2003 Shareholder Letter
Buffett's 2003 letter discusses the shift from stocks to whole businesses, explains why large capital limits opportunities, and reviews the 'unforced errors' environment at Berkshire.
2003 Shareholder Letter
Date: February 27, 2004 Author: Warren Buffett Company: Berkshire Hathaway
Overview
2003 net worth increased $13.6 billion or 21.0% (S&P 28.7%), with per-share book value reaching $50,498 — a 22.2% compound annual return over 39 years.
Key Points
Intrinsic Value vs. Book Value
"Between 1964 and 2003, Berkshire morphed from a struggling northern textile business whose intrinsic value was less than book into a widely diversified enterprise worth far more than book."
Book value is a "slightly understated gauge" for long-term intrinsic value growth.
Why Stocks Are Harder to Find Now
"We've found it hard to find significantly undervalued stocks, a difficulty greatly accentuated by the mushrooming of the funds we must deploy."
The number of stocks purchasable in large enough quantities to impact Berkshire's performance is "a small fraction of the number that existed a decade ago."
Berkshire's Ideal Environment
"At Berkshire, neither history nor the demands of owners impede intelligent decision-making. When Charlie and I make mistakes, they are -- in tennis parlance -- unforced errors."
Why We Own Businesses, Not Just Stocks
"When valuations are similar, we strongly prefer owning businesses to owning stocks."
Famous Quotes
"Investment managers often profit far more from piling up assets than from handling those assets well. So when one tells you that increased funds won't hurt his investment performance, step back: His nose is about to grow."
Related
- letter-2002 — Previous year
- letter-2004 — Following year
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- compounding