Buffett’s Annual Letter & Trader’s TradeBook
Dear Traders,
One of the most exciting parts of my February newsletters is reading Warren Buffett’s annual shareholder letters. They are hosted on a very basic website (check the link to see for yourself), and the archive goes back to 1977. Each letter is a manifesto from a great mind that discusses life, family, investment philosophy, and candid self-criticism.
Rarely do you see such humility, life lessons, and a blend of investing and trading advice all in one place. It’s a very enjoyable read, and there are valuable lessons for everyone.
This year’s letter was also fascinating. He explains that accepting mistakes is important—a practice rarely embraced on Wall Street. He notes that despite market commentators pointing out that Berkshire Hathaway holds a large cash reserve, the company remains heavily invested in equities and will continue to be so. He said:
Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities. That preference won’t change. While our ownership in marketable equities moved downward last year from $354 billion to $272 billion, the value of our non-quoted controlled equities increased somewhat and remains far greater than the value of the marketable portfolio.
Berkshire shareholders can rest assured that we will forever deploy a substantial majority of their money in equities – mostly American equities although many of these will have international operations of significance. Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses, whether controlled or only partially owned. Paper money can see its value evaporate if fiscal folly prevails. In some countries, this reckless practice has become habitual, and, in our country’s short history, the U.S. has come close to the edge. Fixed-coupon bonds provide no protection against runaway currency.
He also discusses capitalism and its merits, expressing pride in American exceptionalism and even in paying taxes. The part where he expresses pride in paying taxes blows my mind. While many of us try to avoid taxes—believing it is unfair and striving to minimize them—Warren Buffett is proud of paying them. When he took over Berkshire Hathaway, the company paid very little in taxes; however, now he says:
Fast forward 60 years and imagine the surprise at the Treasury when that same company – still operating under the name of Berkshire Hathaway – paid far more in corporate income tax than the U.S. government had ever received from any company – even the American tech titans that commanded market values in the trillions. To be precise, Berkshire last year made four payments to the IRS that totaled $26.8 billion. That’s about 5% of what all of corporate America paid. (In addition, we paid sizable amounts for income taxes to foreign governments and to 44 states.)
He paid this year 26 billion in taxes to the Treasury Department. To show how big this number is, he says:
Huge numbers can be hard to visualize. Let me recast the $26.8 billion that we paid last Year. If Berkshire had sent the Treasury a $1 million check every 20 minutes throughout all of 2024 – visualize 366 days and nights because 2024 was a leap year – we still would have owed the federal government a significant sum at yearend. Indeed, it would be well into January before the Treasury would tell us that we could take a short breather, get some sleep, and prepare for our 2025 tax payments.
Then he thanks the US government for its stability and stable currency and says:
So thank you, Uncle Sam. Someday your nieces and nephews at Berkshire hope to send you even larger payments than we did in 2024. Spend it wisely. Take care of the many who, for no fault of their own, get the short straws in life. They deserve better. And never forget that we need you to maintain a stable currency and that result requires both wisdom and vigilance on your part.
This letter is amazing to read, and I highly recommend you read it yourself.
Today, I’m in Vancouver and had some amazing trading opportunities on TSLA and PLTR. I hope you get a chance to review my recap and ask your questions in the comments. Thank you for your support and trust—we’re happy to help.
If you’re inspired by Warren Buffett’s letter and want to start investing, check out our brand-new course “Foundations of Stock Trading: A Complete Beginner’s Guide”—available free for all BBT Elite members and for purchase on Trading Terminal Academy.
I get excited every time I read his letters and want to help more people take control of their financial future. To share what I’ve learned from investment masters like Warren Buffett, I’m offering 50% off our Elite Annual Membership—but only for this week!
Take this opportunity to learn more about investing and how to leverage the stock market to achieve your financial goals.
To Your Success,
Andrew
