4 Lessons from Warren Buffett's Latest Shareholder Letter

 

1. Even Billionaires Make Mistakes!

In a 2008 shareholder letter, Buffett described his purchase of $ 433 million worth of Dexter Shoe shares using Berkshire, calling it his worst deal ever. But he also promised: "I'll make more mistakes in the future, you can be sure of that." Buffett admitted another mistake this year: investing too much in 2016 in Precision Castparts Corp., a manufacturer of industrial and aircraft parts. While the airline industry was seriously damaged by the epidemic, Precision company laid off nearly 40 percent of its employees last year. Buffett said that Berkshire's writedown of nearly $ 11 billion in 2020 was the result of misjudging the business's average future earnings. The lesson: Even the world's most successful investors make mistakes! Learn from mistakes. And no matter what mistake you make, reassure yourself with the fact that it probably won't cost you $ 11 billion.

2. Patience Matters More Than Luck

Buffett is a staunch buy-and-hold advocate who says that a stock's best holding period is forever. In this year's letter, Buffett reiterated the importance of patience in active trading. "A patient and sane investor who creates a portfolio by throwing 50 darts on a board listing the entire S&P 500 will benefit from dividends and capital gains unless they tend to make changes to their original choices."

3. Investment Managers Don't Work Cheap.

Berkshire's president has long criticized fund managers for their high wages and poor performance. Buffett said, "Wall Streeters don't work for peanuts," to investors in his letter this year. Over a decade ago, Buffett made a million-dollar bet through a hedge fund that a simple S&P 500 index fund could outperform a handpicked portfolio in 10 years. He officially won this bet in 2017.

4. Difficulty Will Not Get You Extra Points

Buffett cares about owning shares in large businesses but doesn't mind controlling them. He and Berkshire vice president Charlie Munger will continue to manage investors' money, but the less effort is always better, he said. He added, "Unlike the scoring system used in jump competitions, you don't earn extra points for difficulty in work efforts." The Oracle of Omaha has also specifically stated that he does not invest in hard-to-understand business.   4 Lessons from Warren Buffett's Latest Shareholder Letter Source: https://www.fool.com/ You may also be interested in:

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