Warren Buffett launched his annual shareholder letter on Saturday, and I flew it even earlier than I acquired away from bed, as half of my work on the up to date, revised version of my free book, Warren Buffett Predicts the Future (which you can obtain right here.)
There have been some compelling takeaways from the letter, together with how Buffett embraced a few of his largest errors.
However with the good thing about a day or two of hindsight, I understand now that I missed one thing I would been anticipating to see–three somethings in fact–because Buffett no means talked about them. And the reality is, they’re placing their absence.
1. Um, the pandemic?
Buffett’s letter runs 7,218 phrases, however as Katherine Chiglinsky of Bloomberg identified, there’s barely a phrase concerning the largest international improvement of the previous yr: the Covid-19 pandemic.
In actual fact, the time period “COVID-19” seems solely as soon as, after which solely as an afterthought, describing how considered one of Berkshire’s subordinate firms, Nebraska Furnishings Mart, set a gross sales document in 2020 (“regardless of … closing … for greater than six weeks due to COVID-19.”)
Past that: Pandemic? Coronavirus? Masks? Vaccines? Medicines? Pharma?
None of those phrases is talked about. In actual fact, even when Buffett describes how Berkshire needed to scrap its annual assembly and go all-virtual final yr, and descriptions plans to take action once more this yr (in Los Angeles, not Omaha), he manages to take action with out ever mentioning the explanation why the entire thing was upended to start with.
Much more odd: Buffett barely mentions the pandemic even within the context of his huge mea culpa within the letter, over an $11 billion writedown that Berkshire needed to take because of the efficiency of Precision Castparts.
Precision Castparts makes tools for aerospace and vitality firms, and as Chiglinsky factors out, a key purpose why it underperformed final yr was due to diminished demand throughout the pandemic.
However aside from a brief, glancing point out of “adversarial developments all through the aerospace business, PCC’s most vital supply of shoppers,” that is it. Buffett would not convey it up.
2. The political local weather?
Here is the following factor that does not come up: the U.S. political local weather. Not that that is precisely what you’d hope the letter can be all about, however it’s placing to not point out it in any respect: the 2020 presidential election, the racial justice protests that erupted all around the nation throughout the previous 12 months, and the January 6 riot on the U.S. Capitol.
Really, I do not know what to make of the silence, even when it looks like it will be related. For instance, there’s nothing concerning the dangers confronted insurers, or the context of Berkshire’s 5.four % possession of Apple — say, “the coalition of state attorneys basic, together with the U.S. Division of Justice,” that have been reportedly “taking the primary steps towards launching an antitrust probe of Apple.”
It is a little bit of a change for Buffett, who has not been quiet on politics earlier in his profession.
For instance, in 2008 he endorsed Barack Obama for president and made contributions; that yr he stated he used the phrase “lobotomy” in explaining what it will take for him to have the ability to assist Obama’s Republican opponent, Sen. John McCain.
Buffett endorsed Obama once more in 2012, acquired behind Hillary Clinton in 2016, and criticized then-candidate Donald Trump for not releasing his tax returns. However this time–not simply within the letter, thoughts you however for the entire yr? Silence on politics.
It is value mentioning that Buffett has numerous perspective, politically talking. As he stated in 2017, he’d lived below 15 of the then-45 presidents (make that 16 out of 46, now), and had traded below each president since FDR.
“The primary one was [President Herbert] Hoover,” Buffett instructed CNBC in 2017, . “I used to be solely 2 when he left so I hadn’t gotten energetic at that time. However Roosevelt was subsequent. And I purchased shares below him, though my dad thought it was the tip of the world when he acquired elected.”
A yr in the past, Buffett talked a few burning query at Berkshire: Who will take over when he and Charlie Munger are not capable of run the corporate?
“Charlie and I way back entered the pressing zone,” Buffett acknowledged then, when he was 89 and Munger was 96. “That is not precisely nice information for us. However Berkshire shareholders needn’t fear. Your organization is 100 % ready for our departure.”
Such as you, me and each different dwelling soul, Buffett and Munger at the moment are a yr older.
In consequence, Buffett stated final yr that he deliberate to provide “extra publicity” to the 2 almost definitely successors: Ajit Jain and Greg Abel, who run the insurance coverage and non-insurance elements of Berkshire, respectively.
The plan was for them to affix Buffett and Munger on stage on the annual assembly, however in fact the assembly did not precisely go in line with plan. Neither Jain nor Munger was there.
Abel sat on the desk subsequent to Buffett within the auditorium, however he actually did not say very a lot.
Now, I would not count on Buffett to repeat the entire thing verbatim from final yr — however actually, the query of succession hardly got here up on this yr’s letter, aside from Buffett to vow that this yr, all 4 will probably be on the dais in Los Angeles.
“Our different invaluable vice-chairmen, Ajit Jain and Greg Abel, will probably be with us to reply questions referring to their domains,” he wrote.
Ought to we learn something into these omissions? I do not but know. However now that I’ve stepped again and seen that they are not right here, I can not cease not seeing them.