Wednesday 29 February 2012

The latest edition of Buffett's annual letter,

http://www.berkshirehathaway.com/letters/2011ltr.pdf



The per-share book value of both our Class A and Class B stock increased by 4.6% in 2011. Over the last 47 years (that is, since present management took over), book value has grown from $19 to $99,860, a rate of 19.8% compounded annually.



Change in Per-Share Book Value of Berkshire
Compounded Annual Gain – 1965-2011 . . . . . . . . . . . . . . . . . . . . . . . . . 19.8%
Overall Gain – 1964-2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . 513,055%

Percentage Change in S&P 500 with Dividends Included
Compounded Annual Gain – 1965-2011 . . . . . . . . . . . . . . . . . . . . . . . . . 9.2%
Overall Gain – 1964-2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,397%

Berkshire Hathaway showed losses in only 2 years for this long period, namely 2001 (-6.2%) and 2008 (-9.6%).

By ensuring that losses are few and small, the gains in all the years compounded into a very huge value.

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