In his eagerly awaited annual letter to shareholders, legendary investor Warren Buffett touched on several pressing issues, including the United States’ growing fiscal challenges, suggestions for the Trump administration, and reflections on his six decades with Berkshire Hathaway. Let’s dive into some of the standout highlights from Buffett’s 2024 letter:
Dubbed the “Oracle of Omaha,” Buffett disclosed that last year, Berkshire contributed $26.8 billion in taxes, roughly 5% of the total corporate tax bill in America. He emphasized the importance of the administration using taxpayers’ money judiciously and ensuring stability in the currency. With a touch of gratitude, he remarked, “Thank you, Uncle Sam. We hope to send even larger sums in the future. Use these funds wisely, especially to help those who, through no fault of their own, are dealt a poor hand in life. They deserve better. Always remember your role in maintaining currency stability, which requires both wisdom and vigilance.”
Buffett also spotlighted the escalating fiscal challenges the country is facing. The budget deficit soared to $1.8 trillion in the 2024 fiscal year with interest expenses exceeding $1 trillion for the first time, driven by high long-term yields. He warned of the dangers of fiscal irresponsibility, noting that in some countries, this recklessness becomes a habit and that the U.S. has occasionally teetered on the brink. “Fixed-coupon bonds don’t offer protection against a depreciating currency,” he cautioned.
At 94, the CEO is still a strong advocate for equities over cash, despite aggressively selling stocks recently. In the last quarter of last year, Berkshire net sold equities for the ninth consecutive quarter, accumulating a record cash reserve of $334 billion. Despite what some might see as an extraordinary cash position, “the bulk of your money remains in equities,” Buffett assured. “Berkshire will continue to heavily favor owning equities—primarily American, though many will have significant international operations. We’ll never choose cash-equivalents over owning good businesses, whether in full or part.”
This year, Buffett expressed his confidence in his designated successor, Greg Abel, lauding his talent for identifying promising equity opportunities. He even compared Abel to the late Charlie Munger, adding that once he steps down, Abel will continue the tradition of authoring annual letters. “Opportunities often don’t look appealing; it’s rare to find ourselves surrounded by them. Greg has proven his ability to seize such moments, just as Charlie did,” Buffett observed. “As I near the end of my tenure, Greg will step in as CEO and maintain our commitment to transparency. He understands that deceiving shareholders is all too quickly followed by self-deception.”
Reflecting on his remarkable career of over 60 years, Buffett highlighted pivotal decisions that have shaped Berkshire’s evolution, such as acquiring Geico and hiring Ajit Jain to head the insurance business. “I’ve had pleasant surprises regarding both business potential and managerial loyalty. One winning decision can make a world of difference,” he shared, mentioning GEICO and Ajit Jain as prime examples, as well as his fortune in partnering with Charlie Munger. “Mistakes fade; successes endure.”
Finally, Buffett reaffirmed Berkshire’s commitment as a long-term investor in the five Japanese trading companies he began investing in nearly six years ago. He disclosed an agreement with the companies allowing Berkshire’s ownership to exceed the initial 10% cap. “Our holdings in these five firms are a long-term endeavor, and we support their boards wholly. From the outset, we agreed to limit our stakes to below 10%, but the companies have since agreed to moderately lift this limit. Over time, you’ll likely see our stakes in all five increase somewhat.”
