{"id":333,"date":"2009-03-01T12:19:08","date_gmt":"2009-03-01T16:19:08","guid":{"rendered":"https:\/\/stockherd.com\/moosepond\/?p=333"},"modified":"2010-02-15T13:06:03","modified_gmt":"2010-02-15T17:06:03","slug":"taking-a-long-term-view","status":"publish","type":"post","link":"https:\/\/stockherd.com\/moosepond\/2009\/03\/01\/taking-a-long-term-view\/","title":{"rendered":"Taking a Long Term View"},"content":{"rendered":"<p style=\"clear: both\"><a class=\"image-link\" href=\"https:\/\/stockherd.com\/moosepond\/wp-content\/uploads\/2009\/03\/buffet2.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"linked-to-original\" style=\" display: inline; float: left; margin: 0 10px 10px 0;\" src=\"https:\/\/stockherd.com\/moosepond\/wp-content\/uploads\/2009\/03\/buffet1.jpg\" alt=\"\" width=\"128\" height=\"77\" align=\"left\" \/><\/a>Warren Buffet&#8217;s <a title=\"Annual Letter for 2008\" href=\"http:\/\/www.berkshirehathaway.com\/letters\/2008ltr.pdf\">annual letter<\/a> to Berkshire Hathaway shareholders should be mandatory reading for all investors.\u00c2\u00a0 He not only provides an economic outlook, he explains how Berkshire Hathaway makes money for its shareholders.\u00c2\u00a0 No other publicly traded company provides the same candor or clear explanation of its operations.\u00c2\u00a0 (All of the Berkshire Hathaway shareholder letters from 1977 to 2008 can be found <a title=\"Berkshire Hathaway Shareholder Letter\" href=\"http:\/\/www.berkshirehathaway.com\/letters\/letters.html\">here<\/a>.)<\/p>\n<p style=\"clear: both\">Between 1965-2008, the book value of Berkshire Hathaway shares grew at compounded annual gain of 20.3%.\u00c2\u00a0 In comparison, the S&amp;P 500 (including dividends) had a compounded annual gain of 8.9%.<\/p>\n<p style=\"clear: both\"><!--more-->Regarding the current economic environment, Warren Buffet notes:<\/p>\n<blockquote style=\"clear: both\"><p>But neither Charlie Munger, my partner in running Berkshire, nor I can predict the winning and losing years in advance. (In our usual opinionated view, we don\u00e2\u20ac\u2122t think anyone else can either.) We\u00e2\u20ac\u2122re certain, for example, that the economy will be in shambles throughout 2009 \u00e2\u20ac\u201c and, for that matter, probably well beyond \u00e2\u20ac\u201c but that conclusion does not tell us whether the stock market will rise or fall.<\/p>\n<p>In good years and bad, Charlie and I simply focus on four goals:<\/p>\n<p>(1) maintaining Berkshire\u00e2\u20ac\u2122s Gibraltar-like financial position, which features huge amounts of excess liquidity, near-term obligations that are modest, and dozens of sources of earnings and cash;<\/p>\n<p>(2) widening the \u00e2\u20ac\u0153moats\u00e2\u20ac\u009d around our operating businesses that give them durable competitive advantages;<\/p>\n<p>(3) acquiring and developing new and varied streams of earnings;<\/p>\n<p>(4) expanding and nurturing the cadre of outstanding operating managers who, over the years, have delivered Berkshire exceptional results.<\/p><\/blockquote>\n<p style=\"clear: both\">An individual investor can follow Buffet&#8217;s lead by ensuring that his or her portfolio contains companies with strong balance sheets, proven management, solid earnings, strong market share, and a wide moat.\u00c2\u00a0 Historically, companies of this type have sold for a substantial premium (i.e., a higher P\/E than their peers).\u00c2\u00a0 However, the market decline has reduced that premium.\u00c2\u00a0 This is a good time to exchange low or medium quality companies for high quality one.<\/p>\n<p style=\"clear: both\">\n","protected":false},"excerpt":{"rendered":"<p>Warren Buffet&#8217;s annual letter to Berkshire Hathaway shareholders should be mandatory reading for all investors.\u00c2\u00a0 He not only provides an economic outlook, he explains how Berkshire Hathaway makes money for its shareholders.\u00c2\u00a0 No other publicly traded company provides the same candor or clear explanation of its operations.\u00c2\u00a0 (All of the Berkshire Hathaway shareholder letters from [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_jetpack_memberships_contains_paid_content":false,"_links_to":"","_links_to_target":""},"categories":[52],"tags":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/stockherd.com\/moosepond\/wp-json\/wp\/v2\/posts\/333"}],"collection":[{"href":"https:\/\/stockherd.com\/moosepond\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stockherd.com\/moosepond\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stockherd.com\/moosepond\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/stockherd.com\/moosepond\/wp-json\/wp\/v2\/comments?post=333"}],"version-history":[{"count":12,"href":"https:\/\/stockherd.com\/moosepond\/wp-json\/wp\/v2\/posts\/333\/revisions"}],"predecessor-version":[{"id":423,"href":"https:\/\/stockherd.com\/moosepond\/wp-json\/wp\/v2\/posts\/333\/revisions\/423"}],"wp:attachment":[{"href":"https:\/\/stockherd.com\/moosepond\/wp-json\/wp\/v2\/media?parent=333"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stockherd.com\/moosepond\/wp-json\/wp\/v2\/categories?post=333"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stockherd.com\/moosepond\/wp-json\/wp\/v2\/tags?post=333"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}