巴菲特致股东的信1997.docx

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1、编号：时间：2021年x月x日书山有路勤为径，学海无涯苦作舟页码：第32页 共32页BERKSHIRE HATHAWAY INC. 1997 Chairmans Letter To the Shareholders of Berkshire Hathaway Inc.: Our gain in net worth during 1997 was $8.0 billion, which increased the per-share book value of both our Class A and Class B stock by 34.1%. Over the last 33 years

2、(that is, since present management took over) per-share book value has grown from $19 to $25,488, a rate of 24.1% compounded annually.(1) 1. All figures used in this report apply to Berkshires A shares, the successor to the only stock that the company had outstanding before 1996. The B shares have a

3、n economic interest equal to 1/30th that of the A. Given our gain of 34.1%, it is tempting to declare victory and move on. But last years performance was no great triumph: Any investor can chalk up large returns when stocks soar, as they did in 1997. In a bull market, one must avoid the error of the

4、 preening duck that quacks boastfully after a torrential rainstorm, thinking that its paddling skills have caused it to rise in the world. A right-thinking duck would instead compare its position after the downpour to that of the other ducks on the pond. So whats our duck rating for 1997? The table

5、on the facing page shows that though we paddled furiously last year, passive ducks that simply invested in the S&P Index rose almost as fast as we did. Our appraisal of 1997s performance, then: Quack. When the market booms, we tend to suffer in comparison with the S&P Index. The Index bears no tax c

6、osts, nor do mutual funds, since they pass through all tax liabilities to their owners. Last year, on the other hand, Berkshire paid or accrued $4.2 billion for federal income tax, or about 18% of our beginning net worth. Berkshire will always have corporate taxes to pay, which means it needs to ove

7、rcome their drag in order to justify its existence. Obviously, Charlie Munger, Berkshires Vice Chairman and my partner, and I wont be able to lick that handicap every year. But we expect over time to maintain a modest advantage over the Index, and that is the yardstick against which you should measu

8、re us. We will not ask you to adopt the philosophy of the Chicago Cubs fan who reacted to a string of lackluster seasons by saying, Why get upset? Everyone has a bad century now and then. Gains in book value are, of course, not the bottom line at Berkshire. What truly counts are gains in per-share i

9、ntrinsic business value. Ordinarily, though, the two measures tend to move roughly in tandem, and in 1997 that was the case: Led by a blow-out performance at GEICO, Berkshires intrinsic value (which far exceeds book value) grew at nearly the same pace as book value. For more explanation of the term,

10、 intrinsic value, you may wish to refer to our Owners Manual, reprinted on pages 62 to 71. This manual sets forth our owner-related business principles, information that is important to all of Berkshires shareholders. In our last two annual reports, we furnished you a table that Charlie and I believ

11、e is central to estimating Berkshires intrinsic value. In the updated version of that table, which follows, we trace our two key components of value. The first column lists our per-share ownership of investments (including cash and equivalents) and the second column shows our per-share earnings from

12、 Berkshires operating businesses before taxes and purchase-accounting adjustments (discussed on pages 69 and 70), but after all interest and corporate expenses. The second column excludes all dividends, interest and capital gains that we realized from the investments presented in the first column. I

13、n effect, the columns show what Berkshire would look like were it split into two parts, with one entity holding our investments and the other operating all of our businesses and bearing all corporate costs. Pre-tax Earnings Per Share Investments Excluding All Income from Year Per Share Investments 1

14、967 $ 41 $ 1.09 1977 372 12.44 1987 3,910 108.14 1997 38,043 717.82 Pundits who ignore what our 38,000 employees contribute to the company, and instead simply view Berkshire as a de facto investment company, should study the figures in the second column. We made our first business acquisition in 196

15、7, and since then our pre-tax operating earnings have grown from $1 million to $888 million. Furthermore, as noted, in this exercise we have assigned all of Berkshires corporate expenses - overhead of $6.6 million, interest of $66.9 million and shareholder contributions of $15.4 million - to our bus

16、iness operations, even though a portion of these could just as well have been assigned to the investment side. Here are the growth rates of the two segments by decade: Pre-tax Earnings Per Share Investments Excluding All Income from Decade Ending Per Share Investments 1977 24.6% 27.6% 1987 26.5% 24.

17、1% 1997 25.5% 20.8% Annual Growth Rate, 1967-1997 25.6% 24.2% During 1997, both parts of our business grew at a satisfactory rate, with investments increasing by $9,543 per share, or 33.5%, and operating earnings growing by $296.43 per share, or 70.3%. One important caveat: Because we were lucky in

18、our super-cat insurance business (to be discussed later) and because GEICOs underwriting gain was well above what we can expect in most years, our 1997 operating earnings were much better than we anticipated and also more than we expect for 1998. Our rate of progress in both investments and operatio

19、ns is certain to fall in the future. For anyone deploying capital, nothing recedes like success. My own history makes the point: Back in 1951, when I was attending Ben Grahams class at Columbia, an idea giving me a $10,000 gain improved my investment performance for the year by a full 100 percentage

20、 points. Today, an idea producing a $500 million pre-tax profit for Berkshire adds one percentage point to our performance. Its no wonder that my annual results in the 1950s were better by nearly thirty percentage points than my annual gains in any subsequent decade. Charlies experience was similar.

21、 We werent smarter then, just smaller. At our present size, any performance superiority we achieve will be minor. We will be helped, however, by the fact that the businesses to which we have already allocated capital - both operating subsidiaries and companies in which we are passive investors - hav

22、e splendid long-term prospects. We are also blessed with a managerial corps that is unsurpassed in ability and focus. Most of these executives are wealthy and do not need the pay they receive from Berkshire to maintain their way of life. They are motivated by the joy of accomplishment, not by fame o

23、r fortune. Though we are delighted with what we own, we are not pleased with our prospects for committing incoming funds. Prices are high for both businesses and stocks. That does not mean that the prices of either will fall - we have absolutely no view on that matter - but it does mean that we get

24、relatively little in prospective earnings when we commit fresh money. Under these circumstances, we try to exert a Ted Williams kind of discipline. In his book The Science of Hitting, Ted explains that he carved the strike zone into 77 cells, each the size of a baseball. Swinging only at balls in hi

25、s best cell, he knew, would allow him to bat .400; reaching for balls in his worst spot, the low outside corner of the strike zone, would reduce him to .230. In other words, waiting for the fat pitch would mean a trip to the Hall of Fame; swinging indiscriminately would mean a ticket to the minors.

26、If they are in the strike zone at all, the business pitches we now see are just catching the lower outside corner. If we swing, we will be locked into low returns. But if we let all of todays balls go by, there can be no assurance that the next ones we see will be more to our liking. Perhaps the att

27、ractive prices of the past were the aberrations, not the full prices of today. Unlike Ted, we cant be called out if we resist three pitches that are barely in the strike zone; nevertheless, just standing there, day after day, with my bat on my shoulder is not my idea of fun. Unconventional Commitmen

28、ts When we cant find our favorite commitment - a well-run and sensibly-priced business with fine economics - we usually opt to put new money into very short-term instruments of the highest quality. Sometimes, however, we venture elsewhere. Obviously we believe that the alternative commitments we mak

29、e are more likely to result in profit than loss. But we also realize that they do not offer the certainty of profit that exists in a wonderful business secured at an attractive price. Finding that kind of opportunity, we know that we are going to make money - the only question being when. With alter

30、native investments, we think that we are going to make money. But we also recognize that we will sometimes realize losses, occasionally of substantial size. We had three non-traditional positions at yearend. The first was derivative contracts for 14.0 million barrels of oil, that being what was then

31、 left of a 45.7 million barrel position we established in 1994-95. Contracts for 31.7 million barrels were settled in 1995-97, and these supplied us with a pre-tax gain of about $61.9 million. Our remaining contracts expire during 1998 and 1999. In these, we had an unrealized gain of $11.6 million a

32、t yearend. Accounting rules require that commodity positions be carried at market value. Therefore, both our annual and quarterly financial statements reflect any unrealized gain or loss in these contracts. When we established our contracts, oil for future delivery seemed modestly underpriced. Today

33、, though, we have no opinion as to its attractiveness. Our second non-traditional commitment is in silver. Last year, we purchased 111.2 million ounces. Marked to market, that position produced a pre-tax gain of $97.4 million for us in 1997. In a way, this is a return to the past for me: Thirty year

34、s ago, I bought silver because I anticipated its demonetization by the U.S. Government. Ever since, I have followed the metals fundamentals but not owned it. In recent years, bullion inventories have fallen materially, and last summer Charlie and I concluded that a higher price would be needed to es

35、tablish equilibrium between supply and demand. Inflation expectations, it should be noted, play no part in our calculation of silvers value. Finally, our largest non-traditional position at yearend was $4.6 billion, at amortized cost, of long-term zero-coupon obligations of the U.S. Treasury. These

36、securities pay no interest. Instead, they provide their holders a return by way of the discount at which they are purchased, a characteristic that makes their market prices move rapidly when interest rates change. If rates rise, you lose heavily with zeros, and if rates fall, you make outsized gains

37、. Since rates fell in 1997, we ended the year with an unrealized pre-tax gain of $598.8 million in our zeros. Because we carry the securities at market value, that gain is reflected in yearend book value. In purchasing zeros, rather than staying with cash-equivalents, we risk looking very foolish: A

38、 macro-based commitment such as this never has anything close to a 100% probability of being successful. However, you pay Charlie and me to use our best judgment - not to avoid embarrassment - and we will occasionally make an unconventional move when we believe the odds favor it. Try to think kindly

39、 of us when we blow one. Along with President Clinton, we will be feeling your pain: The Munger family has more than 90% of its net worth in Berkshire and the Buffetts more than 99%. How We Think About Market Fluctuations A short quiz: If you plan to eat hamburgers throughout your life and are not a

40、 cattle producer, should you wish for higher or lower prices for beef? Likewise, if you are going to buy a car from time to time but are not an auto manufacturer, should you prefer higher or lower car prices? These questions, of course, answer themselves. But now for the final exam: If you expect to

41、 be a net saver during the next five years, should you hope for a higher or lower stock market during that period? Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. In

42、effect, they rejoice because prices have risen for the hamburgers they will soon be buying. This reaction makes no sense. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices. For shareholders of

43、 Berkshire who do not expect to sell, the choice is even clearer. To begin with, our owners are automatically saving even if they spend every dime they personally earn: Berkshire saves for them by retaining all earnings, thereafter using these savings to purchase businesses and securities. Clearly,

44、the more cheaply we make these buys, the more profitable our owners indirect savings program will be. Furthermore, through Berkshire you own major positions in companies that consistently repurchase their shares. The benefits that these programs supply us grow as prices fall: When stock prices are l

45、ow, the funds that an investee spends on repurchases increase our ownership of that company by a greater amount than is the case when prices are higher. For example, the repurchases that Coca-Cola, The Washington Post and Wells Fargo made in past years at very low prices benefitted Berkshire far mor

46、e than do todays repurchases, made at loftier prices. At the end of every year, about 97% of Berkshires shares are held by the same investors who owned them at the start of the year. That makes them savers. They should therefore rejoice when markets decline and allow both us and our investees to deploy funds more advantageously. So smile when you read a headline that says Investors lose as market falls. Edit it in your