Buffett admits his `very big mistake'
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.WARREN BUFFETT, the legendary American investment guru, yesterday reported a 48 per cent jump in earnings at his investment vehicle, Berkshire Hathaway, but warned he was still struggling to find good shares with long-term appeal.
In his annual letter to shareholders, Mr Buffett admitted Berkshire's performance was "not as good as it looks", with most of the gains coming from issuing shares in subsidiary companies.
Mr Buffett, whose homely utterances have earned him the nickname Sage of Omaha, said his equity portfolio had underperformed the S&P 500 index and derided his own decision to sell pounds 30m of shares in McDonalds at the start of 1998. Shares in McDonalds returned 62 per cent over the year.
"My decision to sell McDonalds was a very big mistake," he wrote. "Overall, you would have been better off last year if I had regularly snuck off to the movies during market hours."
Mr Buffett said he and his vice-chairman, Charles Munger, were struggling to find stocks with long-term appeal. But he avoided a repeat of remarks he made earlier this month on a US talk show, when he said market valuations were "high by historic standards".
He also failed to disclose the outcome of large, high-profile investments in silver, oil and bonds, except to say he had "eliminated certain of the positions discussed last year and added certain others".
Mr Buffett said in February last year he had spent $650m buying 129.7 million ounces of silver, close to a quarter of annual world output, calculating demand would outpace production. The price of silver has since fallen by 15 per cent.
At the start of 1998, Berkshire Hathaway also held $4.6bn in zero-coupon Treasury bonds. US regulators' records show the company sold $20bn during the year.
Since he took over as head of Berkshire Hathaway in 1965, Mr Buffett has grown the value of the company's book value from $19 to $37,801 a share, much of it through holdings in Coca-Cola, American Express and Gillette.
Mr Buffett's annual report shows he ditched a holding in Citigroup, the world's biggest financial services company, worth around $1bn. His purchases included General Re, the US reinsurance giant, for $16bn.
Berkshire last year amassed a $15bn cash stockpile which may be used for a large acquisition.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments