Billionaire Warren Buffett, aged 94, continues to see growth in his personal wealth this year. According to the Bloomberg Billionaires Index, his net worth has increased by $12.7 billion, reaching a total of $155 billion. The Class B shares of his company, Berkshire Hathaway, have also seen a 9% increase this year. Buffett has accumulated wealth by adhering to timeless principles: maintaining discipline and thinking long-term.
As one of the greatest investors in history, Buffett’s annual letters to Berkshire Hathaway shareholders are a must-read. Here are four key points from his latest letter that are worth applying to one’s financial life this year.
Buffett openly acknowledges his past investment mistakes, which is the most refreshing aspect of his letter. In this year’s letter, he admits to errors in judgment in certain business acquisitions, emphasizing that procrastination can exacerbate mistakes.
“Sometimes, I err in assessing the future economic conditions of businesses acquired by Berkshire… These are typically cases of capital allocation mistakes… Sometimes, I err in assessing the capability or loyalty of the managers Berkshire hires,” he stated.
He added, “The biggest mistakes are those in delaying the correction of mistakes. These issues cannot be resolved through fantasy; action needs to be taken, however uncomfortable it may be.”
In his February letter to shareholders, Buffett also explained why Berkshire accumulated $334 billion in cash by the end of 2024.
He assured investors that the majority of Berkshire’s funds are still invested in stocks, especially U.S. stocks, and this trend will not change in the short term.
“Although some commentators currently view Berkshire’s cash position as exceptionally strong, the overwhelming majority of your funds are still invested in stocks,” Buffett explained. “This preference won’t change.”
He believes that ownership, particularly of stable long-term assets, is key to accumulating and protecting wealth.
He added, “While the value of publicly traded stocks we own decreased from $354 billion to $272 billion last year, the value of our non-publicly traded equity holdings has increased and remains well above the value of the publicly traded portfolio.”
Sometimes, a wise move can alter the course of one’s life or financial journey entirely. In his annual letter, Buffett reflects on how certain choices have brought significant changes.
Buffett stated, “Both business potential and the abilities and loyalty of managers have brought me many surprises. Our experience is that a successful decision can lead to remarkable changes over time.”
For example, the business decision to acquire GEICO, hiring Ajit Jain, and forming a partnership with Charlie Munger — his partner, advisor, and lifelong friend. “Mistakes will fade, but successes will be forever remembered,” he said.
In other words, making even one successful financial decision, such as early investment in stable assets or starting a side business, can create decades of compounded wealth.
While Berkshire Hathaway’s publicly traded stocks decreased from $354 billion to $272 billion last year, Buffett is not concerned. The company’s operational business is stronger, and he remains focused on long-term growth.
“We believe that over time, earnings are more likely to persist—why else would we buy these securities? Even though annual data can fluctuate significantly and be hard to predict,” he said. “Our time horizon for investing in such stocks is almost always far beyond a year; in many cases, our consideration period is decades, and these long-term investments can sometimes make the cash register ring like a church bell.”
Therefore, when the market is unstable, do not panic. Look ahead and understand that not every year will be profitable.
(Note: This content is for general informational purposes only and does not constitute any recommendation. Dajiyuan does not provide investment, tax, legal, financial planning, real estate planning, or other personal financial advice. For specific investment matters, consult your financial advisor. Dajiyuan does not take any investment responsibility.)