Buffett's 1991 letter: Debt, valuation and Keynesian wisdom

There is something deeply grounding about reading Warren Buffett's annual letters. The 1991 one, in particular, feels like a calm voice in a market that never stops yelling. While Wall Street was busy chasing fads and fiddling with spreadsheets, Buffett was doing what he always does: focusing on businesses, not tickers; people, not projections; and logic, not labels. In this part of our ongoing series on Buffett's annual letters, we see him sharpen old lessons and challenge new illusions. Whether it's about how to truly value a media company, the difference between a franchise and a business, or the proper way to think about debt, this letter is packed with insights that still hold firm in today's noisy world. Look-through earnings: See the business, not the ticker Buffett called for readjusting the lens. Instead of peering at stock quotes, he urges investors to look through the holdings in their portfolios and tally up the earnings they represent. Not market value. Not charts. Just the earnings attributable to each share owned. This essentially entails thinking of your portfolio as your own mini-conglomerate. Its worth? Not what the market says today but the stream of earnings it generates over the next decade. This perspective pushes you to ask the right questions: How durable is the business? Who is managing it? What happens to the profits? You start thinking like a business owner, not a stock trader. It's a simple mindset shift but a powerful one. The below example shows how you can calculate your look-through earnings. What you really own If you focus on building up look-through earnings, market price eventually plays catch-up Company Ownership (%) Profit after tax (Rs cr) Your share (look-through; Rs cr) A 1.5 1000 15

This article was originally published on April 07, 2025.