The Berkshire Hathaway 2010 shareholder letter was recently published and can be found, along with the last 34 years of letters here. I would venture to say that most of you are familiar with the name Warren Buffett and his operation of Berkshire Hathaway. He’s an inspiration to millions of investors and his letters really highlight his investment philosophies very well.
In a day where greed and corruption are the top news in finance, it’s refreshing to read and learn from someone who stays true to his word – especially when he’s managing billions and billions of dollars. While reading his latest letter to the shareholders, I made note of his outlook on investing and a few points about how he runs such a profitable business. I think there's a lot to learn from how Mr. Buffett does business, and his letters to the shareholders are a great look into these lessons.
Buffett’s Positive Outlook On America
It’s no secret that Warren Buffett thinks highly of American businesses. With Berkshire’s acquisition of Burlington Northern Santa Fe (BNSF) in 2010, and $5.4 billion investment of capital (all spent within the United States), it’s clear to see that Warren sees opportunity here within our borders.
Buffett made the comment that “tomorrow is always uncertain” but insisted that we shouldn’t be ‘spooked’ by that comment. (This philosophy aligns perfectly with the passage in Matthew 6:34 – “Do not worry about tomorrow, for tomorrow will worry about itself..”)
He’s confident in our strength as a nation and puts his money where his mouth is!
Performance Reviews And Goals Should Be Objective
Warren Buffett and his business partner Charlie Munger are genius investors, but without a standard to measure performance, you can’t expect them to come up with the same conclusion. This is evident in their use of valuating their company holding according to book value – the total value of a company’s assets that the shareholders would theoretically receive if a company were to be liquidated. This fundamental approach to investing is key for their success and can even be modeled on an individual level when selecting investments.
Diversify Your Talent And Give Credit Appropriately
Warren Buffett does not take all the credit for making Berkshire Hathaway what it is today. He’s quoted as giving much recognition to specific managers, company owners, and support staff at Berkshire.
I love how he describes the team at Berkshire:
“Berkshire’s CEO’s (companies held by Berkshire) come in many forms. Some have MBAs; others never finished college. Some use budgets and are by-the-book types; others operate by the seat of their pants. Our team resembles a baseball squad composed of all-stars having vastly different batting styles. Changes in our line-up are seldom required.”
Buffett’s team of diversified talent is arguable one of the most crucial parts of Berkshire’s success. Without good players, you team won’t win games. Buffett’s team wins games, and following their investing and general business philosophy is a strategy that I feel many businesses and investors would benefit from.
Do you admire anyone in business? What leadership qualities really stand out in someone you admire?