Warren Buffett's annual letter to Berkshire Hathaway (NYSE: BRK-A)(NYSE: BRK-B) shareholders is one of the most talked about pieces of financial literature every year.

This week, Fortune ran the narrative portion of Buffett's letter. In this segment of The Motley Fool's financials-focused show, Where the Money Is, banking analysts Matt Koppenheffer and David Hanson discuss the letter and Buffett's most recent words of wisdom. Referencing two real estate investments he's made over a few decades, Buffett reminds investors of the importance of projecting an asset's earnings potential and ignoring the daily price-changes of stocks and other assets.

In addition to giving his wise thoughts regarding the stock market, Buffett told investors what he plans to do with his money after he passes away. Instead of chasing "the next big thing," Buffett wants his cash to be allocated mostly to a low-cost index fund after he is gone. Matt explains why is this a smart idea, but also tell viewers he doesn't think this means Buffett doesn't believe great investors can beat the market.

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David Hanson has no position in any stocks mentioned. Matt Koppenheffer owns shares of Berkshire Hathaway. The Motley Fool recommends Berkshire Hathaway. The Motley Fool owns shares of Berkshire Hathaway. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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