Mar 9, 2023 3 min read

Last month, Warren Buffett, often considered the country’s best investor, released his annual stockholder’s letter. The letter and accompanying charts were 144 pages long. Buffett, now 92, is chairman of Berkshire Hathaway in Omaha, Neb. If you want to buy one share of stock, you better have a big bank account because one share traded this week at $461,912. Buffet does not believe in doing stock splits.

“I have been investing for 80 years, more than one-third of our country’s lifetime,” Buffett said. “I have yet to see a time when it made sense to make a long-term bet against America. And I doubt very much that any reader of this letter will have a different experience in the future.”

Berkshire owns dozens of businesses, including Geico Insurance, BNSF railroad and consumer brands such as Dairy Queen, Duracell and Fruit of the Loom. These companies had to deal with higher production costs and unsettled consumers. Entities such as the railroad had higher fuel costs and had to deal with supply chain issues. The insurance companies faced natural disasters and rising used car repair costs. They have over 382,000 employees. They also hold major stock investments in large companies such as Coca-Cola, Apple and American Express.

The world’s best investor was not immune from the turbulent stock market in 2022. Berkshire reported that it lost $22.8 billion, driven by $53.6 billion in unrealized losses on its investments. This was the result of increased volatility and rising interest rates from the Federal Reserve. He encouraged stockholders to focus on the long term and underlying value in the company. They did earn a record $30.8 billion in operating profits.

Berkshire is well positioned to take advantage of any buying opportunities in the stock market by outright buying individual companies because they are holding $125 billion in cash and equivalents. Buffett refuses to overpay for any company. When he does buy something, he gives management a lot of independence in running the business as long as it produces the required result. He is very long-term focused.

Buffett and his partner, Charlie Munger, who is 99 years old, are both very active in day-to-day management of Berkshire. They have most of their personal wealth tied up in company stock. The heir apparent is likely Vice Chair Greg Abel, 60, whom they have been grooming for a number of years.

Although there has been some criticism over the years about how low Buffett’s personal income tax has been, he wanted to emphasize how much Berkshire paid – $32 billion over the last decade. He said had there been roughly 1,000 taxpayers in the U.S. matching Berkshire, no other business nor any of the 131 million households would have needed to pay any tax to the federal government.

It is easy to see why Buffett is so highly regarded when you look at his long-term record. Anyone who stuck with Berkshire from 1965 to 2022 saw their share gain 3,787,464% in value. The S&P 500 rose 24,708%, including dividends, over that period. Now the challenge is finding over $400,000 to buy one share of stock!

Your Financial Future is written by certified financial planner Gary W. Boatman, MBA and CFP, who also wrote the book, “Your Financial Compass: Safe Passage Through The Turbulent Waters of Taxes, Income Planning and Market Volatility.”

If there is an area that you would like to see discussed in the column, send your suggestions to gary@BoatmanWealthManagement.com.