Warren buffets shareholder letter –1986 (People)
Berkshire continues its amazing performance adding 26.1% to its net worth. In this shareholder letter buffet begins with praising the management team (the Ceo’s) he has with him and quotes David Ogilvy: “If each of us hires people who are smaller than we are, we shall become a company of dwarfs. But, if each of us hires people who are bigger than we are, we shall become a company of giants.”
Buffets write about the economics of the world book business he had bought last year, which was the best in the direct sales encyclopedia business. Also he bought Fechheimer, a uniform manufacturing and distribution business company, which was a result of the advertisement he had done. While Buffet mentions the remarkable business he also mentions something, which I do not agree with:
Buffet had never visited the firm or looked at its infrastructure and does not advice the same. Something I believe one should doing, at least now. A first hand look at the infra. plant, operations I believe is a must.
A cue on the markets:
When conditions are right that is, when companies with good economics and good management sell well below intrinsic business value – stocks sometimes provide grand-slam home runs. But we currently find no equities that come close to meeting our tests. This statement in no way translates into a stock market prediction: we have no idea – and never have had – whether the market is going to go up, down, or sideways in the near- or intermediate term future.
( Is it warren buffet talking about overvalued markets?You all know.)
Comments on the trading:
Indeed, the term “institutional investor” is becoming one of those self-contradictions called an oxymoron, comparable to “jumbo shrimp,” “lady mud wrestler” and “inexpensive lawyer.”
Comment on he buying a corporate jet, saying that he was trying to attribute positive arguments for what we wanted to do:
“So convenient a thing it is to be a reasonable creature, since it enables one to find or make a reason for everything one has a mind to do.”