2020 Berkshire Hathaway Annual Letter [pdf]

While I&#x27;m not of these meme investors who thinks Buffett is &quot;washed up&quot;, I confess that I&#x27;ve increasingly wondered if it&#x27;s just sorta over. In some sense, it&#x27;s not his fault. Berkshire has grown so large that it has significant scale problems. I joke that Buffett found the investing equivalent of the Donkey Kong kill screen, he basically broke the game. It&#x27;s incredible.<p>But there have been self-inflicted issues. The seemingly unconditional refusal to explore technology companies. (While his Apple investment was great, even Buffett would tell you this is a consumer company and not a tech company) The allowing of the two new managers to keep breaking Berkshire&#x27;s rules, such as not investing in IPO&#x27;s, or not investing in airlines. The large write down in PCP. The double-speak about &quot;never bet against America&quot; while remaining paralyzed during the COVID panic. Maybe these things are moot compared to the scale problem.<p>But I think the more disheartening issue is Buffett&#x27;s last 5-6 letters have been forgettable, and today&#x27;s was really just a recap of Berkshire&#x27;s main assets, not offering anything particularly insightful or interesting. I think he&#x27;s still doing an admirable job but Berkshire just isn&#x27;t what it used to be. Everything has a cycle.

If you like them you can read other letters, in particular older letters. The letters for the later part of the 1970s are especially instructive in terms of what is it like to live in an inflationary regime.<p>Buffett is one of the few people that have &quot;seen it all&quot;, from deflationary 30s, war 40s, greatest 50s, cultural 60s, inflationary 70s, capitalist 80s, excessive 90s, normal then excessive again 00s, deflationary 10s and whatever the 20s will be.

Just an interesting sidenote. It does feel like the letter is shorter than it used to be, so I plotted the number of pages by year in the PDF fils on their site. Looks like there was a decrease from 20 pages to 15 starting in 2017.<p>Graph:<p><a href="https:&#x2F;&#x2F;imgur.com&#x2F;a&#x2F;TQ2oewY" rel="nofollow">https:&#x2F;&#x2F;imgur.com&#x2F;a&#x2F;TQ2oewY</a>

Is Buffett really still the gold standard, Berkshire has been outdone by the s and p 10 year rolling average over the last evade and that was true before the pandemic.<p>I get that 20% annual returns aren’t sustainable as you get into managing hundreds of billions but it seems to me the make up of the market has changed dramatically over the 2010s and Buffett hasn’t adapted or evolved.

I always love to make sure their site is still bare bones. Love the raw HTML look.

“When people are fearful, be greedy. When people are greedy, be fearful.” -Buffet quote I think about a lot over the last 12 months

It’s inspiring to see that Buffett and Munger remain so wonderfully optimistic about the future of the US even when both are 90+ in the current sociopolitical environment. Reading this letter certainly lifted my spirit and put me in a different mood.

See Annual Report as well.<p><a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=26284669" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=26284669</a>

Alternative paper: <a href="https:&#x2F;&#x2F;ourfiniteworld.com&#x2F;wp-content&#x2F;uploads&#x2F;2021&#x2F;02&#x2F;Tverberg-Collapse-Presentation-Final-1.pdf" rel="nofollow">https:&#x2F;&#x2F;ourfiniteworld.com&#x2F;wp-content&#x2F;uploads&#x2F;2021&#x2F;02&#x2F;Tverbe...</a>

Like every lion in the savanna, it must relinquish its reign at some point.<p>Buffet talks pridefully about holding $250+ BILLION in cash, as if it were pegged to a gold standard. Nearly half his life was based on such a system, and so it’d be hard to remove that idea.<p>Yet he sits on it proudly seemingly unaware that sitting on such an amount has eaten up 3%+ via the printing press of the FED.<p>That and you know... not buying when everyone was selling back in March. Selling out of the airlines seems like a rookie mistake but to a 90 yo, flying again is actually a “never again” due to his age.

So Berkshire now owns about 10% of Apple, if I buy a $1,000 Macbook $100 of that money goes to Berkshire, what are they doing with that money since Apple is the one doing the R&amp;D and building these products? I know at least some of that money is driving up the business value of Berkshire, it&#x27;s a great investment on their part but is it good for customers that Macbooks are 11% more expensive than they should be?