巴菲特1980年致股东的信（英文版）

Here is the full text of Buffett's letter to shareholders in 1980:

Operating earnings improved to $41.9 million in 1980 from $36.0 million in 1979, but return on beginning equity capital (with securities valued at cost) fell to 17.8% from 18.6%. We believe the latter yardstick to be the most appropriate measure of single - year managerial economic performance. Informed use of that yardstick, however, requires an understanding of many factors, including accounting policies, historical carrying values of assets, financial leverage, and industry conditions.

In your evaluation of our economic performance, we suggest that two factors should receive your special attention - one of a positive nature, peculiar to a large extent, to our own operation, and one of a negative nature, applicable to corporate performance generally. Let's look at the bright side first.

When one company owns part of another company, appropriate accounting procedures pertaining to that ownership interest must be selected from one of three major categories. The percentage of voting stock that is owned, in large part, determines which category of accounting principles should be utilized.

Generally accepted accounting principles require (subject to exceptions, naturally, as with our former bank subsidiary) full consolidation of sales, expenses, taxes, and earnings of business holdings more than 50% owned. Blue Chip Stamps, 60% owned by Berkshire Hathaway Inc., falls into this category. Therefore, all Blue Chip income and expense items are included in full in Berkshire's consolidated statement of earnings, with the 40% ownership interest of others in Blue Chip's net earnings reflected in the statement as a deduction for “minority interest”.

Full inclusion of underlying earnings from another class of holdings, companies owned 20% to 50% (usually called “investees”), also normally occurs. Earnings of such investees are reported by the owning company on a one - line - consolidation basis, with the percentage - owned portion of the investee's earnings (after tax and after any adjustments for extraordinary items or minority interests) shown as a single item in the income statement of the owning company.

For holdings of less than 20%, GAAP accounting generally requires that earnings be recognized only to the extent of dividends received. Undistributed earnings of such companies are not reflected in the earnings of the investor company.

Our holdings in this third category of companies have increased dramatically in recent years as our insurance business has prospered and as securities markets have presented particularly attractive opportunities in the common stock area. The large increase in such holdings, plus the growth of earnings experienced by those partially - owned companies, has produced an unusual result: the part of “our” earnings that these companies retained last year (the part not paid to us in dividends) exceeded the total reported annual operating earnings of Berkshire Hathaway. Thus, conventional accounting only allows less than half of our earnings “iceberg” to appear above the surface, in plain view. Within the corporate world, such a result is quite rare; in our case, it is likely to be recurring.

It really comes down to being able to identify great investments or businesses where the use of retained earnings will have a big impact (i.e., resulting in the ability for those earnings to continue growing steadily into the future). A lot of companies retain a substantial amount of earnings, but that doesn't mean they create much value reinvesting those earnings into expansion or acquisition.

One usage of retained earnings we often greet with special enthusiasm when practiced by companies in which we have an investment interest is repurchase of their own shares. The reasoning is simple: if a fine business is selling in the market place for far less than intrinsic value, what more certain or more profitable utilization of capital can there be than significant enlargement of the interests of all owners at that bargain price? The competitive nature of corporate acquisition activity almost guarantees the payment of a full - frequently more than full - price when a company buys the entire ownership of another enterprise. But the auction nature of security markets often allows finely - run companies the opportunity to purchase portions of their own businesses at a price under 50% of that needed to acquire the same earning power through the negotiated acquisition of another enterprise.

As we have noted, we evaluate single - year corporate performance by comparing operating earnings to shareholders' equity with securities valued at cost. Our long - term yardstick of performance, however, includes all capital gains or losses, realized or unrealized. We continue to achieve a long - term return on equity that considerably exceeds the average of our yearly returns. The major factor causing this pleasant result is a simple one: the retained earnings of those non - controlled holdings we discussed earlier have been translated into gains in market value.

Of course, this translation of retained earnings into market price appreciation is highly uneven (it goes in reverse some years), unpredictable as to timing, and unlikely to materialize on a precise dollar - for - dollar basis. And a silly purchase price for a block of stock in a corporation can negate the effects of a decade of earnings retention by that corporation. But when purchase prices are sensible, some long - term market recognition of the accumulation of retained earnings almost certainly will occur. Periodically you even will receive some frosting on the cake, with market appreciation far exceeding post - purchase retained earnings.

In the sixteen years since present management assumed responsibility for Berkshire, book value per share with insurance - held equities valued at market has increased from $19.46 to $400.80, or 20.5% compounded annually. (You've done better: the value of the mineral content in the human body compounded at 22% annually during the past decade.) It is encouraging, moreover, to realize that our record was achieved despite many mistakes. The list is too painful and lengthy to detail here. But it clearly shows that a reasonably competitive corporate batting average can be achieved in spite of a lot of managerial strike - outs.

Our insurance companies will continue to make large investments in well - run, favorably - situated, non - controlled companies that very often will pay out in dividends only small proportions of their earnings. Following this policy, we would expect our long - term returns to continue to exceed the returns derived annually from reported operating earnings. Our confidence in this regard is based on the long - term economic characteristics of the businesses in which we invest and our ability to select sound investments at reasonable prices.

Inflation continued to be a significant factor affecting the insurance industry and our operations in 1980. The rising cost of claims and the erosion of the real value of fixed - income investments were major concerns.

In an inflationary environment, the replacement cost of insured properties and the cost of medical care for liability claims tend to increase at a faster rate than the general rate of inflation. This puts pressure on insurance companies to raise premiums to maintain profitability. However, intense competition in the industry often makes it difficult to increase premiums promptly and fully, leading to potential underwriting losses.

Our insurance subsidiaries have been working to manage the impact of inflation by carefully evaluating risks, improving underwriting standards, and seeking opportunities for investment in assets that are more likely to maintain their value in an inflationary environment. Despite these efforts, we expect inflation to continue to pose challenges to our insurance operations in the future.

Blue Chip Stamps and Wesco are public companies with reporting requirements of their own. On pages 40 to 53 of this report, we have reproduced the narrative reports of the principal executives of both companies, in which they describe 1980 operations. We recommend a careful reading, and suggest that you particularly note the superb job done by Louie Vincenti and Charlie Munger in repositioning Mutual Savings and Loan. A copy of the full annual report of either company will be mailed to any Berkshire shareholder upon request to Mr. Robert H. Bird for Blue Chip Stamps, 5801 South Eastern Avenue, Los Angeles, California 90040, or to Mrs. Bette Deckard for Wesco Financial Corporation, 315 East Colorado Boulevard, Pasadena, California 91109.

In summary, we are pleased with the progress made by Berkshire Hathaway in 1980, despite the challenges posed by inflation and the decline in our short - term return on equity. We remain committed to our long - term investment strategy and believe that the underlying strength of our businesses and our portfolio of investments will continue to generate favorable results over time.

We thank you for your continued support and look forward to serving you in the years ahead.

Warren E. Buffett

Chairman of the Board

February 27, 1981