Key takeaways from Warren Buffetts annual letter (06/2024)

The Oracle of Omaha once said that Jamie Dimon is the best banker in the world and that Dimons shareholder letters should be mandatory reading for every investor. As Simon Taylor has beautifully put it, it reads like a manifesto for the future of the banking industry, economy, and the United States.

Jamie Dimon starts his annual letter by reminding us of the key principles used to run one of the biggest banks in the world.

These are universal and can (sometimes - even should) be applied to virtually every company in the world, especially this one:

"Shareholder value can be built only if you maintain a healthy and vibrant company, which means doing a good job of taking care of your customers, employees and communities. Conversely, how can you have a healthy company if you neglect any of these stakeholders? As we have learned over the past few years, there are myriad ways an institution can demonstrate its compassion for its employees and its communities while still strengthening shareholder value."

While there are countless lessons to learn from Buffetts own Annual Letter, we will distill his annual missive into three timeless insights:

• Lesson 1: Focus on what matters and value a business. In the short run the market acts as a voting machine; in the long run it becomes a weighing machine. – Benjamin Graham
• Lesson 2: Effective risk management doesnt just avoid downside risks but is crucial for exceptional long-term returns. One investment rule at Berkshire has not and will not change: Never risk permanent loss of capital.
• Lesson 3: Capital allocation is Berkshires secret weapon. Berkshire can sustain financial surprises but we will not knowingly throw good money after bad. – Warren Buffett

Warren Buffett never disappoints with his annual letter as Buffett is a master teacher and investment genius. While none of the concepts discussed are new, Buffett reinforced insights relevant to the current state of investing and Berkshire Hathaway.

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