2017 Shareholder Letter
Buffett's 2017 letter explains why most of the gain came from unrealized investment gains, discusses the new GAAP rule on mark-to-market, and emphasizes operating earnings strength.
2017 Shareholder Letter
Date: February 24, 2018 Author: Warren Buffett Company: Berkshire Hathaway
Overview
2017 per-share book value increased 23.0% (S&P 21.8%), with book value reaching $211,750 — a 19.1% compound annual return over 53 years.
Key Points
Most Gain Not From Operations
"2017 was far from standard: A large portion of our gain did not come from anything we accomplished at Berkshire."
Much of the gain came from unrealized investment appreciation.
The GAAP Volatility Problem
"Both of us have consistently thought that at Berkshire this mark-to-market change would produce what I described as 'wild and capricious swings in our bottom line.'"
A new GAAP rule requires including unrealized gains/losses in earnings, creating "wild and capricious swings."
Consistent Operating Performance
Despite quarterly volatility from investments, "the many businesses that Berkshire owns delivered consistent and satisfactory operating earnings in all quarters."
Famous Quotes
"A large portion of our gain did not come from anything we accomplished at Berkshire."
Related
- letter-2016 — Previous year
- letter-2018 — Following year
- warren-buffett
- compounding