Warren Buffett published his annual shareholder letter on Saturday, which I leafed through before I got up as part of my work on the updated, revised edition of my free e-book. Warren Buffett predicts the future (which you can download here.)
The letter contained some compelling insights, including how Buffett took on some of his biggest mistakes.
But after a day or two in hindsight, I now realize that I missed something I was expecting – three things in fact – because Buffett never mentioned them. And the truth is, their absence makes them stand out.
1. Um, the pandemic?
Buffett’s letter contains 7,218 words, but as Bloomberg’s Katherine Chiglinsky pointed out, there is hardly a word about the greatest global development of the past year: the Covid-19 pandemic.
In fact, the term “COVID-19” appears only once and then only afterwards, describing how one of Berkshire’s subsidiary companies, Nebraska Furniture Mart, set a sales record in 2020 (“despite … closing … for more than six weeks because of COVID-19. “)
In addition: pandemic? Coronavirus? Masks? Vaccinations? Medication? Pharma?
None of these words are mentioned. Even when Buffett describes how Berkshire had to get rid of its annual get-together and go purely virtual last year, and outlines plans for this year (in Los Angeles, not Omaha), he manages to do it without ever mentioning the reason why the whole thing is up In the beginning it was turned upside down.
Even stranger, Buffett barely mentions the pandemic itself in the context of his big Mea Culpa in the letter, about a write-off of over $ 11 billion that Berkshire suffered due to the performance of Precision Castparts.
Precision Castparts makes equipment for aerospace and energy companies and, as Chiglinsky points out, a major reason for the underperformance last year was lower demand during the pandemic.
But aside from a brief, passing mention of “adverse developments in the aerospace industry, PCC’s main source of customers,” it is. Buffett does not address it.
2. The political climate?
Here’s the next thing that doesn’t show up: the political climate in the US. Not that this is exactly what you’d hope, but it’s striking not to mention it at all: the 2020 presidential election, the racial justice protests that have erupted across the country over the past 12 months, and the 6th January Uprising at the US Capitol.
I really don’t know what to do with the silence, even if it seems relevant. For example, there’s nothing about the risks insurers face or the context of Berkshire’s 5.4 percent stake in Apple – say, “the coalition of attorneys-general along with the US Department of Justice,” which reportedly “was the first.” have taken “steps to launch an antitrust investigation from Apple.” “
This is a small change for Buffett, who was not silent about politics early in his career.
For example, he endorsed and made contributions to Barack Obama as president in 2008; That year he said he used the word “lobotomy” to explain what it would take to support Obama’s Republican opponent, Senator John McCain.
Buffett endorsed Obama again in 2012, standing behind Hillary Clinton in 2016, and criticizing then-candidate Donald Trump for failing to publish his tax returns. But this time – mind you, not just in the letter, but for the whole year? Silence about politics.
It’s worth noting that Buffett has a lot of perspective politically. As he said in 2017, he had lived under 15 of the then 45 presidents (make these 16 from now 46) and acted under every president since the FDR.
“The first was [President Herbert] Hoover, “Buffett told CNBC in 2017.” I was only two years old when he left, so I hadn’t taken action at that point. But Roosevelt was next. And I bought stocks under him even though my father thought it was the end of the world when he was elected. “
3. Succession
A year ago in Berkshire, Buffett spoke about a burning question: Who will take over when he and Charlie Munger can no longer run the company?
“Charlie and I stepped on the urgency zone a long time ago,” admitted Buffett when he was 89 years old and Munger was 96 years old. “That’s not really good news for us. But Berkshire shareholders needn’t worry. Your company is 100 percent prepared for our exit.”
Like you, me, and every other living soul, Buffett and Munger are now a year older.
As a result, Buffett said last year that he intended to pay “more attention” to the two most likely successors: Ajit Jain and Greg Abel, who run the insurance and non-insurance portions of Berkshire.
They were scheduled to join Buffett and Munger on stage at the annual meeting, but of course the meeting didn’t go exactly according to plan. Neither Jain nor Munger was there.
Abel sat at the table next to Buffett in the auditorium, but he really didn’t say much.
Well, I wouldn’t expect Buffett to literally repeat the whole thing from last year – but really, the question of succession barely appeared in this year’s letter, except that Buffett promises all four will be on the podium this year in Los Angeles .
“Our other invaluable Vice Chairs, Ajit Jain and Greg Abel, will be with us to answer questions about their domains,” he wrote.
Should we read something into these omissions? I do not know yet. But now that I’ve stepped back and seen that they’re not here, I can’t stop not seeing them.
(Don’t forget the free e-book, Warren Buffett predicts the future. You can Get the latest issue here for free.)
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