Taking the time to read the time to read Buffett’s letters to shareholders is, in my opinion, the best investment of a few hours a young investor could possibly make. It provides the unusual opportunity get behind the scenes and get a look at the some of the thinking that goes into some of Berkshire Hathaway’s largest buys and sells. It also provides the opportunity to learn from the mistakes made by one investor in the hopes that you won’t repeat them in your own investing experiences.
What makes the letters so good in my opinion is that Buffett is phenomenal at one thing- seeing through the hype. The man seems to have the ability to step back and look at the bigger picture and analyze, with a critical eye, the current opportunities that are available. You never read him as calling something a “new economy” or talking about how this bubble will be any different than the last. He just doesn’t buy the hype. This is something I like to say I am also immune to, but the truth is I often catch myself almost making decisions in reacting to news stories, without taking a breath stepping back and asking, how will this potential investment look in a year from now, or five years from now?
If you don’t already read them you should take the time, here is the link.
One interesting quote from February’s letter:
Within a year or so, residential housing problems should largely be behind us. Prices will remain far below ‘bubble’ levels, of course, but for every seller or lender hurt by this there will be a buyer who benefits. Indeed, many families that couldn’t afford to buy an appropriate home a few years ago now find it well within their means.