巴菲特1971年致股东的信（英文版）

以下是 1971 年巴菲特致股东的信的英文版：

It is a pleasure to report that operating earnings in 1971, excluding capital gains, amounted to more than 14% of beginning shareholders’ equity. This result—considerably above the average of American industry—was achieved in the face of inadequate earnings in our textile operation, making clear the benefits of redeployment of capital inaugurated five years ago. It will continue to be the objective of management to improve return on total capitalization (long - term debt plus equity), as well as the return on equity capital. However, it should be realized that merely maintaining the present relatively high rate of return may well prove more difficult than was improvement from the very low levels of return which prevailed throughout most of the 1960’s.

We, in common with most of the textile industry, continued to struggle throughout 1971 with inadequate gross margins. Strong efforts to hammer down costs and a continuous search for less price - sensitive fabrics produced only marginal profits. However, without these efforts we would have operated substantially in the red. Employment was more stable throughout the year as our program to improve control of inventories achieved reasonable success.

As mentioned last year, Ken Chace and his management group have been swimming against a strong industry tide. This negative environment has only caused them to intensify their efforts. Currently we are witnessing a mild industry pickup which we intend to maximize with our greatly strengthened sales force. With the improvement now seen in volume and mix of business, we would expect better profitability—although not of a dramatic nature—from our textile operation in 1972.

An unusual combination of factors—reduced auto accident frequency, sharply higher effective rates in large - volume lines, and the absence of major catastrophes—produced an extraordinarily good year for the property and casualty insurance industry. We shared in these benefits, although they are not without their negative connotations.

Our traditional business—and still our largest segment—is in the specialized policy or non - standard insured. When standard markets become tight because of unprofitable industry underwriting, we experience substantial volume increases as producers look to us. This was the condition several years ago, and largely accounts for the surge of direct volume experienced in 1970 and 1971. Now that underwriting has turned very profitable on an industry - wide basis, more companies are seeking the insureds they were rejecting a short while back and rates are being cut in some areas. We continue to have underwriting profitability as our primary goal and this may well mean a substantial decrease in National Indemnity’s direct volume during 1972. Jack Ringwalt and Phil Liesche continue to guide this operation in a manner matched by very few in the business.

Our reinsurance business, which has been developed to a substantial operation in just two years by the outstanding efforts of George Young, faces much the same situation. We entered the reinsurance business late in 1969 at a time when rates had risen substantially and capacity was tight. The reinsurance industry was exceptionally profitable in 1971, and we are now seeing rate - cutting as well as the formation of well - capitalized aggressive new competitors. These lower rates are frequently accompanied by greater exposure. Against this background we expect to see our business curtailed somewhat in 1972. We set no volume goals in our insurance business generally—and certainly not in reinsurance—as virtually any volume can be achieved if profitability standards are ignored. When catastrophes occur and underwriting experience sours, we plan to have the resources available to handle the increasing volume which we will then expect to be available at proper prices.

We inaugurated our “home - state” insurance operation in 1970 by the formation of Cornhusker Casualty Company. To date, this has worked well from both a marketing and an underwriting standpoint. We have therefore further developed this approach by the formation of Lakeland Fire & Casualty Company in Minnesota during 1971, and Texas United Insurance in 1972. Each of these companies will devote its entire efforts to a single state seeking to bring the agents and insureds of its area a combination of large - company capability and small - company accessibility and sensitivity. John Ringwalt has been in overall charge of this operation since inception. Combining hard work with imagination and intelligence, he has transformed an idea into a well - organized business. The “home - state” companies are still very small, accounting for a little over $1.5 million in premium volume during 1971. It looks as though this volume will more than double in 1972 and we will develop a more creditable base upon which to evaluate underwriting performance.

A highlight of 1971 was the acquisition of Home & Automobile Insurance Company, located in Chicago. This company was built by Victor Raab from a small initial investment into a major auto insurer in Cook County, writing about $7.5 million in premium volume during 1971. Vic is cut from the same cloth as Jack Ringwalt and Gene Abegg, with a talent for operating profitably.

Regarding the 1970 letter, it seems the available content is mainly about the education regarding tax - exempt bonds and related investment suggestions as you have seen before. It doesn't seem to have a complete formal letter format like the 1971 one. The relevant content is as follows:

We will arrange for the direct purchase of bonds from municipal bond dealers with whom we have had experience in the past for those who wish our help. Tax - free bonds are materially different from common stocks or corporate bonds in that there are literally hundreds of thousands of issues, with the great majority having very few holders. This substantially inhibits the development of close, active markets.

My impression is that marketability is generally a function of the following three items, in descending order of importance:

Tax - exempt bonds are basically of two types: general obligation bonds and revenue bonds. General obligation bonds are backed by the full faith and credit of the issuer and are considered the safest type of tax - exempt bond. Revenue bonds, on the other hand, are issued to finance specific projects such as turnpikes, bridges, airports, etc. and are secured by the revenues generated by the project. Revenue bonds are generally considered to be slightly riskier than general obligation bonds, but they usually offer higher yields to compensate for the additional risk.

The maturity of a tax - exempt bond is the date on which the bond will be repaid. The maturity of a bond can range from a few months to 30 years or more. The choice of maturity depends on your personal financial situation and investment goals.

As the name implies, the interest on tax - exempt bonds is exempt from federal income tax. In addition, some states also exempt the interest on tax - exempt bonds issued within the state from state income tax. However, it should be noted that if you hold tax - exempt bonds in a taxable account and have other taxable income, the interest on the tax - exempt bonds may still be subject to the alternative minimum tax (AMT).

If you are considering using a bank loan to purchase tax - exempt bonds, be aware that there may be some tax implications. If you use a loan to purchase tax - exempt bonds and then deduct the loan interest for tax purposes, you may have problems with the IRS. This is because the tax - exempt bonds are not collateral for the loan, and the IRS may view such a deduction as an attempt to avoid paying tax on the bond interest income. If I were in your position, I would pay off the bank loan before purchasing tax - exempt bonds. However, you should consult your tax advisor to determine the best course of action for your specific situation.

In conclusion, tax - exempt bonds can be a useful addition to your investment portfolio, especially if you are in a high - tax bracket. They provide a relatively stable income stream and can offer some diversification benefits. However, it is important to understand the risks and characteristics of tax - exempt bonds before investing in them.

If you have any further questions regarding tax - exempt bonds, or need assistance in making a purchase, please do not hesitate to contact me before March 31st. After that date, I will no longer be available for investment - related discussions.

Warren E. Buffett

If you want to know more details about the 1970 letter, you may need to refer to more professional materials or relevant archives.