Annual letter 2022 by Warren Buffet (Key points to remember)

episodically–it becomes easy to buy pieces of wonderful businesses at wonderful prices.It’s crucial to understand that stocks often trade at truly foolish prices, both high and low. “Efficient”markets exist only in textbook.In truth marketable stocks and bonds are baffling, their behavior usually understandable only in retrospect.Controlled businesses are different breed.They sometimes command ridiculously higher prices than justified but are almost never available at bargain valuations.Unless under duress,the owner of a controlled business gives no thought to selling at a panic-type valuation

The weeds wither away in significance as the flowers bloom Over time, it takes just a few winners to work wonders. And, yes, it helps to start early and live into your 90s as well.

The math isn’t complicated: When the share count goes down, your interest in our many businesses goes up. Every small bit helps if repurchases are made at value-accretive prices. Just as surely, when a company overpays for repurchases, the continuing shareholders lose. At such times, gains flow only to the selling shareholders and to the friendly, but expensive, investment banker who recommended the foolish purchases.

 When you are told that all repurchases are harmful to shareholders or to the country, or particularly beneficial to CEOs, you are listening to either an economic illiterate or a silver-tongued demagogue (characters that are not mutually exclusive)

Charlie and I plead ignorance and firmly believe that near-term economic and market forecasts are worse than useless

Berkshire’s contribution via the corporate income tax was $32 billion during the decade, almost exactly a tenth of 1% of all money that the Treasury collected. And that means – brace yourself – had there been roughly 1,000 taxpayers in the U.S. matching Berkshire’s payments, no other businesses nor any of the country’s 131 million households would have needed to pay any taxes to the federal government. Not a dime.

Millions, billions, trillions – we all know the words, but the sums involved are almost impossible to comprehend.Let’s put physical dimensions to the numbers:

• If you convert $1 million into newly-printed $100 bills, you will have a stack that reaches your chest

• Perform the same exercise with $1 billion – this is getting exciting!–and the stack reaches about 3⁄4 of a mile into the sky

• Finally, imagine piling up $32 billion,the total of Berkshire’s 2012-21 federal income tax payments.Now the stack grows to more than 21 miles in height,about three times the level at which commercial planes fly

Charlie and I think pretty much alike. But what it takes me a page to explain, he sums up in a sentence. His version, moreover, is always more clearly reasoned and also more artfully – some might add bluntly – stated.

• The world is full of foolish gamblers, and they will not do as well as the patient investor.

• If you don’t see the world the way it is, it’s like judging something through a distorted lens.

• All I want to know is where I’m going to die, so I’ll never go there. And a related thought: Early on, write your desired obituary – and then behave accordingly.

• If you don’t care whether you are rational or not, you won’t work on it. Then you will stay irrational and get lousy results.

• Patience can be learned. Having a long attention span and the ability to concentrate on one thing for a long time is a huge advantage.

• You can learn a lot from dead people. Read of the deceased you admire and detest.

• Don’t bail away in a sinking boat if you can swim to one that is seaworthy.

• A great company keeps working after you are not; a mediocre company won’t do that.

• Warren and I don’t focus on the froth of the market. We seek out good long-term investments and stubbornly hold them for a long time.

• Ben Graham said, “Day to day, the stock market is a voting machine; in the long term it’s

a weighing machine.” If you keep making something more valuable, then some wise person is going to notice it and start buying.

• There is no such thing as a 100% sure thing when investing. Thus, the use of leverage is dangerous. A string of wonderful numbers times zero will always equal zero. Don’t count on getting rich twice.

• You don’t, however, need to own a lot of things in order to get rich.

• You have to keep learning if you want to become a great investor. When the world changes, you must change.

• Warren and I hated railroad stocks for decades, but the world changed and finally the country had four huge railroads of vital importance to the American economy. We were slow to recognize the change, but better late than never.

• Finally, I will add two short sentences by Charlie that have been his decision-clinchers for decades: “Warren, think more about it. You’re smart and I’m right.” And so it goes. I never have a phone call with Charlie without learning something. And, while he makes me think, he also makes me laugh.