Will you read this important letter on investing?


Everyone has easy access to vast amounts of information in the internet. Most of it is free.

You can quickly find online data on publicly listed companies, portfolios and buying/selling activities of big investors, the ins and outs of the best investing/trading strategies, and much more.

You can’t gain an investing edge in the market with information alone. You need something more.

You need market wisdom. In this day and age of fierce competition for even Re 1 profit knowing what to buy, when to buy, and why, is more important than knowing a 1,000 random facts.

This is why every February, investors around the world wait with bated breath for the publication of a very important investing letter.

This annual letter contains wisdom that can not only help you beat the market but also give you new insights into the world of investing.

This wisdom contains the key to making a fortune in the stock market. It’s the distilled wisdom of the greatest investor in the world – Warren Buffett.

Reading Buffett’s letters to shareholders is an annual tradition among investors. Even those who don’t practice the art of value investing, as Buffett does, like to read them. The letters contain great insights that will make you a better investor.

Where can I read the letters?

They are all freely available on Berkshire Hathaway’s website.

The first annual letter was published way back in 1977. This year’s letter will be the 46th edition.

Each one of these letter contains gems of wisdom that you can use in your investing. Collectively they contain almost half a century’s wisdom of one of the greatest investing minds of all time.

When will the 2022 letter be available?

This year’s letter is expected on 26 February. You will be able to download it directly from Berkshire Hathaway’s website.

What are investors expecting?

This year, investors would like Buffett to write about how he navigated the last two years in the market, especially the unprecedented volatility.

Buffett might also share his views on investments he hasn’t made and likely never will – Cryptos, SPACs, meme stocks, and the like.

He will likely share what he has learnt over the last two years and if he has decided to change his investing style in some way. Investors will be eager to know if he will stick to his proven method in the face of unprecedented disruption in the world.

Buffett’s optimism

Buffett is also famous for sharing his optimistic view on the market and criticising naysayers. Here’s an excerpt from his 2016 letter…

American business – and consequently a basket of stocks – is virtually certain to be worth far more in the years ahead. Innovation, productivity gains, entrepreneurial spirit and an abundance of capital will see to that. Ever-present naysayers may prosper by marketing their gloomy forecasts. But heaven help them if they act on the nonsense they peddle. Many companies, of course, will fall behind, and some will fail. Winnowing of that sort is a product of market dynamism. Moreover, the years ahead will occasionally deliver major market declines – even panics – that will affect virtually all stocks. No one can tell you when these traumas will occur – not me, not Charlie, not economists, not the media. During such scary periods, you should never forget two things: First, widespread fear is your friend as an investor, because it serves up bargain purchases. Second, personal fear is your enemy. It will also be unwarranted. Investors who avoid high and unnecessary costs and simply sit for an extended period with a collection of large, conservatively-financed American businesses will almost certainly do well.

There is a lesson to be learnt here. In the four years since these words were written, the US market did very well and so did global markets.

And then the pandemic hit. Buffett said a large decline would happen back in 2016 and so it did, in early 2020.

But what happened after that crash has proved him right. Anyone who bet against the market suffered huge losses.

On Inflation…

Buffett has said in the past that inflation is an enemy of the long term investor. This is because the investor has to earn extra profits just to make the same post-inflation returns.

The US is suffering from the worst inflation in the last 40 years. Investors will hang on every word Buffett says about beating inflation should he choose to write about it.

New Investments

Last but not least, there is always something to learn about creating long-term wealth for yourself from Buffett’s investments.

His investments in stocks like Apple, which is about 40% of his portfolio, surprised many investors initially. But there is no doubt that he got that call correct.

If Buffett announces any new investments or expresses his interest in any sector, you should pay attention to it.

Well, we will surely read his letter when it’s published. We hope you do so too. There is no better way to learn the secrets of long-term investing.

Happy investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. 

This article is syndicated from Equitymaster.com

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