2000 Shareholder Letter

Date: February 28, 2001 Author: Warren Buffett Company: Berkshire Hathaway

Overview

2000 net worth increased $3.96 billion or 6.5% (S&P fell 9.1%), with per-share book value reaching $40,442 — a 23.6% compound annual return over 36 years.

Key Points

Beating the S&P by 15.6%

Despite a challenging year, Berkshire beat the S&P 500 by 15.6 percentage points. Over 36 years, Berkshire averaged 23.6% vs. S&P's 11.8%.

Why No Dividends

Berkshire has never paid a dividend because:

1. Every dollar retained generates at least $1 of market value
2. Shareholders can decide whether to sell if they want cash

"Our [dividend] policy is instead to distribute cash only when we believe the retention of every dollar of earnings would fail to increase Berkshire's market value by at least $1."

The New Economy Bubble

Buffett criticized the late 1990s "new economy" thinking:

"The truly extraordinary rewards of the past several decades came from owning American industry... The party ended in 1969."

In 2000, the bubble was unwinding.

Famous Quotes

"In the 20th Century, the Dow increased from 66 to 11,497, rewarding its shareholders magnificently — but only because the index retained almost all earnings and compounded them at close to 12% annually."

Related

• letter-1999 — Previous year
• letter-2001 — Following year
• warren-buffett
• compounding