Berkshire Hathaway's 2008 letter to shareholders

About this letter

Warren Buffett wrote this letter to Berkshire Hathaway shareholders, dated 27 February 2009, on a year in which net worth fell by $11.5 billion and per-share book value by 9.6%. He notes that 2008 was the worst year in 44 for both Berkshire's book value and the S&P 500, as a credit crisis and tumbling home and stock prices produced a paralysing fear.

The letter sets out four goals Buffett and Charlie Munger pursue in good years and bad, starting with a Gibraltar-like financial position. It reports that the insurance group made an underwriting gain for the sixth consecutive year, so its $58.5 billion of float cost less than zero, and covers the utility business, the Marmon acquisition and three large investments made on terms unavailable in normal markets. A long section on Clayton Homes uses its mortgage book to inform the public debate on housing and mortgages.

What to notice

1. 1

   Buffett admits a major mistake of commission: buying a large amount of ConocoPhillips stock near the peak in oil and gas prices, which he says cost Berkshire several billion dollars.

“When investing, pessimism is your friend, euphoria the enemy.”