassatColumbia,anideagivingmea$10,000gainimprovedmyinvestmentperformancefortheyearbyafull100percentagepoints.Today,anideaproducinga$500millionpre-taxprofit

16、forBerkshireaddsonepercentagepointtoourperformance.Itsnowonderthatmyannualresultsinthe1950swerebetterbynearlythirtypercentagepointsthanmyannualgainsinanysubsequentdecade.Charliesexperiencewassimilar.Weweren,tsmarterthen,justsmaller.Atourpresentsize,anyperformancesuperiorityweachievewillbeminor.Wewillbehelped,however,bythefactthatthebusinessestowhichwehave