Berkshire Hathaway Letters to Shareholders: 1965-2024

by Warren Buffett

Over time, the aggregate gains made by Berkshire shareholders must of necessity match the business gains of the company. When the stock temporarily overperforms or underperforms the business, a limited number of shareholders—either sellers or buyers—receive outsized benefits at the expense of those they trade with. Generally, the sophisticated have an edge over the innocents in this game. Though our primary goal is to maximize the amount that our shareholders, in total, reap from their ownership of Berkshire, we wish also to minimize the benefits going to some shareholders at the expense of others. These are goals we would have were we managing a family partnership, and we believe they make equal sense for the manager of a public company. In a partnership, fairness requires that partnership interests be valued equitably when partners enter or exit; in a public company, fairness prevails when market price and intrinsic value are in sync. Obviously, they won’t always meet that ideal, but a manager—by his policies and communications—can do much to foster equity. Of course, the longer a shareholder holds his shares, the more bearing Berkshire’s business results will have on his financial experience—and the less it will matter what premium or discount to intrinsic value prevails when he buys and sells his stock. That’s one reason we hope to attract owners with long-term horizons. Overall, I think we have succeeded in that pursuit. Berkshire probably ranks number one among large...