Learnings from Warren Buffett's 2021 letter to shareholders

Nearly every year since 1965, there has been something to learn from Mr Warren Buffett's letters to Berkshire Hathaway shareholders. Sometimes there are new things that one can learn and other times there are old nuggets of wisdom that act as a good reinforcement. Regardless, it is a great source of learning. So we thought we would present to you the important tidbits from his latest letter here.

Business-like investing
"Whatever our form of ownership, our goal is to have meaningful investments in businesses with both durable economic advantages and a first-class CEO. Please note particularly that we own stocks based upon our expectations about their long-term business performance and not because we view them as vehicles for timely market moves. That point is crucial: Charlie and I are not stock-pickers; we are business-pickers."

Deceptive numbers
"It should be noted, we are talking about the old-fashioned sort of earnings that we favor: a figure calculated after interest, taxes, depreciation, amortization and all forms of compensation. (Our definition suggests a warning: Deceptive "adjustments" to earnings - to use a polite description - have become both more frequent and more fanciful as stocks have risen. Speaking less politely, I would say that bull markets breed bloviated bull . . ..)"

Interest rates (for more on this, check out the latest issue of Wealth Insight)
"Long-term interest rates that are low push the prices of all productive investments upward, whether these are stocks, apartments, farms, oil wells, whatever. Other factors influence valuations as well, but interest rates will always be important."

Share Repurchases
"Our final path to value creation is to repurchase Berkshire shares. Through that simple act, we increase your share of the many controlled and non-controlled businesses Berkshire owns. When the price/value equation is right, this path is the easiest and most certain way for us to increase your wealth...

...I want to underscore that for Berkshire repurchases to make sense, our shares must offer appropriate value. We don't want to overpay for the shares of other companies, and it would be value-destroying if we were to overpay when we are buying Berkshire."

A golden nugget
"...people who are comfortable with their investments will, on average, achieve better results than those who are motivated by ever-changing headlines, chatter and promises."

Also read:

Lessons from Buffett's annual letter

Highlights from Warren Buffett's annual letter

How to think about businesses the Warren Buffett way