Warren Buffett 10 shareholder letters: The decade’s most essential investment lessons

The ageless knowledge offered by Warren Buffett is encapsulated in his renowned letters to shareholders. From investing in high-dividend-paying companies to the grim future of fixed-income instruments, resistance to debt, and the importance of purchasing shares at the proper price, he explains it all.

Buffett once stated that global fixed-income investors, including pension funds, insurance firms, and retirees, face a grim future.


Abraham Lincoln famously stated that if he had six hours to cut down a tree, he would spend the first four hours honing the axe.

Yet, in today’s financial markets, there is likely no one better than Warren Buffett, chairman of Berkshire Hathaway and, more significantly, a legendary investor.

Investing in the stock market is similar. The more time you spend studying your behaviour and honing your “axe,” the better the outcomes will be.

Yet, in today’s financial markets, there is likely no one better than Warren Buffett, chairman of Berkshire Hathaway and, more significantly, a legendary investor.

Lucky for us, he writes a letter to shareholders each year summarising his organization’s financial results in clear and entertaining English.

All of these letters are drenched in ancient financial wisdom. We look over the letters sent in the last decade to extract some of this timeless knowledge.

Let us go on the decade-long Buffett-ism journey:

Investing in dividend-paying companies in 2023:

Buffett discusses Berkshire Hathaway’s massive dividend income from only two firms. Buffett’s Berkshire earned a $704 million dividend from Coke, and a $302 million dividend from American Express. Berkshire invested $1.3 billion apiece in 1994 to purchase their shares.

These equities now account for 5% of Berkshire’s investment.

Top Dividend Paying Stocks in India 2023

Instead of spending $1.3 billion in Coke and American Express in the 1990s, Berkshire could have invested in fixed income instruments such as high grade 30-year bonds and received an annual income of $80 million.

Yet, by investing in equities, Berkshire now makes about $1 billion each year, and the whole investment is now $47 billion, or around 10% of Berkshire’s net value.

2021 – Keeping cash rather than investing in equities

In 2021, Berkshire Hathaway had $144 billion in cash. He cited a dearth of solid investment prospects as the explanation.
If you think like there is no investment opportunity that you feel confident better to hold your cash for any other investment options.

Warren buffett believes that investing should not be done for the sake of investing. “Berkshire’s present 80 percent-or-so position in businesses is a result of my failure to discover complete firms or tiny pieces thereof (that is, marketable stocks) that fulfil our long-term holding criterion,” he said.

Fixed income instruments face a bleak future in 2020:

Fixed income instruments, he claims, have a grim future.

“Investors receive a negative return on trillions of dollars in national debt in several major and significant nations, such as Germany and Japan. “Global fixed-income investors, whether pension funds, insurance firms, or pensioners, face a grim future,” he claims.

2019: The importance of operating profits above quarterly gains:

Concentrate on operational profitability rather than quarterly and yearly gains and losses, whether realised or unrealised.

Quoting John Maynard Keynes in his review of Edgar Lawrence Smith’s book ‘Common Stocks as Long Term Investments,’ Warren Buffett says that successful corporations may not declare dividends but instead reinvest profits, reaping the benefits of compounding.

In general, well-managed industrial enterprises do not allocate the entirety of their produced earnings to shareholders. In good years, if not all years, they keep a portion of their profits and reinvest them in the firm. As a result, there is an element of compound interest (Keynes’ emphasis) at work in favour of a smart industrial investment,” he argues.

ALSO READ: Warren Buffett’s letter to shareholders: Key lessons investors should not miss 

2018Look at the larger picture instead of the individual units

He claims that estimating Berkshire’s core business value does not require evaluating each tree separately.

In discussing the bigger picture, he claims that Berkshire is the only Fortune 500 corporation that does not prepare monthly earnings reports or balance sheets.

Aversion to debt in 2017:

Warren buffett emphasises that while attempting to buy new firms, Berkshire ensures that the purchase price is reasonable and that the company does not need to incur excessive debt to finance the transaction.

He also emphasised Berkshire Hathaway’s aversion to total debt.

“Over the years, our reluctance to leverage has impacted our results. Yet Charlie and I both sleep soundly. “We both agree that risking what you have and need in order to gain what you don’t need is foolish,” he writes.

Purchasing at the Right Price in 2016:

Warren buffett claims that any good firm may be a disastrous investment if purchased at an exorbitant price. Hence, a healthy investment is one that is made not only in a solid firm but also at a decent price.

2015: Evergreen industries:

Despite justifying significant expenditures in plant and equipment, he emphasises that society will always require significant investments in transportation and energy. Throughout the same year, he had no qualms about recognising his errors and poor judgement.

“In most of these situations, I was incorrect in my assessment of the economic dynamics of the firm or the industry in which it works, and we are now paying the price for my errors,” he said.

Intrinsic value trumps book value in 2014.

Warren buffett emphasises the need of looking at a company’s intrinsic worth rather than just its book value.

He claims that the extra value (referring to insurance float) will never be recorded on the books. Yet it’s still there. “That’s one reason – a big reason – why we think Berkshire’s underlying business value well above its book value,” he adds.

2013: The Significance of Long-Term Stock Holdings:

A bull market, he argues, is like sex, paraphrasing Barton Biggs. It feels the nicest right before it ends.

Warren buffett advises investors to acquire shares over time and never sell when the news is negative and equities are substantially off their highs.

He also claims that a novice investor might get good earnings by diversifying and keeping expenditures to a minimum.

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