Warren Buffett plays down rumours he is ready to step down

Randall Padilla
February 25, 2018

The year also saw the company's war chest swell to $116 billion in cash and US Treasury bills, financial manna that Buffett wants to use to make significant new acquisitions. "The remaining $29 billion was delivered to us in December when Congress rewrote the U.S. Tax Code", Buffett wrote.

"In our search for new stand-alone businesses, the key qualities we seek are durable competitive strengths; able and high-grade management; good returns on the net tangible assets required to operate the business; opportunities for internal growth at attractive returns; and, finally, a sensible purchase price", Buffett said.

For the full year, Berkshire reported $44.9 billion net income, or $18.22 per Class B share. Equity holdings include Apple, Wells Fargo and Coca-Cola. Real-time viewership in 2017 was about 3.1 million, a gain of 72 percent over the previous year, Buffett said. Those storms are a significant part of why Berkshire's insurance underwriting recorded a loss in 2017 after 14-straight years of underwriting profits.

Berkshire also owns clothing, furniture and jewelry firms.

Buffett's newsletters are read with intense interest on Wall Street and beyond. "Instead, we simply believe that if the businesses of the investees are successful (as we believe most will be) our investments will be successful as well".

Buffett said it is a "terrible mistake" for investors with long-term horizons - among them, pension funds, college and endowments and savings-minded individuals - to measure their investment "risk" by their portfolio's ratio of bonds to stocks. The reason: losses can be amplified if stocks plunge. Berkshire's effective tax rate for 2018 could drop to roughly 20%, down from an estimated 30%, according to Morgan Stanley. Even if your borrowings are small and your positions aren't immediately threatened by the plunging market, your mind may well become rattled by scary headlines and breathless commentary.

Buffett says a 10-year bet he made with a group of hedge funds shows why investors should be wary of fees and focus on investing regularly for the long term. The S&P 500 won handily, posting average annual gains of 8.5%, topping all five hedge fund products handily. "American investors pay staggering sums annually to advisors, often incurring several layers of consequential costs".

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