Patience and Perseverance

In a world where markets fluctuate wildly and the economic landscape is constantly shifting, there's something remarkably calming about the wisdom shared by Warren Buffett in his 2022 Annual Letter to Berkshire Hathaway shareholders. As expected, the Oracle of Omaha sprinkles his letter with insights that are simultaneously simple yet profound and always worth heeding.

Buffett's mantra of long-term thinking and patience is particularly striking in today's environment, where short-term gains seem to rule the day. He reminds us that Berkshire Hathaway's net worth increased by $22.9 billion in 2022 – a testament to the power of sticking to core principles and investing in solid businesses, even in uncertain times.

Buffett encourages investors to avoid getting caught up in the frenzy of macroeconomic predictions, particularly those surrounding inflation. Instead, he suggests focusing on the age-old wisdom of buying undervalued stocks and holding onto them for the long haul. It's a reminder that sometimes the most straightforward strategies can yield the best results.

Buffett never misses the opportunity to praise his long-time partner, Charlie Munger, highlighting that his thoughts are always clearly reasoned and more artfully stated. While many get swept up in the excitement of quick gains, Munger has always remained a steadfast advocate for patience and long-term thinking. As he puts it, the world is full of foolish gamblers who will never fare as well as those who are patient and diligent.

Munger's philosophy reminds us that clarity and rationality are essential in the pursuit of success. To truly see the world as it is, we must resist the distorted lenses through which we often judge our surroundings. Being rational is a conscious choice that requires constant work and dedication; if you don't care about it, you're destined to remain irrational and suffer the consequences.

Patience, Munger believes, can be learned. The ability to concentrate on a single task or idea for an extended period is an invaluable skill in today's fast-paced world. Munger also emphasizes the importance of learning from the past, whether that means admiring the accomplishments of the deceased or analyzing the mistakes of those we detest.

When it comes to investing, Munger and Warren Buffett have built their success on a solid foundation of long-term thinking. They steer clear of market froth, seeking out quality investments and holding onto them stubbornly. As Ben Graham said, the stock market is a voting machine in the short term but a weighing machine in the long run. The key, according to Munger, is to continue creating value, and eventually, the wise will take notice.

Munger also cautions against the illusion of certainty and the use of leverage in investing. A string of wonderful numbers multiplied by zero will always equal zero, so it's essential to avoid counting on getting rich twice. Yet, he reminds us that one need not own a plethora of assets to achieve wealth. In a world that's constantly changing, Munger underscores the importance of continuous learning and adaptation. Even he and Buffett had to adjust their thinking on railroad stocks when the world changed, proving that it's never too late to recognize new opportunities.

Buffett's praise extends beyond Munger in this year's letter, emphasizing the work of Berkshire's subsidiary managers as a lesson in the importance of corporate governance and responsible management. It's clear that Berkshire Hathaway's success isn't just the result of Buffett's skill as an investor but also the collective effort of its team. The Oracle of Omaha reminds us that great businesses are built on a foundation of strong management and unwavering dedication to shareholder value.

As we navigate the choppy waters of today's economic climate, Buffett's 2022 Annual Letter serves as a beacon of rationality and wisdom. His message is clear: stay patient, focus on the long term, and trust in the power of perseverance. It's a timeless lesson that, much like the man himself, never goes out of style.

Read Warren's Annual Shareholder Letter Here.