Highlights from Berkshire Hathaway’s 2016 Letter to Shareholders

On Saturday, February 25th, Berkshire Hathaway released its much-anticipated 2016 letter to shareholders in which Warren Buffett presents his company’s results for the year and shares his inimitable insights and wisdom. Here are some highlights (Part I was posted yesterday):

  • “Starting from scratch, America has amassed wealth totaling $90 trillion.”
  • Meg McConnell of the New York Fed: “We spend a lot of time looking for systematic risk; in truth, however, it tends to find us.”
  • Berkshire has $86 billion in cash on hand—perhaps the most ever.
  • “We have made no commitment that Berkshire will hold any of its marketable securities forever.”
  • With active management, Buffett says, come high fees. “When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits.”
  • “Both large and small investors should stick with low-cost index funds.”
  • Pension funds are “hit with a double whammy: poor investment performance and huge fees.”
  • “Our expectation is that investment gains will continue to be substantial—though totally random as to timing.”