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Extremely Separate Grades

Summary

Warren Buffett's annual letter to Berkshire Hathaway Inc.'s shareholders was released on Feb. 25. He noted that most of his capital-allocation decisions had been no better than so-so, and that his superior performance was due to approximately 12 decisions. Buffett argued that buybacks can be abused, but are generally not detrimental to shareholders. He also pointed out that the stock market is a yo-yo, but that businesses remain relatively stable, and that patience is key to long-term success as an investor. The article also discussed ESG funds, noting that some readers had different views on them, with some investing in them and others not.

Q&As

What is Warren Buffett's main point regarding making fewer decisions?
Warren Buffett's main point regarding making fewer decisions is that most of his capital-allocation decisions have been no better than so-so, and that his superior performance is attributed to approximately 12 decisions.

What is Warren Buffett's opinion of stock buybacks?
Warren Buffett's opinion of stock buybacks is that they can be abused, but on average, they don't enrich insiders or starve companies of sorely needed capital.

What does Warren Buffett think is the key to successful long-term investing?
Warren Buffett thinks that the key to successful long-term investing is to look past the spasmodic behavior of stocks and focus instead on whether businesses have durable advantages.

What did WSJ readers have to say about investing in ESG funds?
WSJ readers expressed different views on investing in ESG funds. Some readers have a small fraction of their portfolio invested in an ESG fund due to the higher fees, while others expressed that they would invest more if the fees were comparable to their other investment funds. Other readers expressed that they would rather donate to their favorite causes or volunteer to create social change.

What is Warren Buffett's advice for investors when it comes to stocks?
Warren Buffett's advice for investors when it comes to stocks is to be patient and let their winners run, as the potential gains are unlimited.

AI Comments

👍 Warren Buffett's annual letter offers great insight into how to be a successful investor. The article provides a comprehensive overview of his points and encourages readers to stay patient in the stock market.

👎 The article fails to address the potential risks involved with ESG funds. Additionally, the article does not provide a comprehensive list of the pros and cons associated with investing in ESG funds, making it difficult to make an informed decision.

AI Discussion

Me: It's about Warren Buffett's annual letter to shareholders and it talks about how he attributes his success to only a few good decisions. He also talks about how stock market fluctuations don't always reflect the actual performance of a company and encourages patience when it comes to investing.

Friend: That's interesting. What's the takeaway?

Me: I think the main takeaway is that it's important to be patient and to focus on the long-term performance of a business when investing. He also emphasizes the importance of making fewer decisions, which can help you avoid mistakes. Lastly, he advises against using leverage and to focus on finding a few winners that can carry your portfolio.

Action items

Technical terms

ESG Funds
ESG stands for Environmentally, Socially, and Governance. ESG funds are investment funds that focus on companies that meet certain environmental, social, and governance criteria.
Leverage
Leverage is the use of borrowed money to increase the potential return of an investment.
Book Value vs. Market Value
Book value is the value of an asset as stated on a company's balance sheet, while market value is the current price of an asset in the market.
Free Cash Flow
Free cash flow is the amount of cash a company has available after accounting for all expenses and capital investments.
Yo-Yo
A yo-yo is a toy consisting of two discs connected by an axle, which is spun around to create a spinning motion. In the context of the article, it is used to describe the stock market's volatile and unpredictable nature.
Durable Advantages
Durable advantages are advantages that a company has over its competitors that are likely to remain in place for a long period of time.

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