Billionaire investor Warren Buffett on Saturday signaled he has lost none of his enduring confidence in the U.S. economy and his company Berkshire Hathaway Inc BRKa.N.
In his annual letter to Berkshire shareholders, the 92-year-old Buffett urged investors to focus on the big picture over the long term, rather than higher inflation and other factors that in 2022 dampened stock prices, though not Berkshire’s.
He also urged Americans not to be convulsed by “self-criticism and self-doubt,” saying the country’s dynamism has benefited Berkshire in his 58 years running the company from Omaha, Nebraska, and will do so after he passes the reins.
“We count on the American Tailwind and, though it has been becalmed from time to time, its propelling force has always returned,” Buffett wrote.
“I have yet to see a time when it made sense to make a long-term bet against America. And I doubt very much that any reader of this letter will have a different experience in the future.”
Berkshire also repurchased $7.9 billion of its own stock in 2022, signaling confidence it was undervalued. Buffett defended buybacks, a target of politicians in Washington.
The letter was accompanied by Berkshire’s year-end results, including a record $30.8 billion operating profit.
Buffett called 2022 a “good year” for Berkshire, with many of its strongest businesses withstanding pressures from elevated inflation, rising interest rates and supply chain disruptions.
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Berkshire also posted a $22.8 billion annual net loss, compared with an $89.8 billion gain in 2021, as the prices of Apple Inc AAPL.O and many other stocks in its vast investment portfolio declined.
Buffett downplays net results because they are volatile and affected by accounting rules.
Berkshire owns dozens of operating businesses including the Geico car insurer, BNSF railroad, and well-known consumer brands such as Dairy Queen, Duracell and Fruit of the Loom. It employs more than 382,000 people.
‘Very humble’
Multiple observers said Buffett appeared cautious, almost apologetic, about his struggles in navigating markets, though he is arguably the most famous living American investor. His $106 billion net worth ranks fifth worldwide, Forbes magazine said.
“Buffett is very humble in assessing his own investment prowess, and unnecessarily so,” said Thomas Russo, a partner at Gardner Russo & Quinn and longtime Berkshire investor. “Investors have profited from him over decades.”
Anyone who stuck with Berkshire from 1965 to 2022 saw their shares gain 3,787,464% in value. The Standard & Poor’s 500 .SPX rose 24,708% including dividends over that period.
Buffett said most of his capital allocation decisions have been merely “so-so,” and Berkshire’s “satisfactory” results over time resulted from only about one dozen “truly good” decisions.
“‘Efficient’ markets exist only in textbooks,” Buffett said. “In truth, marketable stocks and bonds are baffling, their behavior usually understandable only in retrospect.”
Buffett also said “trust and rules are essential” in running large businesses, even amid the inevitable disappointments, and urged investors not to dwell on near-term market conditions.
Cathy Seifert, an analyst at CFRA Research, said Buffett took a “subtle swipe” at critics who wished he would disclose more than a few paragraphs about Berkshire’s largest businesses, and invest more aggressively.
“The current market climate has been, for a lack of a better word, very schizophrenic,” Seifert said. “Buffett is expressing that frustration.”
Munger ‘makes me laugh’
Despite paying $11.5 billion in October for the insurance company Alleghany Corp, Berkshire ended 2022 with $128.6 billion of cash, as it became a big seller of stocks including Taiwanese semiconductor maker TSMC 2330.TW late in the year.
Buffett, a Democrat, appeared in his letter to indirectly criticize President Joe Biden who this month urged a quadrupling of a 1% tax on corporate stock buybacks that became law in his Inflation Reduction Act last August.
While Biden hasn’t demanded an end to buybacks, Buffett said those who claim all repurchases “are harmful to shareholders or to the country, or particularly beneficial to CEOs” are “either an economic illiterate or a silver-tongued demagogue.”
Bill Smead, a longtime Berkshire investor at Smead Capital Management, said: “He’s poking fun at people who try to add money without adding value.”
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Buffett also reminded investors how much Berkshire gives back to the U.S. Treasury, paying $32 billion of federal income taxes over a decade.
“At Berkshire we hope and expect to pay much more in taxes during the next decade,” Buffett wrote. “We owe the country no less.”
While Berkshire has tapped Vice Chairman Greg Abel, 60, as Buffett’s eventual successor as chief executive, Buffett used his letter to renew his affection for his friend and business partner Charlie Munger, the 99-year-old Berkshire vice chairman.
He said both will in early May attend Berkshire’s annual shareholder weekend, which is known as “Woodstock for Capitalists” and draws tens of thousands of people to Omaha.
“I never have a phone call with Charlie without learning something,” Buffett said. “And, while he makes me think, he also makes me laugh.”
(Reporting by Jonathan Stempel in New York; editing by Ira Iosebashvili, Megan Davies and Diane Craft)
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
OTTAWA – The economy added 47,000 jobs in September, while the unemployment rate declined for the first time since January to 6.5 per cent, Statistics Canada reported on Friday.
The agency says youth and women aged 25 to 54 drove employment gains last month, while full-time employment saw its largest gain since May 2022.
The overall job gains followed four consecutive months of little change, the agency said.
The unemployment rate has been steadily climbing over the past year and a half, hitting 6.6 per cent in August.
Inflation that month was two per cent, the lowest level in more than three years as lower gas prices helped it hit the Bank of Canada’s inflation target.
The central bank has cut its key interest rate three times this year, and is widely expected to keep cutting as inflation has subsided and the broader trend points to a weakening in the labour market.
Despite the job gains in September, the employment rate was lower in the month, reflecting continued growth in Canada’s population.
Statistics Canada said since the employment rate saw its most recent peak at 62.4 per cent in January and February 2023, it’s been following a downward trend as population growth has outpaced employment growth.
On a year-over-year basis, employment was up by 1.5 per cent in September, while the population aged 15 and older in the Labour Force Survey grew 3.6 per cent.
The information, culture and recreation industry saw employment rise 2.6 per cent between August and September, after seven months of little change, Statistics Canada said, with the increase concentrated in Quebec.
The wholesale and retail trade industry saw its first increase since January at 0.8 per cent, while employment in professional, scientific and technical services was up 1.1 per cent.
Average hourly wages among employees rose 4.6 per cent year-over-year to $35.59, a slowdown from the five-per-cent increase in August.
The unemployment rate among Black and South Asian Canadians between 25 and 54 rose year-over-year in September and was significantly higher than the unemployment rate for people who were not racialized and not Indigenous.
Black Canadians in that age group saw their unemployment rate rise to 11 per cent last month while for South Asian Canadians it was 7.3 per cent. For non-racialized, non-Indigenous people, it rose to 4.4 per cent.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
