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.
2:03 Canada’s job surge: How hot economy could affect employers, interest rates
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.”
4:10 Money Mentors
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)
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
