Warren Buffett’s new yearly letter to Berkshire Hathaway’s shareholders has not been given the attention it deserves. I wonder if this is because economic journalists feel like they simply can’t publish yet another story about how exactly wise Warren Buffett is.
I feel this is the most significant annual letter of the 50 he has sent out. This one is really three letters in one. First, there’s his usual look at Berkshire Hathaway’s performance in 2014. Subsequently, because it is the 50th anniversary of his buying Berkshire, there’s a different section where he undergoes the history of his control of the firm. Ultimately, his colleague Charlie Munger writes about the company. I suggest reading just the history section, “Berkshire – Past, Present and Future.” It is really interesting, even if you never read one of their Annual Reports and know nothing about the their business.
The matter that should strike you in his latest letter is the value of expertise. And not simply Buffett’s experience—although that’s undeniably amazing. He has researched a great number of companies over a long time and understands much about business success. What is so revealing is Buffett creates that same scenario for that people who manage Berkshire firms. He allows them flexibility and considerable freedom and takes away the parts of their work they do not like and are therefore likely not to be good at. They stay in their firms for many years, often after retirement. The Berkshire way ensures extremely skilled people run their firms, allows independence, and permits them to get their job done over many years. They understand that Buffett can stick with them, even if they make a few mistakes. That’s how he’s assembled such great enterprise executives in the firms of the conglomerate.
Warren Buffett is a man of geart experience who really knows the value of experience.