Warren Buffet remains upbeat about the growth of the economy of both the U.S. and his company Berkshire. Although the coronavirus pandemic has diminished the values of several stocks in the market including his, he has struck an optimistic note in his annual letter to investors.
The 90-year old chief executive has been under the radar from last May, when he chaired the annual meeting of Berkshire in Omaha. This year, the meeting is scheduled to be held in Los Angeles, to let the 97-year old Vice Chairman Charlie Munger, a Californian, join in and answer shareholder’s questions.
Buffet’s letter was filled with a lot of his trademark optimism. He assured investors that he and his team would continue to carefully guide their investments. He also said that Berkshire was undervalued and bought back $24.7 billion worth of stocks in 2020. He also said that their conclusion was: “Never bet against America.”
He continued to mention some of his pet themes including the greed of Wall Street bankers and how their deal making fees benefit them rather than the companies they represent. He also spoke of the company’s commitment to some of their investments including Apple Inc. and BNSF railroad and called them as some of the company’s most precious assets. He expressed dismay that bonds or fixed income as an investment was losing its sheen.
He admitted that he had paid too much for Precision Castparts Corp and said that though it was not his only error through the years it was a big one.
Buffet did not mention the effect of the coronavirus pandemic nor did he address the job losses at Berkshire that took place during 2020, as a result of the pandemic. He skirted away from issues
Including recent social upheavals and the divisive political environment which is now being addressed more directly by other companies.
Buffet is a revered figure and his opinions matter but the new generation of American investors require companies, including Berkshire, “to set out their beliefs, standard and goals” according to Cathy Seifert, an analyst at CFRA Research.
On Saturday, Berkshire reported fourth quarter results: a net income of $35.84 billion and $42.52 billion for the year, gains that came from its stocks. Operating income decreased by 9% to $21.92 billion for year 2020. Berkshire bought back over $4 billion its stock and ended the year with cash reserves of $138.3 billion.