Buffett will step down as Berkshire Hathaway’s chief executive officer at the end of this year and hand the reins to his longtime deputy, Greg Abel. Here are 5 key takeaways from the letter.1. Warren Buffett paid a moving tribute to his longtime friend and business partner Charlie Munger, recalling their six-decade bond that formed a large part of Berkshire Hathaway’s legacy. Describing him as a mentor, teacher and protective “big brother,” Buffett said Munger’s influence spanned more than six decades. “We had our disagreements, but never arguments,” Buffett wrote, adding that phrases like “I told you so” were simply not part of Charlie’s vocabulary.
Buffett talked about how their paths almost crossed in the 1940s. Munger had worked at his grandfather’s grocery store in Omaha a year before Buffett did, but the two did not meet until 1959, when Buffett was 28 and Munger 35.
2. The 95-year-old fondly recalled his lifelong connection to Omaha, the city he called home for most of his life. While playfully wondering if “there’s a magic ingredient in Omaha’s water,” Buffett reminisced about his short time away, his teenage years in Washington, D.C., while his father served in Congress, and a brief stint in New York in 1954, working under his mentor Ben Graham. Buffett noted that his children and grandchildren all grew up in Omaha and attended the same public schools that educated generations of his family, as did many figures who would later play key roles in Berkshire Hathaway’s success, including Charlie Munger, Stan Lipsey and the Blumkin family of Nebraska Furniture Mart fame. “Looking back, I think both Berkshire and I did better because of our base in Omaha than if I had lived somewhere else,” he said. “By dumb luck,” he wrote, “I got a ridiculously long straw at birth.”3) Buffett reflected on the role of luck in living a long and full life, recognizing that living to old age often depends as much on chance as on choice. “Those who live to old age require an enormous dose of luck, daily escape from banana peels, natural disasters, drunk or distracted drivers, lightning strikes – you name it,” he wrote.
After decades of fortune favoring him, Buffett admitted that time has the upper hand. “Lady Luck kept coming around for much of my life, but she has better things to do than work with people in their 90s. Luck has its limits,” he said.
4.) Buffett added that while new investment ideas are rarer these days, given Berkshire’s sheer size and current market conditions, they still pop up every now and then, enough to keep his legendary curiosity and enthusiasm alive. Ideas are few, but not zero, he added. Buffett gave a candid look at his current life, noting with humility and humor that despite the passage of time, he still feels surprisingly good. “Although I move slowly and my reading becomes increasingly difficult, I am in the office five days a week, working with great people,” he wrote.
5.) Buffett reminded shareholders that volatility is part of Berkshire Hathaway’s long-term story. “Our stock price will move erratically, dropping as much as 50% every now and then, as has happened three times in 60 years. Don’t despair; America will come back, and so will Berkshire stock,” he wrote.
Buffett also expressed full confidence in his successor, Greg Abel, who will take over as CEO by the end of the year. He said Abel has exceeded even his own high expectations because he has deep insight into Berkshire’s diverse businesses and teams. “I can’t think of a CEO, management consultant, academic or government official I would choose over Greg to handle your savings and mine,” Buffett said. Buffett praised Abel’s insight into both the opportunities and risks of Berkshire’s property and casualty insurance business, adding that he hopes Abel’s health “remains good for decades to come,” noting that with any luck, Berkshire may only need a handful of CEOs over the next hundred years.
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