8 Timeless Investing Lessons from 2023 Berkshire Hathaway Shareholder Letter by Warren Buffett
Berkshire Hathaway Chairman Warren Buffett released the 2023 shareholder letter yesterday. It has some timeless lessons on investing. Not that these are new. Mr. Buffett has mentioned these umpteen times in his previous letters. The 2023 letter is a useful reminder to all upcoming investors on key investing principles.
I have picked up a few important lines from the shareholder letter and compiled them below as key principles. I urge you to read the entire letter in full after reading this post. Link to the letter at the end of this post.
Here are the 8 timeless principles highlighted in the 2023 letter.
Never risk permanent loss of capital. This will always remain Rule 1.
"One investment rule at Berkshire has not and will not change: Never risk permanent loss of capital".
Long-term Thinking & Ownership.
"I can’t remember a period since March 11, 1942 – the date of my first stock purchase – that I have not had a majority of my net worth in equities, U.S.-based equities".
Do not time the market. Stay Invested.
"America has been a terrific country for investors. All they have needed to do is sit quietly, listening to no one".
Markets are inefficient and offer good opportunities occasionally.
"Occasionally, markets and/or the economy will cause stocks and bonds of some large and fundamentally good businesses to be strikingly mispriced".
"For whatever reasons, markets now exhibit far more casino-like behaviour than they did when I was young".
Invest in Good Businesses run by Good Management.
"Our goal at Berkshire is simple: We want to own either all or a portion of businesses that enjoy good economics that are fundamental and enduring".
"We also hope these favored businesses are run by able and trustworthy managers, though that is a more difficult judgment to make".
Invest in companies with Financial Strength
"Berkshire’s strength comes from its Niagara of diverse earnings delivered after interest costs, taxes and substantial charges for depreciation and amortization".
Be Patient with your Investments
"The lesson from Coke and AMEX? When you find a truly wonderful business, stick with it. Patience pays, and one wonderful business can offset the many mediocre decisions that are inevitable".
Look for Re-Investment Opportunities (On his investments in Japanese Stocks)
"large Japanese companies, each of which operates in a highly-diversified manner somewhat similar to the way Berkshire itself is run"
"These companies apply only about one-third of their earnings to dividends, using the large sums they retain both to build their many businesses and, to a lesser degree, to repurchase shares. Like Berkshire, they are reluctant to issue shares, which aligns with Buffett's investment philosophy."
"In certain important ways, all five companies – Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo – follow shareholder-friendly policies that are much superior to those customarily practiced in the U.S."