On February 22, the renowned investor Warren Buffett candidly shared his thoughts on using a cane in his annual letter to Berkshire Hathaway shareholders, stating, “For me, the usefulness of a cane is limited to avoiding getting bruised and banged up.” His admission that he has taken up a cane surprised several global investors who revere him as the “Oracle of Omaha.” At 94 years of age, such news is both surprising and expected, evoking deeper reflections from a community that cherishes the chance to glean insights from Buffett’s investment philosophies, encapsulated in his well-known shareholder letters.

This year, the letter was particularly poignant as Buffett hinted at the upcoming transition in leadership at Berkshire. “I am 94 years old, and it won’t be long until Greg Abel takes the helm and writes these letters,” he noted, acknowledging the inevitable passing of the guard while reassuring shareholders that the core beliefs of Berkshire will remain steadfastHighlighting the importance of transparency, he wrote, “Reporting is an obligation the CEO owes to shareholdersStart misleading them, and you’ve set yourself on a path of self-deception.” This commitment to candor has distinguished Buffett from many corporate leaders, especially during a time when many companies prefer to speak only of their successes while burying their failures behind corporate jargon.

Buffett’s humility in owning mistakes stands out starkly against the backdrop of corporate AmericaIn letters from 2019 to 2023, he referred to 'mistakes' or 'errors' sixteen times, a candid admission that many other leaders shy away from, preferring to portray a picture of unblemished successThis level of sincerity has contributed significantly to Berkshire Hathaway's towering legacy: an astonishing total return rate exceeding 5.5 million percent from 1964 to 2024, compared to a meager 39,054% for the S&P 500 during the same time frame; and an annualized compound return of 19.9% for Berkshire against 10.4% for the S&P.

In the lengthy report, which approached 10,000 words, Buffett’s core themes of value investing and long-term thinking pulsated

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For fiscal year 2024, Berkshire reported operating profits of $47.437 billion and net earnings attributing to shareholders, inclusive of investment gains, soaring to $88.995 billion—figures that reflect the company’s impressive resilience in a volatile economic landscape.

Interestingly, Buffett emphasized the operating profit of $47 billion over the higher total earnings figure, a strategy that drew criticism from readers who preferred the brighter side of financial reportingHis firm stance on prioritizing operating earnings served as a guideline for investors, urging them to focus on fundamental performance rather than fleeting market valuations—critical advice especially given the current climate of rampant speculation.

Berkshire’s revenue for 2024 reached $371.433 billion, climbing from $364.482 billion in 2023, with a notable 27% increase in operating profit year-over-yearDespite challenges faced by many of its 189 subsidiaries—53% reported declining earnings—Berkshire’s performance exceeded Buffett’s expectations, hinting at strategic maneuvers that buoyed its overall resultsIn addition to operational profits, rising bond yields also boosted investment income, with the insurance segment, particularly GEICO, displaying significant resilience.

The fourth quarter of 2024 echoed a pattern set in the previous quarter: no share buybacks were conductedThis stance aligns with Buffett's long-standing belief that repurchases are only justifiable when stock prices are undervaluedAs the new fiscal year approached, Berkshire's cash reserves hit a record $334.2 billion, equal to 29% of total assets, presenting a stark contrast to large buybacks made during bull marketsObservers began to question this alignment, with concerns about whether Buffett anticipated an impending market correction.

Buffett's actions in the Japanese market have also captured attentionHis investment in five major Japanese trading companies, including Itochu and Mitsubishi, has been lauded as a savvy move in the face of a weak yen

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His ongoing affection for Japanese equities is a testament to Buffett’s broader investment philosophy—finding value in places where others may overlook potentialAs of the end of 2024, the total investment in these companies stood at $13.8 billion, now valued at over $23.5 billion, reflecting strategic foresight.

The letter underscored Buffett’s belief in maintaining long-standing relationships with these corporations, detailing a commitment to gradually increasing Berkshire’s stake in these companies as collaborative partnersThe groundwork laid in his initial investment, influenced by low share prices and a strong admiration for their operational success, emphasizes the necessity of not just finding good deals, but fostering healthy partnerships in business.

Despite Berkshire’s substantial cash reserves, which might suggest a conservative strategy, Buffett reiterated his preference for maintaining a substantial equity investment—primarily in American stocksThis inclination towards equity, as opposed to liquid assets, remains a cornerstone of his investment ideologyBuffett understands that while market conditions fluctuate, well-chosen equity holdings ultimately yield better long-term outcomes compared to mere cash preservation.

Thus, the question arises: how does the world of investing continue to evolve under the close watch of Buffett? The 2024 environment gives us a glimpse into his philosophy, one characterized by patience and analytical acumenBuffett's practical approach and long-term planning enable an environment where investor concerns about volatility are calmed by a return-focused strategy—a mantra echoed repeatedly through his written communications.

As he prepares for the upcoming annual meeting scheduled in Omaha in May, Buffett extends an invitation that reflects warmth and camaraderieThe atmosphere will undoubtedly feel a bit different this year following the passing of his longtime partner, Charlie Munger

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