Warren Buffett offers lessons on investing in his annual Berkshire Hathaway letter

[February 24, 2025]  By JOSH FUNK

OMAHA, Neb. (AP) — Billionaire Warren Buffett is viewed as one of the world's greatest investors, so his annual letters to Berkshire Hathaway shareholders are always read closely for lessons.

Buffett no longer ventures much into politics or current events in his letters, so he won't offend anyone who might take it out on his many companies that include well-known ones like Geico insurance, Dairy Queen and Helzberg jewelry.

But Buffett's latest letter released Saturday does offer insights into investing and some lessons from his six decades at the helm of Berkshire. Here's a sample:

On what the U.S. government should do:

“Thank you, Uncle Sam. Someday your nieces and nephews at Berkshire hope to send you even larger payments than we did in 2024. Spend it wisely. Take care of the many who, for no fault of their own, get the short straws in life. They deserve better. And never forget that we need you to maintain a stable currency and that result requires both wisdom and vigilance on your part."

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On the future of Berkshire's well-read annual report:

“At 94, it won’t be long before Greg Abel replaces me as CEO and will be writing the annual letters. Greg shares the Berkshire creed that a “report” is what a Berkshire CEO annually owes to owners. And he also understands that if you start fooling your shareholders, you will soon believe your own baloney and be fooling yourself as well.”

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On making mistakes over the years:

"Of course, I expect to make my share of mistakes about the businesses Berkshire buys and sometimes err in evaluating the sort of person with whom I’m dealing.

"But I’ve also had many pleasant surprises in both the potential of the business as well as the ability and fidelity of the manager. And our experience is that a single winning decision can make a breathtaking difference over time. (Think GEICO as a business decision, Ajit Jain as a managerial decision and my luck in finding Charlie Munger as a one-of-a-kind partner, personal advisor and steadfast friend.)

“Mistakes fade away; winners can forever blossom.”

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On what Buffett relies on to profit:

“Businesses, as well as individuals with desired talents, however, will usually find a way to cope with monetary instability as long as their goods or services are desired by the country’s citizenry. So, too, with personal skills. Lacking such assets as athletic excellence, a wonderful voice, medical or legal skills or, for that matter, any special talents, I have had to rely on equities throughout my life. In effect, I have depended on the success of American businesses and I will continue to do so.”

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On Berkshire's investments in acquiring entire companies vs. investing in stocks:

"Understandably, really outstanding businesses are very seldom offered in their entirety, but small fractions of these gems can be purchased Monday through Friday on Wall Street and, very occasionally, they sell at bargain prices.

Shareholder Tina Schmidt of Cozad, Neb., wears a shirt with Warren Buffett's portrait in the style of an Andy Warhol painting at the Berkshire Hathaway annual meeting on May 4, 2024, in Omaha, Neb. (AP Photo/Rebecca S. Gratz, File)

“We are impartial in our choice of equity vehicles, investing in either variety based upon where we can best deploy your (and my family’s) savings. Often, nothing looks compelling; very infrequently we find ourselves knee-deep in opportunities. Greg has vividly shown his ability to act at such times.”

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On America's prosperity:

"Our country’s progress over its mere 235 years of existence could not have been imagined by even the most optimistic colonists in 1789, when the Constitution was adopted and the country's energies were unleashed.

"True, our country in its infancy sometimes borrowed abroad to supplement our own savings. But, concurrently, we needed many Americans to consistently save and then needed those savers or other Americans to wisely deploy the capital thus made available. If America had consumed all that it produced, the country would have been spinning its wheels.

"The American process has not always been pretty – our country has forever had many scoundrels and promoters who seek to take advantage of those who mistakenly trust them with their savings. But even with such malfeasance – which remains in full force today – and also much deployment of capital that eventually floundered because of brutal competition or disruptive innovation, the savings of Americans has delivered a quantity and quality of output beyond the dreams of any colonist.

“From a base of only four million people – and despite a brutal internal war early on, pitting one American against another — America changed the world in the blink of a celestial eye.”

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On Berkshire's massive $334.2 billion cash pile:

"Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities. That preference won’t change.

"While our ownership in marketable equities moved downward last year from $354 billion to $272 billion, the value of our non-quoted controlled equities increased somewhat and remains far greater than the value of the marketable portfolio.

"Berkshire shareholders can rest assured that we will forever deploy a substantial majority of their money in equities – mostly American equities although many of these will have international operations of significance. Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses, whether controlled or only partially owned.

“Paper money can see its value evaporate if fiscal folly prevails. In some countries, this reckless practice has become habitual, and, in our country’s short history, the U.S. has come close to the edge. Fixed-coupon bonds provide no protection against runaway currency.”

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