#88 Warren Buffett's Shareholder Letters— All of them!

**David Senra** (0:00)
want to tell you about a one-time only limited event that I don't think you're going to want to miss. I am doing a live show with Patrick O'Shaughnessy from the Invest Like the Best podcast in New York City on October 19th. Patrick has interviewed over 300 of the world's best investors and founders for his podcast. I've read over 300 biographies of history's greatest entrepreneurs for my podcast. We'll be talking about what we learned from seven years of podcasting, sharing our favorite ideas and stories, and doing a live Q&A. There will also be special event-only swag. If you live in New York City, I think it's a no-brainer. But if not, I think it's a great excuse to fly in. I've already heard from a bunch of people that bought tickets, they're flying in from other cities. Some people are flying in from other countries. That's setting the bar really high, so I will have at least four shots of espresso or four energy drinks before or during the show so we can make it a night that you'll never forget. If you're interested in attending this unique live event, I will leave a link down below. I highly recommend you get your tickets today, and I hope I get to see you in New York on October 19th. Warren Buffett first took control of Berkshire Hathaway, a small textile company in April of 1965 A share changed hands for around $18 at that time. 54 letters to shareholders later, and that same share trades for $306,000, compounding investor capital at just under 20% per year. Buffett has said many times that he was wired at birth to allocate capital. By allocating resources to assets and endeavors that have the greatest potential for gain, Buffett has guided Berkshire to creating enormous value, not only for shareholders, but for the managers, employees, and customers of its holdings. The numbers and charts you see on the following pages tell the story of a compounding machine. The rest of the book tells of the people, companies and philosophies that have driven it for five decades. That's also the part that I'm gonna be focused on today. In addition to providing an outstanding case study on Berkshire's success, Buffett shows an incredible willingness to share his methods and act as a teacher to his many students. All right, so that's from the introduction of the book that I read, which is Berkshire Hathaway Letters to Shareholders, all of them. 54 years of unbelievably long shareholders. This is by far the largest book that I've ever read for the podcast so far, maybe two or three times the size, because it's almost 800 pages, but it's the size of a textbook. So we have no time to waste. Let's go ahead and jump into it. Okay, so I want to start with the very first sentence, the very first shareholder letter. It says, the fiscal year ended October 2nd, 1965 It resulted in net earnings of $2.2 million. And when I read that, I think this part illustrates one of my favorite Jeff Bezos quotes of all time. He says, this is a quote from Bezos. He says, big things start small. The biggest oak starts from an acorn. You've got to be willing to let that acorn grow into a little sapling, and then finally into a small tree, and then maybe one day, it'll be a big business on its own. You can't skip steps. You have to put one foot in front of the other. Things take time. There are no shortcuts. But you want to do those steps with passion and ferocity. So in our story, we're right here. This is, at this point, Berkshire is essentially just a tiny little acorn. It's not even a sapling. And so let's go into the condition of the business that Warren is inheriting. I mean, he purchased it, so he chose this path. But he's gonna tell us, basically, what is the blueprint for, like, what do you want to do if you have a cyclical business, which is what the textile industry is?
And then the summary of the section I'm about to read to you is essentially he sets out his idea. He's like, I'm gonna acquire more companies and I'm gonna build a buffer. And then he does that for 54 years straight. So it says, this is now Warren writing, the sales picture of the last half of 1966 was one of generally depressed markets.
So he's talking about the textile business and then his business within that industry. In particular, he says, in a business as highly cyclical as the textile business, the past decade for Berkshire Hathaway has been a recurring story of a period of earnings followed by a period of relatively heavy losses.