1992年 华伦.docx

1992年 华伦.docx

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1992年华伦

BERKSHIREHATHAWAYINC.

SHAREHOLDERLETTERS

WarrenE.Buffett

February28,1992ChairmanoftheBoard

CHAIRMAN’SLETTERS1992

TotheShareholdersofBerkshireHathawayInc.:

Ourper-sharebookvalueincreased20.3%during1992.Over

thelast28years（thatis,sincepresentmanagementtookover）

bookvaluehasgrownfrom$19to$7,745,oratarateof23.6%

compoundedannually.

Duringtheyear,Berkshire'snetworthincreasedby$1.52

billion.Morethan98%ofthisgaincamefromearningsand

appreciationofportfoliosecurities,withtheremaindercoming

fromtheissuanceofnewstock.Theseshareswereissuedasa

resultofourcallingourconvertibledebenturesforredemption

onJanuary4,1993,andofsomeholderselectingtoreceive

commonsharesratherthanthecashthatwastheiralternative.

Mostholdersofthedebentureswhoconvertedintocommonwaited

untilJanuarytodoit,butafewmadethemoveinDecemberand

thereforereceivedsharesin1992.Tosumupwhathappenedto

the$476millionofbondswehadoutstanding:

$25millionwere

convertedintosharesbeforeyearend;$46millionwereconverted

inJanuary;and$405millionwereredeemedforcash.The

conversionsweremadeat$11,719pershare,soaltogetherwe

issued6,106shares.

Berkshirenowhas1,152,547sharesoutstanding.That

compares,youwillbeinterestedtoknow,to1,137,778shares

outstandingonOctober1,1964,thebeginningofthefiscalyear

duringwhichBuffettPartnership,Ltd.acquiredcontrolofthe

company.

WehaveafirmpolicyaboutissuingsharesofBerkshire,

doingsoonlywhenwereceiveasmuchvalueaswegive.Equal

value,however,hasnotbeeneasytoobtain,sincewehavealways

valuedourshareshighly.Sobeit:

Wewishtoincrease

Berkshire'ssizeonlywhendoingthatalsoincreasesthewealth

ofitsowners.

Thosetwoobjectivesdonotnecessarilygohand-in-handasan

amusingbutvalue-destroyingexperienceinourpastillustrates.

Onthatoccasion,wehadasignificantinvestmentinabank

whosemanagementwashell-bentonexpansion.（Aren'ttheyall?

）

Whenourbankwooedasmallerbank,itsownerdemandedastock

swaponabasisthatvaluedtheacquiree'snetworthandearning

poweratovertwicethatoftheacquirer's.Ourmanagement-

visiblyinheat-quicklycapitulated.Theowneroftheacquiree

theninsistedononeothercondition:

"Youmustpromiseme,"he

saidineffect,"thatonceourmergerisdoneandIhavebecomea

majorshareholder,you'llneveragainmakeadealthisdumb."

Youwillrememberthatourgoalistoincreaseourper-share

intrinsicvalue-forwhichourbookvalueisaconservative,but

useful,proxy-ata15%annualrate.Thisobjective,however,

cannotbeattainedinasmoothmanner.Smoothnessis

particularlyelusivebecauseoftheaccountingrulesthatapply

tothecommonstocksownedbyourinsurancecompanies,whose

portfoliosrepresentahighproportionofBerkshire'snetworth.

Since1979,generallyacceptedaccountingprinciples（GAAP）have

requiredthatthesesecuritiesbevaluedattheirmarketprices

（lessanadjustmentfortaxonanynetunrealizedappreciation）

ratherthanatthelowerofcostormarket.Run-of-the-mill

fluctuationsinequitypricesthereforecauseourannualresults

togyrate,especiallyincomparisontothoseofthetypical

industrialcompany.

Toillustratejusthowvolatileourprogresshasbeen-and

toindicatetheimpactthatmarketmovementshaveonshort-term

results-weshowonthefacingpageourannualchangeinper-

sharenetworthandcompareitwiththeannualresults（including

dividends）oftheS&P500.

Youshouldkeepatleastthreepointsinmindasyou

evaluatethisdata.Thefirstpointconcernsthemanybusinesses

weoperatewhoseannualearningsareunaffectedbychangesin

stockmarketvaluations.Theimpactofthesebusinessesonboth

ourabsoluteandrelativeperformancehaschangedovertheyears.

Earlyon,returnsfromourtextileoperation,whichthen

representedasignificantportionofournetworth,wereamajor

dragonperformance,averagingfarlessthanwouldhavebeenthe

caseifthemoneyinvestedinthatbusinesshadinsteadbeen

investedintheS&P500.Inmorerecentyears,asweassembled

ourcollectionofexceptionalbusinessesrunbyequally

exceptionalmanagers,thereturnsfromouroperatingbusinesses

havebeenhigh-usuallywellinexcessofthereturnsachieved

bytheS&P.

Asecondimportantfactortoconsider-andonethat

significantlyhurtsourrelativeperformance-isthatboththe

incomeandcapitalgainsfromoursecuritiesareburdenedbya

substantialcorporatetaxliabilitywhereastheS&Preturnsare

pre-tax.Tocomprehendthedamage,imaginethatBerkshirehad

ownednothingotherthantheS&Pindexduringthe28-yearperiod

covered.Inthatcase,thetaxbitewouldhavecausedour

corporateperformancetobeappreciablybelowtherecordshownin

thetablefortheS&P.Underpresenttaxlaws,againforthe

S&Pof18%deliversacorporateholderofthatindexareturn

wellshortof13%.Andthisproblemwouldbeintensifiedif

corporatetaxratesweretorise.Thisisastructural

disadvantagewesimplyhavetolivewith;thereisnoantidote

forit.

Thethirdpointincorporatestwopredictions:

Charlie

Munger,Berkshire'sViceChairmanandmypartner,andIare

virtuallycertainthatthereturnoverthenextdecadefroman

investmentintheS&Pindexwillbefarlessthanthatofthe

pastdecade,andwearedeadcertainthatthedragexertedby

Berkshire'sexpandingcapitalbasewillsubstantiallyreduceour

historicaladvantagerelativetotheindex.

Makingthefirstpredictiongoessomewhatagainstourgrain:

We'velongfeltthattheonlyvalueofstockforecastersisto

makefortunetellerslookgood.Evennow,CharlieandIcontinue

tobelievethatshort-termmarketforecastsarepoisonandshould

bekeptlockedupinasafeplace,awayfromchildrenandalso

fromgrown-upswhobehaveinthemarketlikechildren.However,

itisclearthatstockscannotforeveroverperformtheir

underlyingbusinesses,astheyhavesodramaticallydoneforsome

time,andthatfactmakesusquiteconfidentofourforecastthat

therewardsfrominvestinginstocksoverthenextdecadewillbe

significantlysmallerthantheywereinthelast.Oursecond

conclusion-thatanincreasedcapitalbasewillactasananchor

onourrelativeperformance-seemsincontestable.Theonlyopen

questioniswhetherwecandragtheanchoralongatsome

tolerable,thoughslowed,pace.

Wewillcontinuetoexperienceconsiderablevolatilityin

ourannualresults.That'sassuredbythegeneralvolatilityof

thestockmarket,bytheconcentrationofourequityholdingsin

justafewcompanies,andbycertainbusinessdecisionswehave

made,mostespeciallyourmovetocommitlargeresourcesto

super-catastropheinsurance.Wenotonlyacceptthisvolatility

butwelcomeit:

Atoleranceforshort-termswingsimprovesour

long-termprospects.Inbaseballlingo,ourperformance

yardstickissluggingpercentage,notbattingaverage.

TheSalomonInterlude

LastJune,IsteppeddownasInterimChairmanofSalomonInc

aftertenmonthsinthejob.YoucantellfromBerkshire's1991-

92resultsthatthecompanydidn'tmissmewhileIwasgone.But

thereverseisn'ttrue:

ImissedBerkshireandamdelightedto

bebackfull-time.Thereisnojobintheworldthatismorefun

thanrunningBerkshireandIcountmyselfluckytobewhereIam.

TheSalomonpost,thoughfarfromfun,wasinterestingand

worthwhile:

InFortune'sannualsurveyofAmerica'sMostAdmired

Corporations,conductedlastSeptember,Salomonrankedsecond

among311companiesinthedegreetowhichitimprovedits

reputation.Additionally,SalomonBrothers,thesecurities

subsidiaryofSalomonInc,reportedrecordpre-taxearningslast

year-34%abovetheprevioushigh.

ManypeoplehelpedintheresolutionofSalomon'sproblems

andtherightingofthefirm,butafewclearlydeservespecial

mention.Itisnoexaggerationtosaythatwithoutthecombined

effortsofSalomonexecutivesDeryckMaughan,BobDenham,Don

Howard,andJohnMacfarlane,thefirmveryprobablywouldnot

havesurvived.Intheirwork,thesemenweretireless,

effective,supportiveandselfless,andIwillforeverbe

gratefultothem.

Salomon'sleadlawyerinitsGovernmentmatters,RonOlson

ofMunger,Tolles&Olson,wasalsokeytooursuccessingetting

throughthistrouble.Thefirm'sproblemswerenotonlysevere,

butcomplex.Atleastfiveauthorities-theSEC,theFederal

ReserveBankofNewYork,theU.S.Treasury,theU.S.Attorney

fortheSouthernDistrictofNewYork,andtheAntitrustDivision

oftheDepartmentofJustice-hadimportantconcernsabout

Salomon.Ifweweretoresolveourproblemsinacoordinatedand

promptmanner,weneededalawyerwithexceptionallegal,

businessandhumanskills.Ronhadthemall.

Acquisitions

OfallouractivitiesatBerkshire,themostexhilarating

forCharlieandmeistheacquisitionofabusinesswith

excellenteconomiccharacteristicsandamanagementthatwelike,

trustandadmire.Suchacquisitionsarenoteasytomakebutwe

lookforthemconstantly.Inthesearch,weadoptthesame

attitudeonemightfindappropriateinlookingforaspouse:

It

paystobeactive,interestedandopen-minded,butitdoesnot

paytobeinahurry.

Inthepast,I'veobservedthatmanyacquisition-hungry

managerswereapparentlymesmerizedbytheirchildhoodreadingof

thestoryaboutthefrog-kissingprincess.Rememberingher

succ