Down Angle Symbol A symbol in the form of an angle pointing downwards. Warren Buffett offered important investment advice for those looking to grow their wealth in his letter to Berkshire Hathaway shareholders in 2024. AP images
- Warren Buffett released his annual letter to Berkshire Hathaway shareholders on Saturday.
- In the letter, the billionaire gave several investment advice.
- Play the long term, he says, and ignore experts who make their financial forecasts.
Warren Buffett published his annual letter to Berkshire Hathaway shareholders on Saturday, offering subtle investing tips to readers who want to grow their wealth the hundred-billionaire's way has.
Since 1965, Buffett has written an annual letter analyzing the performance of the holding's investments and observing financial trends and pitfalls.
He has also given advice over the years, the Wall Street Journal noted in an analysis of each of his letters, including by warning investors about fast-growing companies, which he calls “the worst kind of business,” and by expressing fear and greed as two of the inevitable “super-contagious diseases” plaguing the investing community. Buffett suggested in 1987 that smart investors should try to reverse both, writing, “We simply try to be fearful when others are greedy, and to be greedy only when others are fearful.”
Here's what Buffett suggested to investors in his letter this year:
Always ignore the experts
Buffett begins by praising his sister Bertie, who he says is extremely well-read and understands many accounting terms, although she is by no means an economics expert or prepared to take an auditor's exam. Your instinct is his first important piece of advice.
He writes: “She is sensible – very sensible – and knows instinctively that experts should always be ignored. After all, if she could reliably predict tomorrow's winners, would she freely share her valuable insights and thereby increase competition in purchases? “It would be like finding gold,” and then giving the neighbors a map showing the location.
Be patient when you find a wonderful deal
Buffett then discusses some of Berkshire's “long-term fractional ownership” investment successes: American Express and Coca-Cola, which began operations in 1850 and 1886, respectively.
Berkshire Hathaway made significant investments in Coca-Cola in 1988 and American Express in 2001, none of which Buffett changed in the decades that followed, despite each company's occasional failed attempts at expansion and moments of mismanagement.
“The lesson from Coke and AMEX? When you find a truly wonderful business, stick with it,” Buffett writes. “Patience pays off, and a wonderful business can make up for the many mediocre decisions that are inevitable.”
Never risk permanent loss of capital
Buffett goes on to say that the stock market is becoming more and more of a casino and there is a daily temptation to ignore his long-term investment strategy and quickly turn over his holdings as “feverish activity” brings a whole host of uninformed or malicious actors to the woodwork.
He writes: “In such times, whatever folly can be marketed is vigorously marketed—not by everyone, but always by someone.”
He points out that one should not fall for the marketing of this folly, otherwise the scene could turn ugly and the average investor could come away “confused, poorer and sometimes vindictive.”
“One investing rule at Berkshire has not changed and will not change: never risk permanent loss of capital. Thanks to American tailwinds and the power of compound interest, the area we operate in was and is rewarding if you make one.” Make a few good decisions throughout your life and avoid serious mistakes.