Buffett's Shareholder Letter: Confidence in US remains unshaken, Calls for investors to focus on the big picture

Warren Buffett expressed his continued confidence in the U.S. economy and his company Berkshire Hathaway in his annual letter to shareholders. He urged investors to focus on the big picture over the long term, rather than short-term concerns like inflation and other factors that impacted stock prices in 2022. Buffett defended buybacks, which were targeted by politicians in Washington, and downplayed net results because they are volatile and affected by accounting rules. Berkshire also repurchased $7.9 billion of its own stock in 2022, signaling confidence it was undervalued. Buffett appeared cautious about his struggles in navigating markets, though he is arguably the most famous living American investor.

Berkshire Hathaway Inc posted a $30.8 billion operating profit in its year-end results, with many of its strongest businesses withstanding pressures from elevated inflation, rising interest rates, and supply chain disruptions. However, Berkshire also posted a $22.8 billion annual net loss, compared with an $89.8 billion gain in 2021, as the prices of Apple Inc and many other stocks in its vast investment portfolio declined. Berkshire owns dozens of operating businesses including the Geico car insurer, BNSF railroad, and well-known consumer brands such as Dairy Queen, Duracell and Fruit of the Loom.

Buffett indirectly criticized President Joe Biden, who this month urged a quadrupling of a 1% tax on corporate stock buybacks that became law in his Inflation Reduction Act last August. Buffett said those who claim all repurchases "are harmful to shareholders or to the country, or particularly beneficial to CEOs" are "either an economic illiterate or a silver-tongued demagogue." He also reminded investors how much Berkshire gives back to the U.S. Treasury, paying $32 billion of federal income taxes over a decade.

Buffett used his letter to renew his affection for his friend and business partner Charlie Munger, the 99-year-old Berkshire vice chairman. He said both will in early May attend Berkshire's annual shareholder weekend, which is known as "Woodstock for Capitalists" and draws tens of thousands of people to Omaha. Berkshire Hathaway employs more than 382,000 people.



Adapted from source: "Warren Buffett, in annual letter, stays upbeat and preaches patience." Reuters, 26 Feb. 2023, www.reuters.com/business/warren-buffett-annual-letter-stays-upbeat-preaches-patience-2023-02-25.

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