7 Amazing Quotes from Warren Buffett's Annual Letter to Shareholders

Every year Buffett's letter to shareholders is filled with fantastic insights. Here are seven of the best of the best from Buffett's 2013 letter.

Mar 11, 2014 at 7:17AM

Warren Buffett's annual letter to Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) shareholders is out, and as usual, it didn't disappoint. The letter is filled with more than its fair share of easily understandable financial results, witty commentary, and loads of patented Buffett wisdom.

Buffett From Hanson
Source: HomeServicesAmerica.

While there were countless gems to choose from, I scoured the letter for the best of the best. Listed below are the seven most amazing quotes from Buffett's annual letter.

1. "If such humiliating comparisons continue, I'll have no choice but to cease talking about them."
In 2013, Berkshire investment managers Todd Combs and Ted Weschler had investment returns exceeding Buffett's. The two managers now manage portfolios valued over $7 billion each. More than that, according to Buffett, "they've earned it." 

The question of who will take over as CEO is still a fantastic mystery. While it's no sure thing Combs or Weschler will earn the position, it's awfully tempting to imagine Todd and Ted as the next Warren and Charlie.

2. "The advantage of being a bi-sexual is that it doubles your chances of a date on Saturday night."
As usual, Buffett turns the complex interworking of Berkshire Hathaway into a hilariously simple idea.

By using Woody Allen's quote, Buffett explains that since Berkshire both buys and operates businesses as well as investing in stocks, it doubles the company's chances of finding great investment opportunities. This is a strategy that has proven extremely successful, and one that should continue to work for decades to come.

3. "Indeed, who has ever benefited during the past 237 years by betting against America?"
I think you have to imagine Buffett saying this with an America flag translucently waving, and "God Bless America" playing in the background.

Derek Baker American Flag

Source: Derek Baker

Buffett explained that Charlie and he have "always considered a 'bet' on ever-rising U.S. prosperity to be very close to a sure thing." This is a great reminder for those of us who get caught up in the doom and gloom of the daily market swings that betting on the U.S. economy is one of the best bets you can make.

4. "Trucks taking on the same job guzzle about four times as much fuel."
I don't know about you, but when I imagine trains I still have this picture of dense smoke and two soot-covered men shoveling coal into a fire pit. Turns out that's not really how it works anymore.

Greg Gjerdingen Bnsf

Source: Greg Gjerdingen

In fact, railroads are timely, fuel-efficient, and fairly environmentally friendly. According to Buffett, BNSF can carry, "a ton of freight about 500 miles on a single gallon of diesel fuel."

Burlington Northern (BNSF) has turned out to be one of Buffett's greatest investments. Amazingly, Buffett noted that BNSF "carries about 15% (measured by ton-mile) of all inter-city freight." This is a business with huge competitive advantage, and one that will make Berkshire a ton of money for years to come. 

5. "If they absorb Mrs. B's lessons, they need none from me."
Buffett said that every year students from universities across the country visit Berkshire Hathaway, and he'll always start the tour at Nebraska Furniture Mart (NFM.) A business that won't move the needle, but one that's story encapsulates the type of company Buffett runs.

Rose Blumkin (Mrs. B) emigrated from Russia, and at the time spoke no English. She started NFM with nothing but $72,000 in net worth and $50 in cash, and would build NFM into the "two highest-volume home furniture stores in the country." Let me tell you, if that doesn't get you a little choked up, you're a robot.

6. "After all, if a moody fellow with a farm bordering my property yelled out a price every day"
Learning that Buffett owned a farm wasn't surprising. He did, however, turn his anecdotal story of owning that farm into the greatest metaphor of the stock market ever.

Buffett explained, it's as if a moody farmer lived next door and shouted prices at you all day. How much he'd buy your farm for, and how much he'd sell his for. The point is that while the farmer's prices may go up or own, the earnings potential of the farm remained intact.

Therefore, if you truly understand the business you're investing in, the mood of the farmer only matters if he's selling his farm cheaply, or offering to buy yours at a premium. So for investors everywhere, the next time you get caught up in market fluctuations, just imagine you're being yelled at by a moody farmer -- and if that visual doesn't calm you down nothing will.

7. "A low-cost S&P 500 index fund will achieve this goal."
Here's where it gets tricky. The opinions of the market can be much more confusing if you don't understand (or can't roughly predict) the future earnings of a business.

Buffett noted, "I have good news for these non-professionals: the typical investor doesn't need this skill."

Remember, as Buffett alluded to earlier, he has faith in the U.S. economy. So, Buffett suggested for those investors that have neither the time nor the inclination to follow stocks closely, investing in a low-cost index fund can achieve "wonderfully over time."

More of Warren Buffett's Greatest Wisdom
Warren Buffett has made billions through his investing and he wants you to be able to invest like him. Through the years, Buffett has offered up investing tips to shareholders of Berkshire Hathaway. Now you can tap into the best of Warren Buffett's wisdom in a new special report from The Motley Fool. Click here now for a free copy of this invaluable report.


Dave Koppenheffer has no position in any stocks mentioned. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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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