Buffett Partnership Letter 1968 Semi

Warren E. Buffett | July 11, 1968

First Half 1968 Performance

Metric	Dow	Partnership	Limited Partners
First Half 1968	+0.9%	+16.0%	+13.5%

Dow declined from 905 to 898.

Key Observation

"Our marketable security investments are heavily concentrated in a few situations, making relative performance potentially more volatile than in widely diversified investment vehicles."

Cumulative Record (Through H1 1968)

Metric	Dow	Partnership	Limited Partners
Cumulative	167.7%	1880.0%	1072.0%
Annual Compounded	8.9%	29.6%	23.8%

Warning About Market Conditions

Buffett encloses an article by Marvin May exposing "chain-letter type stock-promotion vogue":

"Spectacular amounts of money are being made by those participating... in the chain-letter type stock-promotion vogue. The game is being played by the gullible, the self-hypnotized, and the cynical."

Accounting Distortions

"One particularly progressive entrepreneur told me he believed in 'bold, imaginative accounting'."

On Indirect Benefits

"Our own performance has been substantially improved on an indirect basis because of the fall-out from such activities."

Chain-letter activities cause many cheap stocks to come to life, benefiting BP's holdings.

Source

Warren E. Buffett, July 11, 1968.