Taking a Long Term View

Warren Buffet’s annual letter to Berkshire Hathaway shareholders should be mandatory reading for all investors.  He not only provides an economic outlook, he explains how Berkshire Hathaway makes money for its shareholders.  No other publicly traded company provides the same candor or clear explanation of its operations.  (All of the Berkshire Hathaway shareholder letters from 1977 to 2008 can be found here.)

Between 1965-2008, the book value of Berkshire Hathaway shares grew at compounded annual gain of 20.3%.  In comparison, the S&P 500 (including dividends) had a compounded annual gain of 8.9%.

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