Unpacking Buffett’s Letter – The Ultimate Investing Guide

Bryce: [00:01:11] Welcome to get started investing in this podcast, we cover all the basics that you need to start your investing journey. Are you joining us for the very first time or is this the very start of your investing journey? Well, before you dive into this episode, our faith is designed to go from the very beginning. So we strongly recommend that you scroll up and start at episode one. However, if you are feeling Bryce, then of course, don't let us stop you here at Get Started Investing feed, we unpack all the jargon and the confusing bits. We hear your investing stories with the goal of making investing less intimidating. And of course, we want to have a good time along the way. My name is Bryce and as always, I'm joined by my equity buddy Ren. How are you going? 

Alec: [00:01:48] I'm very good. Bryce I normally say I'm very excited for those episodes and I am, but it's tough to be excited with everything that's going on. Ukraine floods back here in Australia. So I think I'm more thankful that we get to do this. I am excited to talk to you. I am excited to talk about investing. We're not going to be covering those issues. There are far better people to speak about those, and the economic side of them doesn't really seem that relevant at the moment. So I am excited, but I'm glad we're here. Glad we get to talk about investing. 

Bryce: [00:02:21] Absolutely, absolutely echo those comments. And hopefully if you are listening, you are safe and well. And yes, we are certainly thinking of those that are in a bit of more of a challenging circumstances than we are. But Ren, we're here to talk about one of the most important and number one resources considered one of the number one resources for any investor. And that is the Warren Buffett. Berkshire Hathaway annual 

Alec: [00:02:46] letter. Yeah, there are a few times the retail investor marks their calendar. Warren Buffett's annual conference, a.k.a. the Woodstock for Capitalists, is is one. I guess earnings season is another. But the day that Warren Buffett releases his annual letter is definitely a bit of a moment in the retail investor calendar. And when this episode is released, it would have been about two weeks since he released his letter. And as always, there's some great information in there. It's often spoken about as the number one resource for a beginner investor. So we thought now is the time to actually unpack why that is the case and what we've both learnt from writing some of the letters. Yeah, one admit to writing all of them. You claim to have read all of them.

Bryce: [00:03:32] No, but there are some resources that do make it easier to get through some of the important parts, and we'll touch on that later in the episode. Before we do jump in a reminder that the ASX share market game kicks off or has kicked off, and we have a league that you can join and play along if you're not sure what it is. The ASX have a game where they give you $50000 in fake money and you can trade the ASX 300, the top 300 stocks and a number of ETFs to see how you go. Great opportunity to put strategies in place, learn new things and have a good time. And we would love you to come and join the Equity Mates community and play along over the next 15 weeks. Links to it will be in the show notes, as will details on how to join. But it's just a lot of fun Ren and I'll be in there competing against each other. And yeah, what a time to do it. A lot going on in markets. 

Alec: [00:04:21] Yeah, a lot going on in markets. I've had a little bit of a thought around strategy, but it's going to be pretty half-baked. I think I might 

Bryce: [00:04:28] not even invest well, cash only the 

Alec: [00:04:30] thing that gets me is just the short term nature of it. You know, you've got 12 weeks to try and win the competition, and I think I'm not a great investor at the best of times. So that really that really throws me out. But it should be a lot of fun. It's not real money and should be a good learning experience. Obviously, you get your mates to sign up, try and beat your mates, try and beat Bryce, and I try and beat the hosts of some of the other shows. Yeah. Matty SoFi, Adam Thomas, what more could you want?

Bryce: [00:04:55] That's it. It's it's going to be really exciting, so we'll see you in there. There's no point kicking off an episode on Warren Buffett's letters without actually touching base on who Warren Buffett is Ren. If someone has just started their investing journey and has never heard of the guy, the bloke before, you're in for a real treat. 

Alec: [00:05:13] Yeah, you know, young minds not to be boring, but a lot of people have heard of him, so we'll return this quickly and then we'll get into the letters. But he's arguably his history's greatest investor. And when I say arguably, I mean, if people disagree, come and argue with me because I think he is history's greatest investor and I think is the length of his track record speaks for himself. He's the chairman and CEO of Burke Shire. Hathaway, a company that he took over was a textile mill in 1965. He invested in it. It was a terrible investment, but he took the company over and has turned it into one of the best companies ever to be created. 

Bryce: [00:05:55] Yeah, unbelievable.

Alec: [00:05:56] I think that's fair to say. Yeah, tell me just how unbelievable it is. Bryce put some numbers around it. 

Bryce: [00:06:02] It has returned three million four hundred sixty one thousand six hundred and thirteen percent since. Nineteen sixty five, in other words, a twenty point one per cent return per year. Now that that is extraordinary in that time, the S&P 500 total return, which means it includes the dividends the company's payout has returned only half of that ten point five per cent so over what is almost 50 years. Warren Buffett has been able to double the annual return of the S&P 500 for his shareholders, which I don't know if you've ever tried to pump out two years of twenty per cent returns Ren back to back, but it's incredibly

Alec: [00:06:48] difficult and it's incredibly difficult, and he's doing it with more and more money, which makes it harder and harder, and we'll get to that in a second. But Berkshire Hathaway is now a $700 billion company. And Buffett himself is worth over $100 billion. It's an incredible story. There are some investors that you can talk about, you know, the Peter Lynch's who maybe got a better return over a shorter period of time, but no one has done what Buffett has done for the length of time that he's done. 

Bryce: [00:07:17] That's the important part is to consider the length and yeah, 

Alec: [00:07:21] and and you know how we talk about like the power of compounding eighth wonder of the world, all of that stuff. If you look up a chart of Buffett's net wealth and just how much it's compounded in the last few years, you say there is the classic example of consistent returns over a long period of time. 

Bryce: [00:07:39] Yeah. Well, I took him many, many, many, many years to to crack that sort of 100 million and his net worth 200 and then that billion. But you're right, it it's amazing to see the power of compounding. So if you're not sure exactly what Berkshire do, they own a variety of companies outright and then they have a massive stock portfolio. So Buffett uses the company to make investments. Some of the big companies that they own 100 percent of and one of and are well known for Geico insurance Burlington Northern Santa Fe Railroad and Berkshire Hathaway Energy. So he's big into energy, transportation and insurance, and that gives him the the cash flow and the float to make investments. 

Alec: [00:08:20] There's another company that he always talks about See's Candy, that he owns a half percent outright, an asset here in Australia. It's just not a thing never seen. It never seen. It it's always like, What is this? I think for years when I started investing, I thought it was candy like lollies, like not chocolate. 

Bryce: [00:08:38] I thought, That's what it is. 

Alec: [00:08:39] No, it's chocolate. Oh, it's it's like it's like chocolate gift boxes, like fancy gift boxes. But we were speaking to an American investor over on the main Equity Mates podcast, and he was talking about how See's Candy is massive over there. So it's not just Buffett talking it up. Yeah, but yeah, he owns some businesses 100 per cent outright. They're not like stock market investments, they're just companies that he owns. But then he also owns a number of stocks. Famously, Apple, American Express, Coca-Cola, Chevron, Bank of America, Verizon, and over the years, he's also owned a number that no longer are listed. The Washington Post, which Jeff Bezos now owns Gillette, the razor company. They've been some of his great stock market investments that he's just held for decades at a time. 

Bryce: [00:09:28] Yeah, it's pretty amazing. He has made some mistakes. Airlines was why? 

Alec: [00:09:31] Yes, he has. He said he'd 

Bryce: [00:09:33] never buy airlines and then bought almost all of them. 

Alec: [00:09:36] One of his most famous, one of his most famous lines in his letter is one that I love, which was like if a capitalist was at Kitty Hawk when the Wright brothers first flew, the capitalists should have shot them down. And what he means there is. No one has made money on airlines, and so much money has been lost on airlines that if you care if you're a capitalist and you cared about stock market returns, you would have shot that plane down that way. And after he wrote that years after he wrote that he invested in America's four major domestic l. 

Bryce: [00:10:09] Yeah, yeah. And then obviously it didn't pan out well, then Covid it. Yeah, and he got out of it 

Alec: [00:10:14] pretty quickly because his thesis was he doesn't know which airline is going to win, but the overall overall, we're all going to fly more. And then like a year or two later, every plane in the world was grounded because of COVID. 

Bryce: [00:10:28] Yeah, it's crazy. So that brings us to the letters that he writes Ren. And they have become incredibly famous. People will often stay up all night to wait for the release, and they're they're sort of seen as an investors Bible. And the reason for that he he spends time each year writing to his shareholders in quite a quite a great deal of detail as to how he's thinking about markets, why he's made the investments that he's had, the big, major learnings that he's taken. And over the last 50 years, you get really get a sense of who he is as an investor, how him and Charlie have created Berkshire and some of the key principles that he upholds as an investor. So it's it's a great resource and. We're now going to have a look at some of the major takeaways over the past few years from some of the letters and then take a bit of a deep dive into the most current one and what we've taken out of that letter as well. So, yeah, you don't have to do all the reading.

Alec: [00:11:23] So let's start with some of the major things that we've learnt over the years. I've also gone out to the Equity Mates community on Instagram, and I've asked them some of the the big takeaways that they've learnt. But let's start with what we've learnt a lot of what he writes about other businesses that he's looking for. So whether he's looking to buy a business outright like See's Candy or GEICO insurance, or buy a portion of a business on a on the stock market like Apple or American Express, he's really looking for the same things. And in his 1995 letter, he outlined four key points that he's looking for when he's trying to find a business to invest in. Number one is consistent earnings power, and he doesn't care about. He doesn't want to see future projections. He doesn't want to tell. He doesn't want to say to say, Well, they're going to do next year or five years from now. He wants to say what they've done and have they been able to grow their profitability? The second one is good returns on equity with little or no debt. So basically, for every dollar that the company makes in profit, can they reinvest that in the business to grow the business, to hire more people, to build more factories and earn it? Good return on that profit? Third, one, management in place, Buffett does not want to hire. Yeah, he does not want to get his hands dirty. He does not want to roll up his sleeves. He sits in his office and read five hundred pages a day. And that's not been disparaging. That is what he does. So he wants good management to be in place in the companies that he buys. 

Bryce: [00:12:54] Yeah, he's big on that. 

Alec: [00:12:54] And then number four, he wants a simple business. And for a long time, he avoided tech because he didn't understand tech. And I think for me, that's like the best example of circle of competence. He's not going to try and invest in something he doesn't understand. He wants simple businesses. So those four things is what he's looking for. It all sounds so easy. 

Bryce: [00:13:14] Well, it is. 

Alec: [00:13:17] So there are the four points that he writes about in his 1985 letter. In his 2007 letter, he builds on what he's looking for in a business and talks about the idea of a moat. And so this quote from 2007 a truly great business must have an enduring moat that protects excellent returns on invested capital. And that's because the dynamics of capitalism guarantee that competitors will repeatedly assault any business costs or that is earning high returns. And that makes sense. You know, we we say it over and over again when a business is having a lot of success. Others will enter that space. Afterpay wins it for taking the buy now, pay later. World by storm. Nick Minute does 40 buy now, pay later companies trying to do the same thing. And so if you were going to invest in Afterpay or ZIP, you had to be confident that they had a good moat to protect the advantages that they'd built. And that's what Buffett's looking for, and I think a moat has become one of the most common terms that we talk about when we're looking at individual stocks. 

Bryce: [00:14:21] Yeah. So one of the other major takeaways that has really shone through over the years, Ren has been Buffett's message of trying to avoid picking the market or predicting the future. It's a fool's game. He says your goal as an investor should simply be to purchase at a rational price, apart interest in an easily understandable business whose earnings are virtually certain to be materially higher five, 10 and 20 years from now. And then he goes on to say, You want to build an ark, build the ark, don't predict the rain. I love that everyone tries to predict the future, but it is a loser's game. Instead of predicting rain, focus on building an ark. And what he means by that is find businesses that can withstand market turmoil, volatility that regardless of what's happening over five, 10, 15, 20 years, these are businesses that are durable and can keep performing over a long period of time. Yeah, there's no point trying to predict what the market is going to do days from now, because no one has any idea you want to be making investments that you're comfortable with. 

Alec: [00:15:28] Build the Ark Don't predict the rain was written in 1981. Since then, there's been plenty of rain that has been a stock market crash in the US. The Black Monday. There's been an Asian financial crisis. There's been a tech sell, a tech wreck in 2000. There's been 911 tapes, there's been a GFC. There's been a European debt crisis. In 2014, we've had Covid in 2020. There's been wars in Syria and Iraq and Afghanistan. There's plenty of rain that's always that's always about. But if you find those great businesses, they're durable. 

Bryce: [00:16:06] That's the idea. So what is he said about people v. companies? He's always spoken about the need for good management. 

Alec: [00:16:13] Well, yeah, good management is critical, but Buffett has a slight take on that take. That's different to a lot of the other expert investors that we speak to who really put management as number one. Buffett puts a great company above group management and what he says is so. In 1985, he wrote, When a brilliant management team tackles a business with a reputation for poor fundamental economics, the reputation of the business usually stays intact. And he followed that up a few years later in 1990. Good jockeys will do well on good horses, but not on broken down. You want good management, but you want them to be in good businesses. That makes sense. And the classic example of this that I always think about to remember MoviePass 

Bryce: [00:17:01] Na 

Alec: [00:17:02] so is a start up that started in the states. It's now bankrupt, but its business model was you paid like a monthly subscription. I think it was like ten bucks a month and you got unlimited movie tickets. Wow. So you could go to as many movies as you wanted. And they went bankrupt incredibly quickly because people were just going to more than one movie in a month. Yeah, right. Yeah. And so like, that's a business with just terrible. Yeah, yeah. And you could put the best management team in the world there. But like that business just economically didn't make sense. People just took advantage of. You need businesses that make sense. 

Bryce: [00:17:38] And then following on from that Ren on the hiring and fire finding great people, he said that if we hire people who are smaller than us, we become a company of dwarves. But if we hire people who are bigger than us, we become a company of giants. So no doubt that people and management is there is a big focus for him. But then market irrationality, he said in 2017 that those markets are generally rational. They occasionally do crazy things. As we just spoke about, there's been plenty of occasions seising. The opportunities then offered does not require great intelligence, a degree in economics or a familiar alacrity with Wall Street jargon.

Alec: [00:18:20] I love that. Say it 10 times, and not just because you couldn't say familiarity. But like seising, the opportunities does not require great intelligence. A degree in economics or familiarity with Wall Street jargon like that. Is that is it? That is our. That's why we do

Bryce: [00:18:37] this new marketing marketing slogan. Yeah, it's pretty amazing, he says. What investors then need instead, is an ability to both disregard mob fears or enthusiasms and to focus on a few simple, simple fundamentals. A willingness to look unimaginative for a sustained period or even to look foolish is also essential. So don't follow the herd. 

Alec: [00:19:02] Yeah, and that 

Bryce: [00:19:03] it is very tough 

Alec: [00:19:04] and you know, we all get FOMO. But one person who I'm pretty confident doesn't get FOMO is Warren Buffet. 

Bryce: [00:19:11] Absolutely. And he's he's made it very clear that over the years, he will be very, very, very patient. 

Alec: [00:19:19] It's pretty easy not to get FOMO when you're worth one hundred and fifteen billion dollars. Yeah, but all through his career, there's when the stock market has been really hot. He has been incredibly criticised. So the 1980s, the late 1990s and then in the most recent period, sort of the mid 2010s onwards when growth stocks just were having a day and just ripping and you know, everyone was making money hand over fist. The conservative, boring Warren Buffett approach was seen as out of touch or old or whatever, and he looked foolish and he looked unimaginative. But as this quote says, you know, that's what you got to be. 

Bryce: [00:20:02] Yeah, it's really hard to do. 

Alec: [00:20:04] And as is unbelievable, track record teaches us sometimes that that is exactly the right thing to do. Usually, often that is always that is the right thing to do. 

Bryce: [00:20:16] So there's a couple of other One-Liners that are quite famous were ripped through them and then take a quick ad break. So Ren, what's one of your favourites prices? 

Alec: [00:20:25] What you pay value is what you get. 

Bryce: [00:20:27] Twenty two thousand and five for investors as a whole returns decrease as motion increases. 

Alec: [00:20:35] 2004 Be fearful when others are greedy and greedy only when others are fearful. I think one of the most famous lines? 

Bryce: [00:20:42] Absolutely. You only find out who is swimming naked when the tide goes out. That was in 2001, and 

Alec: [00:20:49] I think the timing of that is particularly important because 2001 they were realising a lot of people were swimming naked as the tech bubble burst. 

Bryce: [00:20:58] Absolutely. And then to close out, if you aren't willing to own a stock for 10 years, don't even think about owning it for ten minutes. I think that really plays into a lot of what we just discussed around finding companies that are durable have have a moat, great earnings power, good return, great management in place. If you're not thinking about it, this company is going to last the next 10 years, then what's the point 

Alec: [00:21:23] in owning it? Some good quotes. They're not. That's not even all of them. That's just a few that we cherry picked. Let's take a quick break here from our sponsors, and when we come back, we'll quickly hear what the Equity Mates community have thought, and then we will get on this year's letter. I Bryce before the break, we talked about some of the things that we've learnt from Buffett's letters. Hopefully, given everyone an idea of why they're such a good resource. I went out to the Equity Mates community to ask their views. First of all, I asked how many people on Instagram have read a Buffett letter. Yeah, what do you think the numbers would have come back as pretty low? Yeah, you've now that 26 percent have read a Buffett, let us. 74 percent haven't. The good news is, if you don't want to read the letters in full, we've got some resources at the end to help shortcut the the process. Here's another one that I asked What would you rather own for the next 10 years? Berkshire Hathaway, an S&P 500 index ETF or bitcoin? What would you? What would you prefer? 

Bryce: [00:22:26] Well, I mean, it's based on his history and not trying to predict the future. I'll have to take that shot.

Alec: [00:22:32] Oh, okay. I thought you were going to say the last 10 years bitcoin has been the best of those three. Yeah, it has been. 

Bryce: [00:22:40] But I'm not going to say that. 

Alec: [00:22:43] Yeah, so forty five percent said the S&P 500, which you love to say that like people are disciplined. Then thirty seven percent said Burke Shire, 18 percent said Bitcoin. Nice. That's good. So then we asked, what are some of the the best things that you've learnt from Buffett's letters? A lot of the responses were around how to find quality companies buy great companies at a reasonable price. Patience, I think, was a really good one, and I think that's something that comes through a lot. You know, the power of compounding. So I think like some really good things there. I also asked, what, if anything, does Buffett get wrong? Do you have any answers for that?

Bryce: [00:23:25] What does he get wrong? Well, it's hard to say he hasn't got a lot wrong, 

Alec: [00:23:31] airlines, yeah. There were a few answers around airlines. They were very 

Bryce: [00:23:34] light into tech.

Alec: [00:23:35] Yeah, that was a big one. A few answers on tech.

Bryce: [00:23:37] Maybe he's made an absolute fortune from Apple, so 

Alec: [00:23:41] a big one was Kraft Hines. Oh yeah. So he merged those two companies with a Brazilian private equity firm, which hasn't done well. 

Bryce: [00:23:49] I feel like that's not the right answer to these questions, though. It's not. What does he get wrong? That's true. Yeah, it's 

Alec: [00:23:54] it's like what investing mistakes as he made the other big one. People said crypto a lot. This was a good response from a from someone up his rule number one. Never lose money. Yeah, but everyone has or will lose money, including Buffett. Yeah, a lot of those were. 

Bryce: [00:24:13] Yeah. But I think it's a good. It's it's I want to know how he plays, that plays that out in reality 

Alec: [00:24:19] about losing money.

Bryce: [00:24:22] Yeah. Because you either have to sell a position to stop losing money or every position needs to be right. 

Alec: [00:24:28] Well, yeah, he sells his old positions, 

Bryce: [00:24:30] but that's what I'm saying like. But then he'll say, if you're not prepared to, you know, when does he make the call? It's my thing.

Alec: [00:24:37] Yeah, yeah. Getting the Equity Mates opinion on Instagram is becoming a bit of a weekly tradition. So if you want to make your voice heard, jump over to our Instagram. Follow us there, and I'm sure we'll do that again next week. But Bryce, let's get to this year's letter because Warren Buffett might be 91, but he's still pumping out long letters. What are we learn this year? 

Bryce: [00:24:59] We learnt a lot Ren firstly, that he is a very generous guy and loves being transparent with his shareholders. So he opened the letter Charlie Munger. If you're not sure, is his sidekick and partner at Berkshire Hathaway? He opened Charlie Munger, my long term partner, and I have the job of managing a portion of your savings. We are honoured by a trust. Our position carries with it the responsibility to report to you what we would like to know if we were an absentee owner and you were the manager. We enjoy communicating directly with you through this annual letter and through the annual meeting as well. If you don't know what that is, it's a massive stadium sized meeting where thousands and thousands of shareholders go to his hometown in Omaha. Our policy is to treat all shareholders equally. Therefore, we do not hold discussions with analysts nor large institutions, wherever possible. Also, we release important communications on Saturday mornings in order to maximise the time for shareholders and the media to absorb the news before markets open on Monday. 

Alec: [00:26:07] What a guy I love how he he he explicitly says he treats all shareholders equally. You know, it's not a way you give this letter to Goldman Sachs and Morgan Stanley before we release it to the public, and they release it when the market is open and closed. So you and I have as much chance to read it and digest it as people whose full time job is to watch the market, which we love to see here at Equity Mates, we're all about the retail investor. That's it. The one thing that really stood out to me is that how they framed themselves, he and Charlie. So I'll read this quote. Our goal is to have meaningful investments in businesses with both durable economic advantages and a first class CEO. Please note particularly that we own stocks based upon our expectations about their long term business performance, and not because we view them as vehicles for timely market moves. That point is crucial. Charlie and I are not stock pickers. We are business pickers. I love that business pickers, not stock pickers. That's what we all should aspire to be. 

Bryce: [00:27:14] That's it. And yeah, this has been one of his biggest pieces of, I guess, advice and communications over the years. So when he started the letter with a did you know and we love some big, big numbers here at Equity Mates. Did you know books I own and operate more US based infrastructure than any other American company, worth $158 million?

Alec: [00:27:39] I didn't know that before I wrote the letter. 

Bryce: [00:27:42] That's incredible. 

Alec: [00:27:43] Well, did you know that Berkshire paid zero point eight percent of all corporate income tax in America in twenty one? 

Bryce: [00:27:52] No, but that's massive. Yeah, wow. Did you know that Berkshire's insurance float has grown from 19 million in 1967 to $147 billion? 

Alec: [00:28:03] I didn't. But now I did, which is. And look, we we won't get into how the float works. But like that is the superpower behind this business. And some of the resources we'll talk about at the end do a really good job of explaining that. But in this letter, he then goes on to write about his big four, the big four businesses that he's invested in or owns fully. That really drive Berkshire's returns at the moment. The first one is is his insurance business. The second one is Burlington Northern Santa Fe Railroad. But you haven't heard that. Not yet, but it's now have a big, big railroad over in the states where big railroad company, third Berkshire Hathaway Energy and then finally, a five point six percent stake in Apple. Not a massive, 

Bryce: [00:28:51] yeah, massive. And I think he he put in something like 40 billion into Apple. And now it's worth what? How much? One hundred and sixty or something close to it? Yeah, that's it's crazy. The next thing? He's currently sitting on and this comes down to the patient side for me, but he's currently sitting on one hundred and forty four billion dollars in cash. Yeah. And given the craziness of the markets and everything that's been going on and everyone saying it's been great making so much money. He can't find any good deals in his eyes. He he plans to hold at least 30 billion in cash at all times. That's portfolio management 

Alec: [00:29:32] 30 billion like that. To put that in context, like that's more than the value of Coles. Yeah, yeah. Yeah, just in cash. Yeah.

Bryce: [00:29:41] Yeah, he's yeah. I mean, it's all. It's all relative. But still, it's a a lot of cash. 

Alec: [00:29:48] It helps. It could be a share, 

Bryce: [00:29:50] but he's sitting on one hundred and forty four billion. So. Also, given what's going on with rates at the moment, you know, cash is certainly not king. It's just goes to show his determination to ensure that he is only investing. When he sees opportunity, he's willing to sit on that much money to wait for the good deals to come through. 

Alec: [00:30:10] Hmm. So this next one, it's a little bit jargon filled, but it was probably my favourite quote from the letter. Buffett writes deceptive adjustments to earnings to use a polite description have become both more frequent and more fanciful as stocks have risen. Speaking less politely, I would say that bull markets preyed bloviate at Bull. Dot Dot Dot. And basically, Buffett is saying there that when any of his companies that he owns a report, they're just going to report their actual profit. And a lot of the other companies that he sees in the market will maybe take things here and there and report their profit and then report a couple of other numbers to try and make it seem like they're doing better than they perhaps are. Yeah. And so Buffett just says if you're going to invest in individual stocks, be really aware of what numbers you're looking at. And importantly, the number that matters is the actual profit number. If you start saying acronyms like a or adjusted EBITDA, just be careful. 

Bryce: [00:31:16] So another call out from the letter Ren is Charlie's orang-utan effect and Charlie Munger look him up on YouTube. Incredibly interesting, guy. And he says that if you sit down with an orang-utan and carefully explain to one of your cherished ideas, you may leave behind a puzzled primate, but will exit thinking more clearly. You'll see yourself. And he for many, many years, both of them actually have always said that if the best way to learn is by teaching others, and that's that's what he's actually saying here. If you can explain the business to someone else, if you can explain how to earn money, you're just going to become a better investor and better yourself. 

Alec: [00:32:01] I think to more and then we'll close with some more resources. The quote that Buffett finishes with that, I think is really important is he's talking about his long term shareholders, the shareholders that have been with him for decades. And he writes Berkshire, these shareholders would sometimes acknowledge, might be far from the best selection they could have made. But they would add that Berkshire would rank high amongst those with which they would be most comfortable. And people who are comfortable with their investments will on average achieve better results than those who are motivated by ever changing headlines, chatter and promises. And for me, that is such an important reminder. Being able to sleep at night, being able to switch off, being able to not think about your investment portfolio all the time is such an important thing to build into your portfolio because it will allow you to just let compounding do its thing. You might not make a thousand percent a year on some mining spec E or some crazy biotech, but if you consistently earn 10 percent a year and you can sleep at night, you'll do more than work over the long run. 

Bryce: [00:33:12] And then a random way to finish the letter so 

Alec: [00:33:15] random 

Bryce: [00:33:17] from Buffett ends with a bit of a sales pitch. He says that cousin Jemmy Buffett has designed a pontoon party boat that is now being manufactured by Forest River, a Berkshire subsidiary. The boat will be introduced on April 29 at our Berkshire Bazaar of Bargains, and for two days only shareholders will be able to purchase Jimmy's masterpiece at a 10 percent discount. You're Bargain Hunting chairman will be buying a boat for his family's use. Join me, 

Alec: [00:33:43] said Jemmy Buffett, the singer. You know, like a Margaritaville and all those other songs is designing pontoon boats for a company that Warren Buffett owns. 

Bryce: [00:33:52] Brandon very Ren. Very random. But look, plenty of information. And there was a lot that we covered there. So do listen to this again to let it all sink in. But if you would like to have a look at the letter yourself, we will include it in the show notes. But there are a couple of resources where you can head to to take a look at a lot of other letters that Berkshire have written. 

Alec: [00:34:13] To be clear, what we're going to include in the show notes is every letter that link to every letter. Yeah, yeah. 

Bryce: [00:34:19] And that is a link. To the Berkshire Hathaway website, 

Alec: [00:34:23] one of the worst, I'm going to say hands down the worst website for a company worth over $500 billion. Yeah, it's 

Bryce: [00:34:30] awful for that. They don't need it. I don't need it. 

Alec: [00:34:34] It's very fitting. I don't need it. But look, if you don't want to read the letters yourself, we've read a few. Warren Buffett books over our time and we, I think some of the most valuable books I've read when it comes to investing. So we've got four titles that we want to share that we should also include links in the show notes. But what some of the Warren Buffett books that you found most valuable? 

Bryce: [00:34:55] One that was written by his sister in law was that right? 

Alec: [00:35:00] No daughter, daughter in law, but his son and the daughter in law divorced. And then she wrote the book. Yeah, it's I don't think it was acrimonious. 

Bryce: [00:35:09] Yeah, yeah. No. But anyway, I'm not going to go into the details of it, but it's called it's called Buffett Ology, and it really breaks down how he everything that we've really spoken about. It's it's a great book.

Alec: [00:35:21] Yeah, it's really that Buffett allergy really covers the how the in terms of how Buffett invests and how he approaches investments. Yeah, two books that are really biographical talk about his life, which are really good. The Snowball. Warren Buffett and the Business of Life by Alice Schroeder and then Buffett. Making of an American Capitalist by Roger Lowenstein. Two great ones. And then the final book that I think is worth mentioning and giving a shout out to. It's called Warren Buffett's Ground Rules by Jeremy Miller and what it does, it's taken. So before Warren Buffett Ren Berkshire Hathaway, he ran an investment partnership and he wrote letters there as well to his that this book takes those letters and distils and groups them into lessons. Warren Buffett's ground rules. So I think that's a that's another really good one to read as well. But honestly, any of those four titles or the letters themselves, everything there, there will be something valuable that you learn. 

Bryce: [00:36:21] Absolutely. So there's always something to learn from Warren Buffett. A. Keep an eye out for his annual letter. And then in May, he does his annual general meeting for Berkshire Hathaway, and there's always plenty of content coming out of that as well. So if you have enjoyed this episode, we'd ask that you could just write and review on on your Apple Podcasts. If you are listening through Apple, if you'd like to leave a question, hit us up at contact@equitymates.com or through our Instagram page. And we hope that you got a lot of value from that episode. So Ren, as always, it's great to chat. Buffett, it's great to chat stocks, and we'll be picking it up again next week. 

Alec: [00:37:01] Sounds good.