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In his annual letter, Warren Buffett praised Charlie Munger as the “architect” of Berkshire Hathaway.
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The investor also blamed stock market gamblers who buy “hot stocks” and “lottery tickets.”
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Buffett fired his forecasters, warned that Berkshire's size was a challenge, and gave a nod to the AI frenzy.
Warren Buffett paid tribute to Charlie Munger, touted Berkshire Hathaway's four biggest bets and expressed his frustration in his annual letter to shareholders published Saturday.
The prominent investor and Berkshire CEO has criticized stock market gamblers and speculators, fired Wall Street forecasters, defended his hometown of Omaha, Nebraska, and nods to the AI trend. .
Munger, Buffett's business partner for more than 40 years and vice chairman of Berkshire, died in November at the age of 99. Munger built Berkshire into a world-class conglomerate and helped Buffett evolve from bargain-hunting to buying companies at fair prices.
Buffett said in the letter, “While I have long been in charge of construction crews, Charlie should forever be recognized as the architect,'' and credited himself with realizing Munger's vision. General Contractor”.
Echoing last year's letter, the billionaire praised Berkshire's large stakes in Coca-Cola and American Express, which it has not touched in more than 20 years, as emblematic of the company's long-term investing style.
Buffett also praised Occidental Petroleum, which he built a nearly 28% stake from scratch over the past two years. He touted himself as an oil and gas explorer and producer who is helping America become energy independent and pioneering carbon capture methods.
He also touted Berkshire's roughly 9% stake in five Japanese trading companies, which it began accumulating in July 2019, and praised Berkshire's restraint on executive compensation, discipline in dividend payments, and long-term, conservative management. .
But Buffett seemed resigned to the fact that Berkshire had grown so much that there was little other direction in which to go.
The stock picker said Berkshire is now so large it had $561 billion in net assets at the end of December, more than any other U.S. company, enough to substantially accelerate its growth. He explained that it is extremely difficult to make an acquisition of this scale.
“There are only a handful of companies left in this country that can truly change Berkshire's course, and those companies have been picked up endlessly by us and others,” he said. , adding that it also has virtually no presence outside the United States.
“Overall, there's no chance of a spectacular performance,” he said.
Buffett also criticized speculators in the letter, saying stock traders are “less emotionally stable and less well-educated” than they were in school. He also pointed out that the proliferation of stock trading apps has made it easier than ever to buy and sell on a daily basis.
“The market is acting much more like a casino now than it did when I was younger,” he said. “Casinos are now in many homes, tempting residents every day.”
Along the same lines, Buffett said he imagines Berkshire's shareholders to be long-term holders, not people who use their excess cash to “play the lottery or buy 'hot stocks.'”
Buffett also dismissed the legions of experts who predict market crashes and recessions and give stock tips on television.
“Experts should always be ignored,” he said, questioning why people would share their predictions when they were sure they would come true. “It's like finding gold and giving your neighbor a map showing its location.”
Buffett also said Omaha produced him and Munger. Ajit Jain and Greg Abel, Berkshire's heads of insurance and non-insurance. And his sister Bertie is “one of the great investors in this country,” he said.
“So what's going on? The water in Omaha? The air in Omaha? Something similar to the phenomenon that produced Jamaican sprinters, Kenyan marathon runners, or Russian chess experts. “Is it some strange planetary phenomenon? We'll have to wait until someday for an AI to come up with an answer to this puzzle?” he joked.
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