2024年巴菲特致股东公开信

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CharlieMunger–TheArchitectofBerkshireHathaway

CharlieMungerdiedonNovember28,just33daysbeforehis100thbirthday.

ThoughbornandraisedinOmaha,hespent80%ofhislifedomiciledelsewhere.Consequently,itwasnotuntil1959whenhewas35thatIfirstmethim.In1962,hedecidedthatheshouldtakeupmoneymanagement.

Threeyearslaterhetoldme–correctly!–thatIhadmadeadumbdecisioninbuyingcontrolofBerkshire.But,heassuredme,sinceIhadalreadymadethemove,hewouldtellmehowtocorrectmymistake.

InwhatInextrelate,bearinmindthatCharlieandhisfamilydidnothaveadimeinvestedinthesmallinvestingpartnershipthatIwasthenmanagingandwhosemoneyIhadusedfortheBerkshirepurchase.Moreover,neitherofusexpectedthatCharliewouldeverownashareofBerkshirestock.

Nevertheless,Charlie,in1965,promptlyadvisedme:“Warren,forgetabouteverbuyinganothercompanylikeBerkshire.ButnowthatyoucontrolBerkshire,addtoitwonderfulbusinessespurchasedatfairpricesandgiveupbuyingfairbusinessesatwonderfulprices.Inotherwords,abandoneverythingyoulearnedfromyourhero,BenGraham.Itworksbutonlywhenpracticedatsmallscale.”Withmuchback-slidingIsubsequentlyfollowedhisinstructions.

Manyyearslater,CharliebecamemypartnerinrunningBerkshireand,repeatedly,jerkedmebacktosanitywhenmyoldhabitssurfaced.Untilhisdeath,hecontinuedinthisroleandtogetherwe,alongwiththosewhoearlyoninvestedwithus,endedupfarbetteroffthanCharlieandIhadeverdreamedpossible.

Inreality,Charliewasthe“architect”ofthepresentBerkshire,andIactedasthe“generalcontractor”tocarryouttheday-by-dayconstructionofhisvision.

Charlieneversoughttotakecreditforhisroleascreatorbutinsteadletmetakethebowsandreceivetheaccolades.Inawayhisrelationshipwithmewaspartolderbrother,partlovingfather.Evenwhenheknewhewasright,hegavemethereins,andwhenIblunderedhenever–never–remindedmeofmymistake.

Inthephysicalworld,greatbuildingsarelinkedtotheirarchitectwhilethosewhohadpouredtheconcreteorinstalledthewindowsaresoonforgotten.Berkshirehasbecomeagreatcompany.ThoughIhavelongbeeninchargeoftheconstructioncrew;Charlieshouldforeverbecreditedwithbeingthearchitect.

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BERKSHIREHATHAWAYINC.

TotheShareholdersofBerkshireHathawayInc.:

Berkshirehasmorethanthreemillionshareholderaccounts.Iamchargedwithwritingalettereveryyearthatwillbeusefultothisdiverseandever-changinggroupofowners,manyofwhomwishtolearnmoreabouttheirinvestment.

CharlieMunger,fordecadesmypartnerinmanagingBerkshire,viewedthisobligationidenticallyandwouldexpectmetocommunicatewithyouthisyearintheregularmanner.HeandIwereofonemindregardingourresponsibilitiestoBerkshireshareholders.

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Writersfinditusefultopicturethereadertheyseek,andoftentheyarehopingtoattractamassaudience.AtBerkshire,wehaveamorelimitedtarget:investorswhotrustBerkshirewiththeirsavingswithoutanyexpectationofresale(resemblinginattitudepeoplewhosaveinordertobuyafarmorrentalpropertyratherthanpeoplewhopreferusingtheirexcessfundstopurchaselotteryticketsor“hot”stocks).

Overtheyears,Berkshirehasattractedanunusualnumberofsuch“lifetime”shareholdersandtheirheirs.Wecherishtheirpresenceandbelievetheyareentitledtoheareveryyearboththegoodandbadnews,delivereddirectlyfromtheirCEOandnotfromaninvestor-relationsofficerorcommunicationsconsultantforeverservingupoptimismandsyrupymush.

InvisualizingtheownersthatBerkshireseeks,Iamluckytohavetheperfectmentalmodel,mysister,Bertie.Letmeintroduceher.

Foropeners,Bertieissmart,wiseandlikestochallengemythinking.Wehavenever,however,hadashoutingmatchoranythingclosetoarupturedrelationship.Weneverwill.

Furthermore,Bertie,andherthreedaughtersaswell,havealargeportionoftheirsavingsinBerkshireshares.Theirownershipspansdecades,andeveryyearBertiewillreadwhatIhavetosay.Myjobistoanticipateherquestionsandgiveherhonestanswers.

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Bertie,likemostofyou,understandsmanyaccountingterms,butsheisnotreadyforaCPAexam.Shefollowsbusinessnews–readingfournewspapersdaily–butdoesn’tconsiderherselfaneconomicexpert.Sheissensible–verysensible–instinctivelyknowingthatpunditsshouldalwaysbeignored.Afterall,ifshecouldreliablypredicttomorrow’swinners,wouldshefreelysharehervaluableinsightsandtherebyincreasecompetitivebuying?Thatwouldbelikefindinggoldandthenhandingamaptotheneighborsshowingitslocation.

Bertieunderstandsthepower–forgoodorbad–ofincentives,theweaknessesofhumans,the“tells”thatcanberecognizedwhenobservinghumanbehavior.Sheknowswhois“selling”andwhocanbetrusted.Inshort,sheisnobody’sfool.

So,whatwouldinterestBertiethisyear?

OperatingResults,FactandFiction

Let’sbeginwiththenumbers.TheofficialannualreportbeginsonK-1andextendsfor124pages.Itisfilledwithavastamountofinformation–someimportant,sometrivial.

Amongitsdisclosuresmanyowners,alongwithfinancialreporters,willfocusonpageK-72.There,theywillfindtheproverbial“bottomline”labeled“Netearnings(loss).”Thenumbersread$90billionfor2021,($23billion)for2022and$96billionfor2023.

Whatintheworldisgoingon?

Youseekguidanceandaretoldthattheproceduresforcalculatingthese“earnings”arepromulgatedbyasoberandcredentialedFinancialAccountingStandardsBoard(“FASB”),mandatedbyadedicatedandhard-workingSecuritiesandExchangeCommission(“SEC”)andauditedbytheworld-classprofessionalsatDeloitte&Touche(“D&T”).OnpageK-67,D&Tpullsnopunches:“Inouropinion,thefinancialstatements.....presentfairly,inallmaterialrespects(italicsmine),thefinancialpositionoftheCompany.....andtheresultsofitsoperations.....foreachofthethreeyearsintheperiodendedDecember31,2023.....”

Sosanctified,thisworse-than-useless“netincome”figurequicklygetstransmittedthroughouttheworldviatheinternetandmedia.Allpartiesbelievetheyhavedonetheirjob–and,legally,theyhave.

We,however,areleftuncomfortable.AtBerkshire,ourviewisthat“earnings”shouldbeasensibleconceptthatBertiewillfindsomewhatuseful–butonlyasastartingpoint–inevaluatingabusiness.Accordingly,BerkshirealsoreportstoBertieandyouwhatwecall“operatingearnings.”Hereisthestorytheytell:$27.6billionfor2021;$30.9billionfor2022and$37.4billionfor2023.

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TheprimarydifferencebetweenthemandatedfiguresandtheonesBerkshireprefersisthatweexcludeunrealizedcapitalgainsorlossesthatattimescanexceed$5billionaday.Ironically,ourpreferencewasprettymuchtheruleuntil2018,whenthe“improvement”wasmandated.Galileo’sexperience,severalcenturiesago,shouldhavetaughtusnottomesswithmandatesfromonhigh.But,atBerkshire,wecanbestubborn.

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Makenomistakeaboutthesignificanceofcapitalgains:IexpectthemtobeaveryimportantcomponentofBerkshire’svalueaccretionduringthedecadesahead.Whyelsewouldwecommithugedollaramountsofyourmoney(andBertie’s)tomarketableequitiesjustasIhavebeendoingwithmyownfundsthroughoutmyinvestinglifetime?

Ican’trememberaperiodsinceMarch11,1942–thedateofmyfirststockpurchase–thatIhavenothadamajorityofmynetworthinequities,U.S.-basedequities.Andsofar,sogood.TheDowJonesIndustrialAveragefellbelow100onthatfatefuldayin1942whenI“pulledthetrigger.”Iwasdownabout$5bythetimeschoolwasout.Soon,thingsturnedaroundandnowthatindexhoversaround38,000.Americahasbeenaterrificcountryforinvestors.Alltheyhaveneededtodoissitquietly,listeningtonoone.

Itismorethansilly,however,tomakejudgmentsaboutBerkshire’sinvestmentvaluebasedon“earnings”thatincorporatethecapriciousday-by-dayand,yes,evenyear-by-yearmovementsofthestockmarket.AsBenGrahamtaughtme,“Intheshortrunthemarketactsasavotingmachine;inthelongrunitbecomesaweighingmachine.”

WhatWeDo

OurgoalatBerkshireissimple:Wewanttoowneitheralloraportionofbusinessesthatenjoygoodeconomicsthatarefundamentalandenduring.Withincapitalism,somebusinesseswillflourishforaverylongtimewhileotherswillprovetobesinkholes.It’sharderthanyouwouldthinktopredictwhichwillbethewinnersandlosers.Andthosewhotellyoutheyknowtheanswerareusuallyeitherself-delusionalorsnake-oilsalesmen.

AtBerkshire,weparticularlyfavortherareenterprisethatcandeployadditionalcapitalathighreturnsinthefuture.Owningonlyoneofthesecompanies–andsimplysittingtight–candeliverwealthalmostbeyondmeasure.Evenheirstosuchaholdingcan–ugh!–sometimeslivealifetimeofleisure.

Wealsohopethesefavoredbusinessesarerunbyableandtrustworthymanagers,thoughthatisamoredifficultjudgmenttomake,however,andBerkshirehashaditsshareofdisappointments.

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In1863,HughMcCulloch,thefirstComptrolleroftheUnitedStates,sentalettertoallnationalbanks.Hisinstructionsincludedthiswarning:“Neverdealwitharascalundertheexpectationthatyoucanpreventhimfromcheatingyou.”Manybankerswhothoughttheycould“manage”therascalproblemhavelearnedthewisdomofMr.McCulloch’sadvice–andIhaveaswell.Peoplearenotthateasytoread.Sincerityandempathycaneasilybefaked.Thatisastruenowasitwasin1863.

ThiscombinationofthetwonecessitiesI’vedescribedforacquiringbusinesseshasforlongbeenourgoalinpurchasesand,forawhile,wehadanabundanceofcandidatestoevaluate.IfImissedone–andImissedplenty–anotheralwayscamealong.

Thosedaysarelongbehindus;sizedidusin,thoughincreasedcompetitionforpurchaseswasalsoafactor.

Berkshirenowhas–byfar–thelargestGAAPnetworthrecordedbyanyAmericanbusiness.Recordoperatingincomeandastrongstockmarketledtoayearendfigureof$561billion.ThetotalGAAPnetworthfortheother499S&Pcompanies–awho’swhoofAmericanbusiness–was$8.9trillionin2022.(The2023numberfortheS&Phasnotyetbeentalliedbutisunlikelytomateriallyexceed$9.5trillion.)

Bythismeasure,Berkshirenowoccupiesnearly6%oftheuniverseinwhichitoperates.Doublingourhugebaseissimplynotpossiblewithin,say,afive-yearperiod,particularlybecausewearehighlyaversetoissuingshares(anactthatimmediatelyjuicesnetworth).

ThereremainonlyahandfulofcompaniesinthiscountrycapableoftrulymovingtheneedleatBerkshire,andtheyhavebeenendlesslypickedoverbyusandbyothers.Somewecanvalue;somewecan’t.And,ifwecan,theyhavetobeattractivelypriced.OutsidetheU.S.,thereareessentiallynocandidatesthataremeaningfuloptionsforcapitaldeploymentatBerkshire.Allinall,wehavenopossibilityofeye-poppingperformance.

Nevertheless,managingBerkshireismostlyfunandalwaysinteresting.Onthepositiveside,after59yearsofassemblage,thecompanynowownseitheraportionor100%ofvariousbusinessesthat,onaweightedbasis,havesomewhatbetterprospectsthanexistatmostlargeAmericancompanies.Bybothluckandpluck,afewhugewinnershaveemergedfromagreatmanydozensofdecisions.Andwenowhaveasmallcadreoflong-timemanagerswhonevermuseaboutgoingelsewhereandwhoregard65asjustanotherbirthday.

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Berkshirebenefitsfromanunusualconstancyandclarityofpurpose.Whileweemphasizetreatingouremployees,communitiesandsupplierswell–whowouldn’twishtodoso?–ourallegiancewillalwaysbetoourcountryandourshareholders.Weneverforgetthat,thoughyourmoneyiscomingledwithours,itdoesnotbelongtous.

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Withthatfocus,andwithourpresentmixofbusinesses,BerkshireshoulddoabitbetterthantheaverageAmericancorporationand,moreimportant,shouldalsooperatewithmateriallylessriskofpermanentlossofcapital.Anythingbeyond“slightlybetter,”though,iswishfulthinking.Thismodestaspirationwasn’tthecasewhenBertiewentall-inonBerkshire–butitisnow.

OurNot-So-SecretWeapon

Occasionally,marketsand/ortheeconomywillcausestocksandbondsofsomelargeandfundamentallygoodbusinessestobestrikinglymispriced.Indeed,marketscan–andwill–unpredictablyseizeuporevenvanishastheydidforfourmonthsin1914andforafewdaysin2001.IfyoubelievethatAmericaninvestorsarenowmorestablethaninthepast,thinkbacktoSeptember2008.Speedofcommunicationandthewondersoftechnologyfacilitateinstantworldwideparalysis,andwehavecomealongwaysincesmokesignals.Suchinstantpanicswon’thappenoften–buttheywillhappen.

Berkshire’sabilitytoimmediatelyrespondtomarketseizureswithbothhugesumsandcertaintyofperformancemayofferusanoccasionallarge-scaleopportunity.Thoughthestockmarketismassivelylargerthanitwasinourearlyyears,today’sactiveparticipantsareneithermoreemotionallystablenorbettertaughtthanwhenIwasinschool.Forwhateverreasons,marketsnowexhibitfarmorecasino-likebehaviorthantheydidwhenIwasyoung.Thecasinonowresidesinmanyhomesanddailytemptstheoccupants.

Onefactoffinanciallifeshouldneverbeforgotten.WallStreet–tousetheterminitsfigurativesense–wouldlikeitscustomerstomakemoney,butwhattrulycausesitsdenizens’juicestoflowisfeverishactivity.Atsuchtimes,whateverfoolishnesscanbemarketedwillbevigorouslymarketed–notbyeveryonebutalwaysbysomeone.

Occasionally,thesceneturnsugly.Thepoliticiansthenbecomeenraged;themostflagrantperpetratorsofmisdeedsslipaway,richandunpunished;andyourfriendnextdoorbecomesbewildered,poorerandsometimesvengeful.Money,helearns,hastrumpedmorality.

OneinvestmentruleatBerkshirehasnotandwillnotchange:Neverriskpermanentlossofcapital.ThankstotheAmericantailwindandthepowerofcompoundinterest,thearenainwhichweoperatehasbeen–andwillbe–rewardingifyoumakeacoupleofgooddecisionsduringalifetimeandavoidseriousmistakes.

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IbelieveBerkshirecanhandlefinancialdisastersofamagnitudebeyondanyheretoforeexperienced.Thisabilityisonewewillnotrelinquish.Wheneconomicupsetsoccur,astheywill,Berkshire’sgoalwillbetofunctionasanassettothecountry–justasitwasinaveryminorwayin2008-9–andtohelpextinguishthefinancialfireratherthantobeamongthemanycompaniesthat,inadvertentlyorotherwise,ignitedtheconflagration.

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Ourgoalisrealistic.Berkshire’sstrengthcomesfromitsNiagaraofdiverseearningsdeliveredafterinterestcosts,taxesandsubstantialchargesfordepreciationandamortization(“EBITDA”isabannedmeasurementatBerkshire).Wealsooperatewithminimalrequirementsforcash,evenifthecountryencountersaprolongedperiodofglobaleconomicweakness,fearandnear-paralysis.

Berkshiredoesnotcurrentlypaydividends,anditssharerepurchasesare100%discretionary.Annualdebtmaturitiesarenevermaterial.

YourcompanyalsoholdsacashandU.S.Treasurybillpositionfarinexcessofwhatconventionalwisdomdeemsnecessary.Duringthe2008panic,Berkshiregeneratedcashfromoperationsanddidnotrelyinanymanneroncommercialpaper,banklinesordebtmarkets.Wedidnotpredictthetimeofaneconomicparalysisbutwewerealwayspreparedforone.

ExtremefiscalconservatismisacorporatepledgewemaketothosewhohavejoinedusinownershipofBerkshire.Inmostyears–indeedinmostdecades–ourcautionwilllikelyprovetobeunneededbehavior–akintoaninsurancepolicyonafortress-likebuildingthoughttobefireproof.ButBerkshiredoesnotwanttoinflictpermanentfinancialdamage–quotationalshrinkageforextendedperiodscan’tbeavoided–onBertieoranyoftheindividualswhohavetrusteduswiththeirsavings.

Berkshireisbuilttolast.

Non-controlledBusinessesThatLeaveUsComfortable

LastyearImentionedtwoofBerkshire’slong-durationpartial-ownershippositions–Coca-ColaandAmericanExpress.ThesearenothugecommitmentslikeourAppleposition.Eachonlyaccountsfor4-5%ofBerkshire’sGAAPnetworth.Buttheyaremeaningfulassetsandalsoillustrateourthoughtprocesses.

AmericanExpressbeganoperationsin1850,andCoca-ColawaslaunchedinanAtlantadrugstorein1886.(Berkshireisnotbigonnewcomers.)Bothcompaniestriedexpandingintounrelatedareasovertheyearsandbothfoundlittlesuccessintheseattempts.Inthepast–butdefinitelynotnow–bothwereevenmismanaged.

Buteachwashugelysuccessfulinitsbasebusiness,reshapedhereandthereasconditionscalledfor.And,crucially,theirproducts“traveled.”BothCokeandAMEXbecamerecognizablenamesworldwideasdidtheircoreproducts,andtheconsumptionofliquidsandtheneedforunquestionedfinancialtrustaretimelessessentialsofourworld.

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During2023,wedidnotbuyorsellashareofeitherAMEXorCoke–extendingourownRipVanWinkleslumberthathasnowlastedwellovertwodecades.Bothcompaniesagainrewardedourinactionlastyearbyincreasingtheirearningsanddividends.Indeed,ourshareofAMEXearningsin2023considerablyexceededthe$1.3billioncostofourlong-agopurchase.

BothAMEXandCokewillalmostcertainlyincreasetheirdividendsin2024–about16%inthecaseofAMEX–andwewillmostcertainlyleaveourholdingsuntouchedthroughouttheyear.CouldIcreateabetterworldwidebusinessthanthesetwoenjoy?AsBertiewilltellyou:“Noway.”

ThoughBerkshiredidnotpurchasesharesofeithercompanyin2023,yourindirectownershipofbothCokeandAMEXincreasedabitlastyearbecauseofsharerepurchaseswemadeatBerkshire.SuchrepurchasesworktoincreaseyourparticipationineveryassetthatBerkshireowns.Tothisobviousbutoftenoverlookedtruth,Iaddmyusualcaveat:Allstockrepurchasesshouldbeprice-dependent.Whatissensibleatadiscounttobusiness-valuebecomesstupidifdoneatapremium.

ThelessonfromCokeandAMEX?Whenyoufindatrulywonderfulbusiness,stickwithit.Patiencepays,andonewonderfulbusinesscanoffsetthemanymediocredecisionsthatareinevitable.

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Thisyear,Iwouldliketodescribetwootherinvestmentsthatweexpecttomaintainindefinitely.LikeCokeandAMEX,thesecommitmentsarenothugerelativetoourresources.Theyareworthwhile,however,andwewereabletoincreasebothpositionsduring2023.

Atyearend,Berkshireowned27.8%ofOccidentalPetroleum’scommonsharesandalsoownedwarrantsthat,formorethanfiveyears,giveustheoptiontomateriallyincreaseourownershipatafixedprice.Thoughweverymuchlikeourownership,aswellastheoption,BerkshirehasnointerestinpurchasingormanagingOccidental.WeparticularlylikeitsvastoilandgasholdingsintheUnitedStates,aswellasitsleadershipincarbon-captureinitiatives,thoughtheeconomicfeasibilityofthistechniquehasyettobeproven.Bothoftheseactivitiesareverymuchinourcountry’sinterest.

Notsolongago,theU.S.waswoefullydependentonforeignoil,andcarboncapturehadnomeaningfulconstituency.Indeed,in1975,U.S.productionwaseightmillionbarrelsofoil-equivalentperday(“BOEPD”),alevelfarshortofthecountry’sneeds.FromthefavorableenergypositionthatfacilitatedtheU.S.mobilizationinWorldWarII,thecountryhadretreatedtobecomeheavilydependentonforeign–potentiallyunstable–suppliers.Furtherdeclinesinoilproductionwerepredictedalongwithfutureincreasesinusage.

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Foralongtime,thepessimismappearedtobecorrect,withproductionfallingtofivemillionBOEPDby2007.Meanwhile,theU.S.governmentcreatedaStrategicPetroleumReserve(“SPR”)in1975toalleviate–thoughnotcomeclosetoeliminating–thiserosionofAmericanself-sufficiency.

Andthen–Hallelujah!–shaleeconomicsbecamefeasiblein2011,andourenergydependencyended.Now,U.S.productionismorethan13millionBOEPD,andOPECnolongerhastheupperhand.OccidentalitselfhasannualU.S.oilproductionthateachyearcomesclosetomatchingtheentireinventoryoftheSPR.Ourcountrywouldbevery–very–nervoustodayifdomesticproductionhadremainedatfivemillionBOEPD,anditfounditselfhugelydependentonnon-U.S.sources.Atthatlevel,theSPRwouldhavebeenemptiedwithinmonthsifforeignoilbecameunavailable.

UnderVickiHollub’sleadership,Occidentalisdoingtherightthingsforbothitscountryanditsowners.Nooneknowswhatoilpriceswilldooverthenextmonth,year,ordecade.ButVickidoesknowhowtoseparateoilfromrock,andthat’sanuncommontalent,valuabletohershareholdersandtohercountry.

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Additionally,Berkshirecontinuestoholditspassiveandlong-terminterestinfiveverylargeJapanesecompanies,eachofwhichoperatesinahighly-diversifiedmannersomewhatsimilartothewayBerkshireitselfisrun.WeincreasedourholdingsinallfivelastyearafterGregAbelandImadeatriptoTokyototalkwiththeirmanagements.

Berkshirenowownsabout9%ofeachofthefive.(Aminorpoint:JapanesecompaniescalculateoutstandingsharesinamannerdifferentfromthepracticeintheU.S.)Berkshirehasalsopledgedtoeachcompanythatitwillnotpurchasesharesthatwilltakeourholdingsbeyond9.9%.Ourcostforthefivetotals¥1.6trillion,andtheyearendmarketvalueofthefivewas¥2.9trillion.However,theyenhasweakenedinrecentyearsandouryearendunrealizedgainindollarswas61%or$8billion.

NeitherGregnorIbelievewecanforecastmarketpricesofmajorcurrencies.Wealsodon’tbelievewecanhireanyonewiththisability.Therefore,BerkshirehasfinancedmostofitsJapanesepositionwiththeproceedsfrom¥1.3trillionofbonds.Thisdebthasbeenverywell-receivedinJapan,andIbelieveBerkshirehasmoreyen-denominateddebtoutstandingthananyotherAmericancompany.TheweakenedyenhasproducedayearendgainforBerkshireof$1.9billion,asumthat,pursuanttoGAAPrules,hasperiodicallybeenrecognizedinincomeoverthe2020-23period.

Incertainimportantways,allfivecompanies–Itochu,Marubeni,Mitsubishi,MitsuiandSumitomo–followshareholder-friendlypoliciesthataremuchsuperiortothosecustomarilypracticedintheU.S.SincewebeganourJapanesepurchases,eachofthefivehasreducedthenumberofitsoutstandingsharesatattractiveprices.

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Meanwhile,themanagementsofallfivecompanieshavebeenfarlessaggressiveabouttheirowncompensationthanistypicalintheUnitedStates.Noteaswellthateachofthefiveisapplyingonlyabout1⁄3ofitsearningstodividends.Thelargesumsthefiveretainareusedbothtobuildtheirmanybusinessesand,toalesserdegree,torepurchaseshares.LikeBerkshire,thefivecompaniesarereluctanttoissueshares.

AnadditionalbenefitforBerkshireisthepossibilitythatourinvestmentmayleadtoopportunitiesforustopartneraroundtheworldwithfivelarge,well-managedandwell-respectedcompanies.Theirinterestsarefarmorebroadthanours.And,ontheirside,theJapaneseCEOshavethecomfortofknowingthatBerkshirewillalwayspossesshugeliquidresourcesthatcanbeinstantlyavailableforsuchpartnerships,whatevertheirsizemaybe.

OurJapanesepurchasesbeganonJuly4,2019.GivenBerkshire’spresentsize,buildingpositionsthroughopen-marketpurchasestakesalotofpatienceandanextendedperiodof“friendly”prices.Theprocessisliketurningabattleship.ThatisanimportantdisadvantagewhichwedidnotfaceinourearlydaysatBerkshire.

TheScorecardin2023

Everyquarterweissueapressreleasethatreportsoursummarizedoperatingearnings(orloss)inamannersimilartowhatisshownbelow.Hereisthefull-yearcompilation:

(in$millions)

20232022

Insurance-underwriting $5,428$(30)

Insurance-investmentincome 9,5676,484

Railroad 5,0875,946

Utilitiesandenergy 2,3313,904

Otherbusinessesandmiscellaneousitems.......14,93714,549

Operatingearnings..........................$37,350$30,853

AtBerkshire’sannualgatheringonMay6,2023,Ipresentedthefirstquarter’sresultswhichhadbeenreleasedearlythatmorning.Ifollowedwithashortsummaryoftheoutlookforthefullyear:(1)mostofournon-insurancebusinessesfacedlowerearningsin2023;(2)thatdeclinewouldbecushionedbydecentresultsatourtwolargestnon-insurancebusinesses,BNSFandBerkshireHathawayEnergy(“BHE”)which,combined,hadaccountedformorethan30%ofoperatingearningsin2022;(3)ourinvestmentincomewascertaintomateriallygrowbecausethehugeU.S.TreasurybillpositionheldbyBerkshirehadfinallybeguntopayusfarmorethanthepittancewehadbeenreceivingand(4)insurancewouldlikelydowell,bothbecauseitsunderwritingearningsarenotcorrelatedtoearningselsewhereintheeconomyand,beyondthat,property-casualtyinsurancepriceshadstrengthened.

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Insurancecamethroughasexpected.Ierred,however,inmyexpectationsforbothBNSFandBHE.Let’stakealookateach.

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RailisessentialtoAmerica’seconomicfuture.Itisclearlythemostefficientway–meas