- Warren Buffett includes some business lessons in his latest shareholder letter, published on Saturday.
- Buffett said mistakes will happen. It is by mastering those who are important.
- He also advised the judgment of candidates from education, emphasizing the value of the innate talent.
Yeardo year, leaders of publicly traded companies compiled letters to their shareholders. These letters summarize the company’s operations, detailing its annual financial results, victories and huge losses and prospects for the coming years.
Maybe there is no more anticipated annual letter than what Warren Buffett sends to his shareholders in Berkshire Hathaway. Investors and business executives clear the letter for suggestions for the economy and financial strategies.
However, it also often includes a more fundamental business – and life lessons, too.
In the latest letter of the Buffett shareholders, published on Saturday, he wrote, “In addition to the mandated data, we believe we owe additional comments on what you own and how we think.”
Business Insider read through this year’s letter to collect Buffett’s better knowledge.
Mistakes occur. Own before them before it is too late.
Buffett said he has made many mistakes over the years.
Some have stemmed from the wrong evaluation of the “future economy” of the companies he bought for Berkshire Hathaway. Others have come from hiring wrong managers – their miscalculation or abilities or loyalty to the organization.
Between 2019 and 2023, Buffett wrote that he used the word “error” or “wrong” 16 times in his annual shareholder letter.
The pointing is that mistakes are normal while doing business.
“The sin of Cardinal is delaying the correction of mistakes,” he wrote.
Know the power of a ‘single winning decision’.
According to Buffett, the result to admit mistakes is to recognize the power of great victories.
“Our experience is that a single winning decision can make a staggering change over time,” he wrote.
He showed some key moments in the history of Berkshire Hathaway – the Strategic Purchase of Geico, the decision to bring former McKinsey Ajit Jain Advisor to management, and find Charlie Long, long friend of Buffett and business partner, who served as vice president of the conglomerate for the conglomerate more than four decades.
“Mistakes fade; winners can bloom forever,” he wrote.
Never judge a candidate for their educational background.
When it comes to choosing a CEO, Buffett has a rule: “I never see where a school candidate went. Never!”
Buffett showed the case of Pete Liegl, founder and manager of Forest River, an RV manufacturing company Berkshire Hathaway won in 2005. In the 19 years after the purchase, Buffett said LEGL exceeded its performance competitors.
“There are excellent managers who attended the most famous schools. But there are many, such as Pete, who may have benefited by participating in a less prestigious institution or even not worrying about finishing school,” he wrote Buffett.
Taking the buffett is that “a very large part of the business talent is born with the nutrition of nature that rolls.”
Continue to save.
Buffett believes that a long saving culture-and reinvestment-has been a key to the success of American capitalism.
Since the establishment of the country, “we needed many Americans to save constantly and then needed those savings or other Americans to wisely make the capital made available in this way,” he wrote. “If America had consumed everything it produced, the country would have rotated its wheels.”
Likewise, Berkshire Hathaway shareholders have “participated in the American miracle” by reinvesting their dividends, compared to their consumption.
To ensure that citizens continue to escape and the country progresses, Buffett shared some tips for regulators: “Never forget that we need you to keep a steady currency and this result requires both wisdom and vigilance on your part” .