- Warren Buffett includes some business lessons in his latest shareholder letter, published Saturday.
- Buffett said mistakes will happen. It’s owning up to them that’s important.
- He also advised against judging candidates by education, stressing the value of innate talent.
Every year, executives of publicly traded companies draft letters to their shareholders. These letters summarize the company’s operations, detailing its annual financial results, major wins and losses, and outlook for the coming years.
There is perhaps no annual letter more anticipated than the one Warren Buffett sends to his Berkshire Hathaway shareholders. Investors and business leaders scour the letter for hints about the economy and financial strategies.
It also, however, often includes some more fundamental business — and life — lessons, too.
In Buffett’s latest shareholder letter, published on Saturday, he wrote, “In addition to the mandated data, we believe we owe you additional commentary about what you own and how we think.”
Business Insider read through this year’s letter to gather Buffett’s best insights.
Mistakes happen. Own up to them before it’s too late.
Buffett said he’s made many mistakes over the years.
Some have stemmed from incorrectly assessing the “future economics” of companies he purchased for Berkshire Hathaway. Others have come from hiring the wrong managers — miscalculating either their abilities or loyalty to the organization.
Between 2019 and 2023, Buffett wrote that he used the word “mistake” or “error” 16 times in his annual shareholder letter.
The point is that mistakes are normal in the course of doing business.
“The cardinal sin is delaying the correction of mistakes,” he wrote.
Know the power of a ‘single winning decision.’
According to Buffett, the corollary to acknowledging mistakes is recognizing the power of big wins.
“Our experience is that a single winning decision can make a breathtaking difference over time,” he wrote.
He pointed to several key moments in Berkshire Hathaway’s history — the strategic acquisition of GEICO, the decision to bring former McKinsey consultant Ajit Jain into management, and finding Charlie Munger, Buffett’s longtime friend and business partner, who served as vice chairman of the conglomerate for more than four decades.
“Mistakes fade away; winners can forever blossom,” he wrote.
Never judge a candidate by their educational background.
When it comes to selecting a CEO, Buffett has a rule: “I never look at where a candidate has gone to school. Never!”
Buffett pointed to the case of Pete Liegl, the founder and manager of Forest River, an RV manufacturing company that Berkshire Hathaway acquired in 2005. In the 19 years following the acquisition, Buffett said Liegl far surpassed his competitors in performance.
“There are great managers who attended the most famous schools. But there are plenty, such as Pete, who may have benefited by attending a less prestigious institution or even by not bothering to finish school,” Buffett wrote.
Buffett’s takeaway is that “a very large portion of business talent is innate with nature swamping nurture.”
Keep saving.
Buffett believes that a long-standing culture of saving — and reinvesting — has been a key to the success of American capitalism.
Since the country’s founding, “We needed many Americans to consistently save and then needed those savers or other Americans to wisely deploy the capital thus made available,” he wrote. “If America had consumed all that it produced, the country would have been spinning its wheels.”
Likewise, Berkshire Hathaway’s shareholders have “participated in the American miracle” by reinvesting their dividends, as opposed to consuming them.
To ensure citizens continue to save and the country prospers, Buffett shared some advice for regulators: “Never forget that we need you to maintain a stable currency and that result requires both wisdom and vigilance on your part.”
