Every year, investors eagerly await Warren Buffett’s annual letter to Berkshire Hathaway shareholders.
A $10,000 investment in Berkshire Hathaway in 1965, when Buffett took control of the company, would have grown to more than $550 million — a gain of 5.5 million percent!
Buffett’s insights are pure gold. He’s been investing for more than 80 years, and his 60-year track record is in a league of its own.
This year’s letter didn’t disappoint.
Buffett shared lessons on admitting mistakes, viewing stocks the right way and why America remains the best place to invest.
Here are my big three takeaways from this year’s letter…
No. 1: Admit Mistakes and Fix Them Fast
Buffett doesn’t sugarcoat his errors. He admits them. That’s a rare trait among CEOs, and it’s one of the reasons he’s built such trust with shareholders.
He writes:
“Sometimes I’ve made mistakes in assessing the future economics of a business I’ve purchased for Berkshire — each a case of capital allocation gone wrong.”
Even the best investors don’t bat 1.000. Buffett acknowledges that some of his stock picks and company acquisitions haven’t worked out.
But here’s the key —he doesn’t let mistakes linger. He acts.
Buffett credits Charlie Munger with drilling this into him. Munger called it “thumb-sucking”— the tendency to delay fixing a bad decision:
“Problems, he [Charlie] would tell me, cannot be wished away. They require action, however uncomfortable that may be.”
That’s a lesson for all investors. If a stock isn’t working out, don’t cling to it out of pride. Admit the mistake and move on.
No. 2: Stocks Are Businesses — Own Them Like One
Buffett’s approach to stocks is refreshingly simple: Treat them as ownership in real businesses.
He doesn’t gamble on price swings — he invests in companies he is confident in.
“Berkshire’s equity activity is ambidextrous. In one hand we own control of many businesses … In the other hand, we own a small percentage of a dozen or so very large and highly profitable businesses.”
Berkshire’s investments fall into two camps:
- Wholly owned subsidiaries like GEICO and BNSF Railway.
- Partial ownership in great companies like Apple, American Express and Coca-Cola.
Buffett’s key point?
Whether you own 100% of a company or just a tiny piece, the mindset should be the same.
Stocks aren’t just ticker symbols — they’re businesses.
And the best businesses aren’t always for sale in their entirety. But as Buffett says:
“Small fractions of these gems can be purchased Monday through Friday on Wall Street and, very occasionally, they sell at bargain prices.”
That’s the playbook. Find great companies, buy them when they’re trading at bargain prices and hold them for the long haul.
That’s exactly the approach we take with every stock in The American Prosperity Report portfolio.
No. 3: The American Miracle is Still Alive
Despite all the negativity out there, Buffett remains very bullish on America. He sees capitalism as an engine for progress and wealth creation:
“This system is called capitalism. It has its faults and abuses — in certain respects more egregious now than ever — but it also can work wonders unmatched by other economic systems. America is Exhibit A.”
The U.S. has faced wars, recessions and crises, yet it keeps growing.
Buffett reminds us that in just 250 years, America has gone from a small collection of colonies to the world’s leading economic powerhouse.
His message is clear: Don’t bet against America.
“The savings of Americans has delivered a quantity and quality of output beyond the dreams of any colonist.”
That’s why Buffett keeps Berkshire’s money invested in American businesses. He knows that, despite the bumps along the way, the long-term trajectory is up.
Building Wealth with These Proven Principles
Buffett’s letter is packed with wisdom. I highly suggest you read it here.
You’ll walk away a lot smarter.
I also recommend a book I read over the weekend, Buffett and Munger Unscripted by Alex Morris.
Morris watched hundreds of hours of Berkshire Hathaway annual meetings, covering more than 1,700 shareholder questions over the past 31 years.
Then, he did something even more impressive: He organized, edited and distilled the most insightful moments into a format that any investor — new or experienced — can learn from.
The book’s subtitle tells you exactly what it is about: Three decades of investment and business insights from the Berkshire Hathaway annual shareholder meetings.
Buffett has spent a lifetime building wealth with these principles.
They worked for him and they are working for us, too.
Regards,
Charles Mizrahi
Founder, Alpha Investor
