1957年巴菲特给股东的信全文（英文版）

In last year's letter to partners, I stated my view that the general level of the market was above its intrinsic value. This view, if accurate, carries with it the possibility of a significant decline in all stocks, both undervalued and otherwise. In any event, I think the probability is very slight that current market levels will be thought of as the apex five years from now.

Even a full - scale bear market, however, should not hurt the market value of our work - outs substantially. If the general market were to return to an undervalued status, our capital might be employed exclusively in general issues and perhaps some borrowed money would be used in this operation at that time. Conversely, if the market should go considerably higher, our policy will be to reduce our general issues as profits present themselves and increase the work - out portion of the portfolio.

All of the above is not intended to imply that market analysis is foremost in my mind. Primary attention is always given to the detection of substantially undervalued securities.

The past year witnessed a moderate decline in stock prices. I stress the word "moderate" since casual reading of the press or conversing with those who have had only recent experience with stocks would tend to create an impression of a much greater decline. Actually, it appears to me that the decline in stock prices has been considerably less than the decline in corporate earning power under present business conditions. This means that the public is still very bullish on blue - chip stocks and the general economic picture. I make no attempt to forecast either business or the stock market; the above is simply intended to dispel any notions that stocks have suffered any drastic decline or that the general market is at a low level. I still consider the general market to be priced on the high side based on long - term investment value.

The market decline has created greater opportunity among undervalued situations so that, generally, our portfolio is heavier in undervalued situations relative to work - outs than it was last year. Perhaps an explanation of the term "work - out" is in order. A work - out is an investment which is dependent upon corporate action for its profit rather than a general advance in the price of the stock as in the case of undervalued situations. Work - outs come about through sales, mergers, liquidations, tenders, etc. In each case, the risk is that something will upset the applecart and cause the abandonment of the planned action, not that the economic picture will deteriorate and stocks decline generally.

At the end of 1956, we had a ratio of about 70:30 between general issues and work - outs. Now it is about 65:35. During the past year we have taken positions in two situations which have reached a size where we may expect to take some part in corporate decisions. One of these positions accounts for between 10% and 20% of the portfolio of the various partnerships and the other accounts for about 5%.

Both of these situations will probably take three to five years to work out, but both appear now to have very low risk and should produce very satisfactory rates of return on an annual basis. At the end of 1957, I can say that our portfolio shows a more favorable picture than at the end of 1956, due both to the generally lower prices and the fact that we have had more time to acquire securities selling well below their intrinsic value, which can only be obtained through patience.

I have mentioned our largest position which is between 10% and 20% of the portfolio in some of the partner accounts. I am planning to make this a 20% position in all partner accounts, but this cannot be done immediately. Without question, in the case of any stock purchase, we prefer to see the stock remain stationary or decline in price rather than advance. This is so because we are always looking for opportunities to add to positions in companies with satisfactory long - term prospects at favorable prices. If a stock advances immediately after purchase, we may not have the opportunity to increase our position and, in fact, may be forced to sell the stock if it advances to a price where it no longer meets our standards of value. On the other hand, if a stock declines after purchase, we have the opportunity to buy more shares at a lower price and thereby increase our potential profit.

It should be emphasized that our investment decisions are based on the long - term prospects of the companies in which we invest, not on short - term market fluctuations. We are looking for companies with strong fundamentals, such as good management, stable earnings, and a competitive advantage in their respective industries. These are the types of companies that we believe will be able to weather any short - term market downturns and provide us with satisfactory returns over the long run.

In conclusion, I want to thank all of the partners for their continued support and confidence in the partnership. I will continue to manage the partnership's investments with the same care and diligence that I have in the past, and I will keep you informed of any significant developments in the portfolio.

Sincerely,

Warren E. Buffett