'We've Bought More Apple than Anything Else', Says Warren Buffett

Screen Shot 2018 02 01

Screen Shot 2018 02 01

The 2017 annual report from Warren Buffett's Berkshire Hathaway (http://www.berkshirehathaway.com/2017ar/2017ar.pdf) has revealed something surprising - the 20% quota share deal it has with Insurance Australia Group has become vital to the premium and earnings from the Buffett's key reinsurer, National Indemnity (or NICO Group).

Insurance and reinsurance premium float continues to build at Berkshire Hathaway and investing that float drives significant income, $1 billion in the fourth-quarter alone.

Market pundits across the world like Buffett's straight talk.

The example he uses was the valuation mismatch between stocks and bonds in 2012.

This is the first lesson for investors.

Berkshire was a net buyer of stocks so far this year, even as it sold back shares of Phillips 66 to the oil refiner.

The U.S. 10-year Treasury note yield eased to 2.8642 percent US10YT=RR, slipping from a four-year high it hit last week. "Indeed, price seemed nearly irrelevant to an army of optimistic purchasers", he said.

What will Buffet buy next with his grand cash pile? There is so much of dry gunpowder out there. "We expect more capital raisings by leveraged entities". To Buffett, the answer is clear: "I don't believe in imposing my views on 370,000 employees and a million shareholders". "Buffettdoesn't dwell very long on the politics", Smead said. "It's insane to risk what you have and need for something you don't really need". But being the good grandchildren we are, we humor him because after all, he took the time to write to us, and the least we can do after all these years is act like we care.

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The country should be generally pro-trade, Buffett said, with as close to a balance of imports and exports as possible. In past quarterly and annual press releases, we have regularly warned you not to pay attention to these realized gains, because they - just like our unrealized gains - fluctuate randomly.

And you know, Warren doesn't ask much and he doesn't ask often. "But he is not telling us that it is a peak and get out", Thakkar told ET Now. Sometimes, the payoffs to us will be modest; occasionally, the cash register will ring loudly.

Buffett said it is a "terrible mistake" for investors with long-term horizons - among them, pension funds, college and endowments and savings-minded individuals - to measure their investment "risk" by their portfolio's ratio of bonds to stocks. "At Berkshire, in contrast, we evaluate acquisitions on an all-equity basis, knowing that our taste for overall debt is very low". "And an unsettled mind will not make good decisions".

Buffett noted that the connection of value-building to retained earnings will be impossible to detect in the short term. Stock value has moved between $135 - 180.93 in last one year. "He participated probably more in the discussion than I did, but I love the idea of tackling what I regard as the major problem in our economy", Buffett said.

His letter spends sometime explaining how his famous 10-year bet against hedge fund managers, that ended last year, panned out.

Buffett reiterated his belief in investing in companies with solid underlying businesses.

'In the meantime, we will stick with our simple guideline: the less the prudence with which others conduct their affairs, the greater the prudence with which we must conduct our own'.

Berkshire Hathaway didn't make many big acquisitions in 2017 because asking prices were so high.

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