Berkshire Hathaway Annual Letter to Shareholders 2008 - Read the latest Berkshire Letter
Warren E. Buffett, chairman of Berkshire Hathaway investment fund and holding company and possibly still the world's richest person, released his annual shareholders letter moments ago, in which he says, "during 2008 I did some dumb things in investments."
"I made at least one major mistake of commission and several lesser ones that also hurt," he said. "Furthermore, I made some errors of omission, sucking my thumb when new facts came in that should have caused me to re-examine my thinking and promptly take action."
That "major mistake," Buffett writes, was the purchase of millions of shares of ConocoPhillips oil company when oil prices were near their peak.
"I still believe the odds are good that oil sells far higher in the future than the current $40-$50 price. But so far I have been dead wrong," Buffet writes. "Even if prices should rise, moreover, the terrible timing of my purchase has cost Berkshire several billion dollars."
Buffett writes that "the economy will be in shambles in 2009 -- and, for that matter, probably well beyond."
Nevertheless, he writes, "America's best days like ahead."
In explaining the crisis, he writes:
"By the fourth quarter, the credit crisis, coupled with tumbling home and stock prices, had produced a paralyzing fear that engulfed the country," Buffett writes. "A freefall in business activity ensued, accelerating at a pace that I have never before witnessed."
"This led to a dysfunctional credit market that in important respects soon turned non-functional," Buffett writes. "The watchword throughout the country became the creed I saw on restaurant walls when I was young: “ 'In God we trust; all others pay cash.' ”
You can read the entire letter here.
The release of Buffett's letter, which often combines folksiness and wit with surprising candor, has been more highly anticipated this year than most, as investors have been waiting to see how Buffett would explain the steep drop in his previously gold-plated stock.
Shares of Berkshire Hathaway closed yesterday at $78,600. Yes, it's a ridiculously high number, but it's down nearly 45 percent compared to this time last year, performing only a little better than the S&P 500.
Earlier this week, shares of Berkshire Hathaway hit a five-and-a-half-year low.
Last year, Forbes magazine ranked Buffett as the world's richest person. It will be interesting to see if he retains the title this year; it's hard to imagine anyone who had a boffo 2008.
He has been hit especially hard by his investments in the financial sector, which included a $5 billion buy-in to Goldman Sachs last year.
Despite Buffett's downturn, his moves are still closely monitored by investors large and small, especially those who take part in what is colloquially called "whale watching," or tracking big-money investors.
Last year, Buffett sold shares of Lowes, Home Depot, Bank of America and CarMax.
Berkshire Hathaway owns Geico and Dairy Queen, is the top shareholder of Coca-Cola and Burlington Northern Santa Fe railroad, and pitched in $4.4 billion to the Mars-Wrigley tie-up last year.
Buffett is a director of The Washington Post Co. and the largest non-family shareholder.
-- Frank Ahrens
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