Sources for Value Investing: Zero to Hero
Every number, date, name and quote in the book, chapter by chapter, in the order it appears. Berkshire Hathaway letters are cited by the year they cover and were checked word for word against the text at berkshirehathaway.com/letters. Market data notes say where each chart's numbers come from.
Chapter 1 A Stock Is a Piece of a Business
Letters are cited by subject year; full text from https://www.berkshirehathaway.com/letters/ (1977–1997 YYYY.html, 1998 1998pdf.pdf, 1999 final1999pdf.pdf, 2000–2002 YYYYpdf.pdf, 2003+ YYYYltr.pdf), cached in .cache/letters/ and checked with build/tools/check-quotes.py. Owner's Manual: https://www.berkshirehathaway.com/owners.html.
| # | Claim (as written) | Source |
|---|---|---|
| 1 | 1986, 400-acre farm ~50 miles north of Omaha, bought from the FDIC for $280,000; knew nothing about farming | 2013 letter, "Some Thoughts About Investing" |
| 2 | 28 years later earnings tripled, worth five times or more; "just my second visit" | 2013 letter |
| 3 | 1973–1981 farm price explosion, inflation belief, small rural bank lending; declines of 50% or more | 2013 letter |
| 4 | Son supplied bushels and costs; normalized return about 10%; expected productivity and crop prices to rise | 2013 letter |
| 5 | 1993 NYU-adjacent retail property from the Resolution Trust Corp.; ~10% unleveraged yield; largest tenant ~20% of space at ~$5/ft vs ~$70 average; lease expiring in nine years; earnings tripled; distributions >35% of equity a year; refinancings 1996 and 1999 returned >150%; never viewed the property | 2013 letter |
| 6 | Quote: "Focus on the future productivity of the asset you are considering." | 2013 letter (verbatim, checked) |
| 7 | Headlines of 1987 and 1994 irrelevant; corn in Nebraska, students at NYU | 2013 letter (paraphrase) |
| 8 | Berkshire finished buying 400 million Coca-Cola shares in August 1994, seven-year purchase, $1.3 billion | 2022 letter |
| 9 | 9.3% of Coca-Cola owned at 31 Dec 2025; 2025 dividends $816M; market value $27,964M; cost $1,299M | 2025 letter (Abel), equity holdings table |
| 10 | Quote: "Although our form is corporate, our attitude is partnership." and "merely owning a piece of paper whose price wiggles around daily" and "much as you might if you owned a farm or apartment house in partnership with members of your family" | An Owner's Manual (1996; online edition dated January 1999), principle 1 (verbatim, checked by hand) |
| 11 | May 1964: 1,583,680 shares outstanding; tender offer at $11.375 (Buffett had said $11.50); market value ≈ $18.0M | 2014 letter; $18.0M derived (1,583,680 × $11.375) |
| 12 | Net worth end of fiscal 1964 $22 million | 2014 letter |
| 13 | $4 billion shares × $90 = $360 billion | labelled example |
| 14 | Coca-Cola dividends to Berkshire: $75M (1994), $704M (2022) | 2022 letter |
| 15 | "just as certain as birthdays"; only had to cash checks; $1.3B in a flat investment ≈ 0.3% of net worth, ~$80M a year; Coke stake ~$25 billion at year-end 2022 | 2022 letter (quote checked) |
| 16 | Quote: "The weeds wither away in significance as the flowers bloom." | 2022 letter (verbatim, checked) |
| 17 | One cash dividend, 3 Jan 1967, $101,755 or 10¢ per A share; "Now it seems like a bad dream." | 2024 letter (quote checked) |
| 18 | Quote: "Games are won by players who focus on the playing field – not by those whose eyes are glued to the scoreboard." | 2013 letter (verbatim, checked) |
| 19 | Moody neighbour shouting a price for the farm; investors "too often become frenetic" | 2013 letter (paraphrase + short quote checked by eye) |
| 20 | Compounded annual gain 1965–2025: Berkshire 19.7%, S&P 500 with dividends 10.5%; overall gain 1964–2025: 6,099,294% vs 46,061% → $1,000 became ~$61.0M vs ~$462K | 2025 letter, performance table; dollar figures derived |
| 21 | Chart 1.4 line values: annual changes compounded from the same table (ends at $60.9M / $455K because the table's percentages are rounded; labels use the letter's overall-gain figures) | 2025 letter table; build/charts/data/ch01-*-1000.json |
| 22 | Berkshire per-share market value −48.7% (1974), −31.8% (2008), −19.9% vs S&P +21.0% (1999) | 2025 letter, performance table |
| 23 | Quote: "If you instead focus on the prospective price change of a contemplated purchase, you are speculating."; nothing improper; coin-flippers; "is never a reason to buy it" | 2013 letter (verbatim, checked) |
| 24 | 90% low-cost S&P 500 index fund / 10% short-term government bonds instructions | 2013 letter |
| 25 | Top 10 = 39.03% of the S&P 500 and Nvidia 7.78%, 10 Oct 2026 | Slickcharts via https://cryptodaily.co.uk/2026/10/top-10-sp-500-stocks-index-weight-2026 (from notes/v1/factsheet.md, CONC) |
| 26 | Textile history: board minutes of 29 Jul 1954; first shares Dec 1962 at $7.50 vs working capital $10.25/share; cigar butt; $11.375 vs $11.50; "monumentally stupid"; April 1965 392,633 of 1,017,547 shares; control in May 1965; "the dog who caught the car" | 2014 letter (quotes checked) |
| 27 | National Indemnity bought early 1967 for $8.6M; 18 years of struggle after 1966; mills closed 1985; ~40% a year had he taken the $11.375 | 2014 letter |
| 28 | 2024: four IRS payments totalling $26.8 billion, about 5% of all corporate America | 2024 letter |
| 29 | One BRK-A share closed at $817,500 on 29 Oct 2026 | Yahoo Finance chart API, BRK-A daily close (.cache/prices/BRK-A.csv) |
| 30 | Quote: "A climate of fear is your friend when investing; a euphoric world is your enemy." | 2013 letter (verbatim, checked) |
| 31 | 2008 panic: never thought of selling the farm or NY property; why sell small pieces of wonderful businesses | 2013 letter (paraphrase) |
| 32 | Coca-Cola dividend to Berkshire rose every year since 1994 | 2022 letter ("Growth occurred every year") |
| 33 | Howto page quote: "You don't need to be an expert in order to achieve satisfactory investment returns." | 2013 letter (verbatim, checked) |
| 34 | Opener image: generated illustration of a farm (not the actual Buffett farm) | build/images/IMAGES.md #1 |
Chapter 2 Price and Value: Two Different Numbers
Letters are cited by subject year from https://www.berkshirehathaway.com/letters/ (cached in .cache/letters/, checked with build/tools/check-quotes.py). Owner's Manual: https://www.berkshirehathaway.com/owners.html (cached as owners-manual.txt). Coca-Cola filings from SEC EDGAR (CIK 21344): FY2000 10-K https://www.sec.gov/Archives/edgar/data/21344/0000021344-01-000005.txt ; FY2006 10-K https://www.sec.gov/Archives/edgar/data/21344/000104746907001328/a2176230z10-k.htm ; FY2011 10-K https://www.sec.gov/Archives/edgar/data/21344/000002134412000007/a2011123110-k.htm ; FY2012 10-K https://www.sec.gov/Archives/edgar/data/21344/000002134413000007/a2012123110-k.htm . Prices: Yahoo Finance daily closes (.cache/prices/KO.csv, split-adjusted; pre-2012-split prices = Yahoo × 2).
| # | Claim (as written) | Source |
|---|---|---|
| 1 | Berkshire's 200 million KO shares worth $13.4 billion at end of 1998 | 1998 letter, equity table ($13,400M) |
| 2 | Same shares $14.0 billion at end of 2011; 8.8% owned | 2011 letter, equity table ($13,994M, 8.8%) |
| 3 | EPS up about 160% 1998→2011 ($1.42 → $3.69); dividend per share $0.60 → $1.88 | KO FY2000 10-K (1998 EPS, dividend); KO FY2011 10-K (2011 EPS $3.69, dividend $1.88) |
| 4 | Quote: "Long ago, Ben Graham taught me that "Price is what you pay; value is what you get."" ; "socks or stocks"; enjoys price declines with funds available; market value declines don't bother him | 2008 letter (checked) |
| 5 | See's bought by Blue Chip Stamps early 1972 | 1983 letter, appendix |
| 6 | "price is what you give, value is what you get"; chocolate lovers prefer See's to candy costing two or three times as much | 1983 letter (checked) |
| 7 | Quote: "It is the discounted value of the cash that can be taken out of a business during its remaining life." | Owner's Manual, "Intrinsic Value" (verified by hand) |
| 8 | 51 cents at 7% for ten years ≈ $1; $100/yr for 10 yrs at 7% ≈ $702 | example arithmetic (1/1.07^10 = 0.508; annuity factor 7.024) |
| 9 | "is an estimate rather than a precise figure"; changes with interest rates and forecasts; Charlie and Buffett get slightly different figures; never give estimates | Owner's Manual (verified by hand) |
| 10 | Quote: "In the short run, the market is a voting machine; in the long run, however, it becomes a weighing machine." (Graham, quoted by Buffett) | 2017 letter (checked) |
| 11 | KO year-end prices: 1997 $66.69, 1998 $67.00, 2000 $60.94 | KO FY2000 10-K, selected financial data |
| 12 | Record close $87.94 on 14 Jul 1998; about $37 on 10 Mar 2003 (−58%) | Yahoo KO closes 43.9688 and 18.535 (split-adjusted), ×2 |
| 13 | Nearly 200 countries | KO FY2000 10-K ("nearly 200 countries") |
| 14 | Repurchases by Coca-Cola, Washington Post, Wells Fargo at low prices helped more than 1997 repurchases | 1997 letter |
| 15 | Book value per share $19.46 in 1964, "with certitude"; overstated intrinsic value (textiles); now understates; college-education analogy | Owner's Manual (verified by hand) |
| 16 | Berkshire bought KO from 1988; finished Aug 1994; $1.3 billion | 2011 letter ("Coca-Cola in 1988"); 2022 letter (seven-year purchase ending Aug 1994, $1.3B) |
| 17 | Market value about $165 billion at end of 1998; 1998 net income $3.5 billion (≈47×) | KO FY2000 10-K (total market value $165,190M; net income $3,533M) |
| 18 | About 62× at the July 1998 record ($87.94 / $1.42) | derived from #12 and #3 |
| 19 | Earnings yield about 2 cents per dollar; ten-year Treasury 4.6% at end of 1998 | derived (1/47); Yahoo ^TNX close 31 Dec 1998, 4.638 |
| 20 | EPS 1998 $1.42, 1999 $0.98, 2000 $0.88; other operating charges $73M (1998), $1,443M (2000) | KO FY2000 10-K |
| 21 | Timeline: 2004 letter "I talked when I should have walked"; first close above the 1998 record 8 Oct 2014 ($44.55 split-adjusted) | 2004 letter (checked); Yahoo KO closes |
| 22 | Chart 2.3: monthly KO price indexed to 31 Dec 1998 close (33.50 split-adjusted); EPS 1995–2012 diluted net income per share, pre-2012 values halved (1995 .585, 1996 .69, 1997 .82, 1998 .71, 1999 .49, 2000 .44, 2001 .80, 2002 .615, 2003 .885, 2004 1.00, 2005 1.02, 2006 1.08, 2007 1.285, 2008 1.25, 2009 1.46, 2010 2.53, 2011 1.85, 2012 1.97) | build/charts/data/ch02-ko-*.json; KO 10-Ks FY2000, FY2006, FY2011, FY2012 |
| 23 | P/E: 62× (record), 47× (end 1998), 19× (end 2011, $69.97 / $3.69) | derived; Yahoo KO close 30 Dec 2011 34.985 × 2 |
| 24 | Ownership 8.1% end of 1997 → 8.8% end of 2011 | 1997 letter equity table; 2011 letter equity table |
| 25 | Berkshire dividends $120M (1998) and $376M (2011) | derived: 200M shares × $0.60 and × $1.88 |
| 26 | "a big mistake in not selling several of our larger holdings during The Great Bubble"; "when their intrinsic value was lower and their prices far higher" | 2003 letter (checked) |
| 27 | "Big Four" (American Express, Coca-Cola, Gillette, Wells Fargo); market values outran businesses in the bubble, reverse afterwards; quote "Though I said at the time … I talked when I should have walked."; "an always-clean, rear-view mirror"; "invariably fogged" | 2004 letter (checked) |
| 28 | 2010 accounting gain $4,978 million from remeasuring KO's equity interest in CCE on acquiring CCE's North American business | KO FY2011 10-K, Note 2 |
| 29 | Bakery numbers ($1M, $2M, $100,000 a year, 10%/5%) | labelled example |
| 30 | Opener art: drawn in code (build/art/diagrams/ch02-diagrams.py), two generic bakeries, no text or logos |
author |
Consistency edit, 2026-10-30
Owner's Manual quote card ("the discounted value of the cash…") converted to an inline quote; the card lives in ch19. Coca-Cola 1998–2014 price stall: ch2 is now the owner; ch15 and ch20 cross-refer here.
Chapter 3 Meet Mr. Market
Letters are cited by subject year from https://www.berkshirehathaway.com/letters/ (cached in .cache/letters/, checked with build/tools/check-quotes.py). Prices: Yahoo Finance daily closes (.cache/prices/BRK-A.csv, VIX.csv, GSPC.csv), fetched 2026-10-30.
| # | Claim (as written) | Source |
|---|---|---|
| 1 | BRK-A $147,000 (19 Sep 2008) → $72,400 (5 Mar 2009), about 51% | 2017 letter table (−50.7%); Yahoo BRK-A closes |
| 2 | "unavailable in normal markets"; three large investments, about $1.5 billion a year pre-tax; several mistakes in 2008 | 2008 letter (checked) |
| 3 | $125,000 one year after the March 2009 low (5 Mar 2010 close) | Yahoo BRK-A |
| 4 | Mr. Market introduced in Chapter 8 of The Intelligent Investor | 1993 letter |
| 5 | Buffett read The Intelligent Investor at 19; "my favorite book on investing" | 2004 letter; 2003 letter |
| 6 | Mr. Market story: partner, appears daily, buy/sell price; "has incurable emotional problems"; euphoric/depressed; "He doesn't mind being ignored"; transactions at your option; more manic-depressive the better; quote "Mr. Market is there to serve you, not to guide you."; "you are free to either ignore him or to take advantage of him"; "you don't belong in the game"; poker/patsy line | 1987 letter (checked) |
| 7 | VIX: Cboe index of expected S&P 500 movement over the next 30 days, from option prices | Cboe VIX methodology, https://www.cboe.com/tradable_products/vix/ |
| 8 | Median VIX close since 1990 about 17.6 ("about 18") | computed from Yahoo ^VIX daily closes 2 Jan 1990 – 30 Oct 2026 |
| 9 | VIX record closes 80.86 (20 Nov 2008), 82.69 (16 Mar 2020); 52.33 (8 Apr 2025) | Yahoo ^VIX |
| 10 | S&P 500 crisis lows 676.53 (9 Mar 2009) and 2,237.40 (23 Mar 2020) | Yahoo ^GSPC |
| 11 | Portfolio insurance; Brady Report $60–90 billion "poised on this hair trigger" in mid-October 1987; commentators' wrong conclusion; "sticks to his investment knitting"; quote "He can be hurt by such volatility only if he is forced…"; few stocks fell to interesting prices but rebounded before meaningful purchases | 1987 letter (checked) |
| 12 | S&P 500 −20.5% on 19 Oct 1987 (282.70 → 224.84) | Yahoo ^GSPC |
| 13 | BRK −37% from early-October high in a little over three weeks (2 → 27 Oct 1987) | 2017 letter table |
| 14 | Buffett began buying Coca-Cola in 1988 | 2011 letter ("Coca-Cola in 1988") |
| 15 | Quote "There is simply no telling how far stocks can fall in a short period."; "the strongest argument I can muster against ever using borrowed money to own stocks"; "an unsettled mind will not make good decisions" | 2017 letter (checked) |
| 16 | Quote "Volatility is far from synonymous with risk."; owning equities for a day/week/year riskier than cash; near-term needs in Treasuries or insured bank deposits; dollar lost 87% of purchasing power 1965–2014, $1 buys what 13¢ did | 2014 letter (checked) |
| 17 | Risk = "the reasoned probability" of loss of purchasing power over the holding period; "can fluctuate greatly in price and not be risky"; non-fluctuating asset "can be laden with risk" | 2011 letter (checked) |
| 18 | Washington Post bought 1973 after a sharp fall; beta makes it "riskier" at a lower price; offered the company at a vastly reduced price | 1993 letter (checked) |
| 19 | Quote "Our goal is more modest: we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."; "those two super-contagious diseases"; "never try to anticipate the arrival or departure of either disease"; euphoria in early 1987 | 1986 letter (checked) |
| 20 | Savers should welcome market declines | 1997 letter (paraphrase) |
| 21 | Four declines: Mar 1973–Jan 1975 $93→$38 (−59.1%); 2–27 Oct 1987 $4,250→$2,675 (−37.1%); 19 Jun 1998–10 Mar 2000 $80,900→$41,300 (−48.9%); 19 Sep 2008–5 Mar 2009 $147,000→$72,400 (−50.7%); "suffered four truly major dips"; "gory details"; 53 years; future declines; "extraordinary opportunities to those who are not handicapped by debt"; Kipling's If | 2017 letter (checked) |
| 22 | One year after the lows: $4,775 (26 Oct 1988), $70,100 (12 Mar 2001), $125,000 (5 Mar 2010); +79%, +70%, +73% | Yahoo BRK-A |
| 23 | Chart 3.4: BRK-A monthly closes 17 Mar 1980 – 29 Oct 2026, last $817,500 | build/charts/data/ch03-brka-1980-2026.json |
| 24 | Investors who calmly own real estate become "frenetic" with constant quotes | 2013 letter |
| 25 | House thought experiment and figures (twice, half) | labelled thought experiment |
| 26 | Opener art: drawn in code (build/art/diagrams/ch03-diagrams.py), generic market stall and mood dial, no text or logos |
author |
Chapter 4 Compounding: The Snowball and the Long Hill
Letters are cited by subject year from https://www.berkshirehathaway.com/letters/ (cached in .cache/letters/, checked with build/tools/check-quotes.py). Owner's Manual: https://www.berkshirehathaway.com/owners.html. Prices: Yahoo Finance daily closes (.cache/prices/GSPC.csv), fetched 2026-10-30.
| # | Claim (as written) | Source |
|---|---|---|
| 1 | March 1942 (11 March), age 11, $114.75 saved since age six, three shares of Cities Service preferred | 2018 letter, "The American Tailwind" |
| 2 | $606,811 on 31 Jan 2019 in a no-fee S&P 500 index fund with dividends reinvested; 5,288 for 1 | 2018 letter |
| 3 | $10,000 at 10%: simple $50,000 after 40 years; compound $25,937 / $67,275 / $174,494 / $452,593 at 10/20/30/40 years; $1,100 in year 2; >$6,000 in year 20; >$41,000 in year 40; split $10,000 + $40,000 + $402,593 | example arithmetic by the author |
| 4 | Stopping at 30 instead of 40 years loses about 61%; last ten years add about $278,000 | example arithmetic |
| 5 | Retirement announcements praise CEOs who quadrupled earnings; quote "A savings account in which interest was reinvested … would quadruple its annual earnings in 18 years." | 1985 letter (checked) |
| 6 | Rule-of-72 table (72/r vs ln 2 / ln(1+r)) | arithmetic by the author |
| 7 | S&P 500 with dividends about 10.5% a year 1965–2025; Berkshire 19.7% | 2025 letter, performance table |
| 8 | Doublings from 25 to 67 (×66) and 35 to 67 (×24) at 10.5%; inflation 3% halves in ~24 years; 2% fee halves a flat pile in ~36 years | illustrative arithmetic |
| 9 | Thought experiment: $10,000 at 10% for 40 years ≈ $452,600; at 20% for 20 years ≈ $383,400 | example arithmetic |
| 10 | $1 million from 1942 → about $5.3 billion; "will shock you"; 1% to "helpers" cuts gain in half to $2.65 billion; 11.8% vs 10.8%; 77 years | 2018 letter (checked) |
| 11 | $100,000 for 30 years at 7%: $761,226 (no cost), $750,626 (0.05%), $574,349 (1%); difference about $176,000 | example arithmetic (costs labelled as examples) |
| 12 | Bet: argument in 2005 annual report; offered to wager $500,000; at least five hedge funds vs low-cost S&P index fund over ten years; Ted Seides of Protégé Partners; five funds-of-funds invested in more than 100 hedge funds; Vanguard S&P fund; Girls Inc. of Omaha as Buffett's charity | 2016 letter |
| 13 | Bet period 1 Jan 2008 – 31 Dec 2017 | 2016 letter (Long Bets statement quoted) |
| 14 | Each side funded its half of the $1 million prize ($500,000 face of zero-coupon Treasuries) | 2017 letter |
| 15 | Final gains: index fund 125.8% (8.5% a year); funds-of-funds A 21.7%, B 42.3%, C 87.7%, D 2.8% (nine years), E 27.0% | 2017 letter, results table |
| 16 | "2 and 20"; fund-of-funds additional layer (usually 1%); roughly 60% of gains over nine years to the two layers of managers; managers honest and intelligent | 2016 letter (checked) |
| 17 | Quote "Performance comes, performance goes. Fees never falter." | 2017 letter (checked) |
| 18 | 1989 example: $1 doubling yearly, 34% tax, ~$13,000 tax, ~$25,250 left; single investment doubling 20 times → $1,048,576, tax ~$356,500, ~$692,000 left; 27:1 | 1989 letter |
| 19 | Quote "Because of the way the tax law works, the Rip Van Winkle style of investing…"; strategy not adopted because of the math; prefer to keep splendid business relationships | 1989 letter (checked) |
| 20 | S&P 500 index 84.75 (31 Dec 1964) → 6,845.50 (31 Dec 2025); about 7.5% a year price only; $1,000 → about $81,000 | Yahoo ^GSPC closes; arithmetic by the author |
| 21 | S&P 500 with dividends: $1,000 → about $462,000 (overall gain 46,061%) | 2025 letter, performance table |
| 22 | Berkshire's only cash dividend, 10¢ in 1967 | 2024 letter (see Chapter 1 sources) |
| 23 | Berkshire $1,000 → about $61 million (overall gain 6,099,294%) | 2025 letter, performance table |
| 24 | Timeline values $3,234 (1974), $103,060 (1984), $1.65M (1994), $7.10M (2004), $18.2M (2014); 1974 fall 48.7% | 2025 letter table, yearly changes compounded by the author (build/charts/data/brk_vs_spx.json) |
| 25 | Compounded rates: Berkshire 28.0% (1965–94), 12.3% (1995–2025), 11.3% (2006–25); S&P 500 9.9%, 11.1%, 11.0% | same, computed by the author |
| 26 | "a greatly enlarged capital base will see to that"; best hope about 15% a year | Owner's Manual (also 1983 letter); verified by hand |
| 27 | 2009: market-price gain 22% compounded since fiscal 1965; "modest difference"; 801,516% vs 434,057% over 45 years | 2009 letter |
| 28 | Opener art: drawn in code (build/art/diagrams/ch04-diagrams.py), no text or logos |
author |
Consistency edit, 2026-10-30
Hedge-fund bet shortened to one paragraph (Seides/Protégé, $500,000 wager, "2 and 20" detail and ch04-bet chart REMOVED from text; 125.8%, 2.8–87.7%, ~60% kept). "Performance comes, performance goes. Fees never falter." is now inline; the card lives in ch32.
Chapter 5 Inflation, Interest Rates and the Gravity on Every Price
Letters are cited by subject year (text cached in .cache/letters/, checked with build/tools/check-quotes.py). FRED series fetched 30 Oct 2026 from https://fred.stlouisfed.org/graph/fredgraph.csv?id=SERIES. Fortune 1977: https://fortune.com/article/buffett-how-inflation-swindles-the-equity-investor-fortune-classics-1977/ ("originally published in the May 1977 issue of Fortune"). Fortune 1999: cached at .cache/sources/fortune-1999-11-22.txt ("Mr. Buffett on the Stock Market", 22 Nov 1999).
| # | Claim (as written) | Source |
|---|---|---|
| 1 | 10-year Treasury 15.84% on 30 Sep 1981 (series high); 0.52% on 4 Aug 2020 (series low); ~30× | FRED DGS10 |
| 2 | Buffett's 1999 talk: rates move every investment's value | Fortune, 22 Nov 1999 |
| 3 | Risk-free rate concept; 5% Treasury vs 6–7% corporate bond | labelled example |
| 4 | Chart 5.1: 10-year yield 1962–2026 and CPI 12-month change; late Oct 2026 ≈ 5% (5.05% on 28 Oct); 1967 range 4.45–5.87% | FRED DGS10, CPIAUCSL (12-month change computed); data build/charts/data/ch05-*.json |
| 5 | $1,000 in 10 years worth $905 / $614 / $247 at 1% / 5% / 15% | calculation, labelled example |
| 6 | Quote: "These act on financial valuations the way gravity acts on matter: The higher the rate, the greater the downward pull." Allen & Co., Sun Valley, July 1999 | Fortune, 22 Nov 1999 (verbatim, checked by hand against cached text) |
| 7 | Other variables obscure the effect; "invisible pull of gravity" | Fortune, 22 Nov 1999 (paraphrase) |
| 8 | Growth stocks fell hardest in 2022 | pointer to Chapter 30 |
| 9 | Book value end-1964 bought ~half an ounce of gold; fifteen years later the same half ounce | 1979 letter |
| 10 | Quote: "The average tax-paying investor is now running up a down escalator whose pace has accelerated to the point where his upward progress is nil." | 1980 letter (checked) |
| 11 | ROE ~12% through the postwar decades; "equity coupon"; 5% paid out, 7% retained; 50% tax on dividends, 30% on gains; ~7% after tax; 7% inflation → ~0 | Fortune, May 1977 |
| 12 | Quote: "12% before taxes and inflation; 7% after taxes and before inflation; and maybe zero percent after taxes and inflation." | Fortune, May 1977 (verbatim, checked by hand) |
| 13 | Quote: "The inflation tax has a fantastic ability to simply consume capital." | Fortune, May 1977 (verbatim, checked by hand) |
| 14 | Widow, 5% passbook; 100% tax / 120% tax; "doesn't seem to notice that 6% inflation is the economic equivalent." | Fortune, May 1977 (checked by hand) |
| 15 | Inflation ~7% in 1977 (CPI Dec 1977 +6.7% y/y) | FRED CPIAUCSL |
| 16 | Dollar fell 86% since 1965; $7 buys what $1 did; T-bills 5.7% over 47 years; 25% tax → 1.4 points; inflation 4.3 points; inflation tax more than triple income tax | 2011 letter |
| 17 | Earnings-yield definition; $5 / $100 = 5% | labelled example |
| 18 | S&P 500 earnings yield: Jan 1965 5.33%, Jan 1982 12.94%, Jan 2000 3.44%, Jan 2021 2.78%, 29 Oct 2026 3.80%; Jan 1981 11.08% | multpl.com, "S&P 500 Earnings Yield by Year" (https://www.multpl.com/s-p-500-earnings-yield/table/by-year), fetched 30 Oct 2026 |
| 19 | 10-year yield Jan 1965 4.19%, Jan 1982 14.59%, Jan 2000 6.66%, Jan 2021 1.08% (monthly averages); 28 Oct 2026 5.05% | FRED GS10, DGS10 |
| 20 | CPI +9.0% in 1978, +13.3% in 1979 (Dec/Dec); 12-month peak 14.6% Mar 1980 | FRED CPIAUCSL (computed) |
| 21 | Paul Volcker became Fed chairman 6 Aug 1979 | https://www.federalreservehistory.org/people/paul-a-volcker |
| 22 | Fed funds averaged 19.1% in June 1981 | FRED FEDFUNDS |
| 23 | 30-year Treasury 15.21% on 26 Oct 1981 | FRED DGS30 |
| 24 | Dow 874.12 (31 Dec 1964), 875.00 (31 Dec 1981); GDP +370% | Fortune, 22 Nov 1999 |
| 25 | S&P 500 with dividends ~6.3%/yr 1965–1981 (compounded from table); CPI ~6.7%/yr Dec 1964–Dec 1981 (31.25 → 94.1) | 2025 letter performance table; FRED CPIAUCSL |
| 26 | S&P 500 low 102.42 on 12 Aug 1982; 140.64 at end of 1982 (+37%) | Yahoo Finance ^GSPC closes |
| 27 | $1M in the Dow on 16 Nov 1981 → $19,720,112 at 31 Dec 1998, 19% a year | Fortune, 22 Nov 1999 |
| 28 | Quote: "Such favored business must have two characteristics: (1)… (2)… minor additional investment of capital." | 1981 letter (checked) |
| 29 | "For inflation acts as a gigantic corporate tapeworm."; 8–10% ROE business has no leftovers; "The tapeworm of inflation simply cleans the plate." | 1981 letter (checked) |
| 30 | Productive assets "while requiring a minimum of new capital investment"; farms, real estate, Coca-Cola, IBM, See's pass; regulated utilities fail | 2011 letter (checked) |
| 31 | Fed cut short-term rate to almost zero (Fed funds 0.05% Apr 2020) | FRED FEDFUNDS |
| 32 | Quote: "Can you believe that the income recently available from a 10-year U.S. Treasury bond – the yield was 0.93% at yearend – had fallen 94% from the 15.8% yield available in September 1981?"; "not the place to be these days"; "a bleak future" | 2020 letter (checked) |
| 33 | CPI +9.0% in 12 months to June 2022, highest since Nov 1981 | FRED CPIAUCSL (computed) |
| 34 | S&P 500 −19.4% in 2022 (4,766.18 → 3,839.50) | Yahoo Finance ^GSPC closes |
| 35 | CPI +4.0% in 12 months to Sep 2026; 10-year near 5%, highest since 2007 (2008–2025 max 4.98% on 19 Oct 2023; 5.12% on 20 Oct 2026) | FRED CPIAUCSL, DGS10 |
| 36 | "cash is trash" early 1980s, "cash is king" late 2008; fixed-dollar investments "at their most attractive level in memory" | 2011 letter (checked) |
| 37 | Thought experiment: 15.21% 30-year bond; $1 at 15% for 30 years ≈ $66; S&P 500 with dividends 1982–2011 ≈ $22.6 per $1 (≈11%/yr) | FRED DGS30; arithmetic; 2025 letter performance table (compounded) |
Consistency edit, 2026-10-30
Earnings yield vs bond yield comparison trimmed (owner: ch22); ch5 keeps the definition and the gravity intuition.
Chapter 6 Investing or Speculating? Know Which Game You're In
Letters cited by subject year (cached in .cache/letters/, checked with build/tools/check-quotes.py). Prices from Yahoo Finance via build/tools/fetch-prices.sh (GC=F, BTC-USD, ^SP500TR, XOM), fetched 30 Oct 2026.
| # | Claim (as written) | Source |
|---|---|---|
| 1 | Gold stock ~170,000 metric tons; cube ~68 ft; baseball infield; $1,750/oz; $9.6 trillion; all U.S. cropland (400M acres, ~$200B output) + 16 Exxon Mobils (>$40B a year each) + ~$1 trillion left | 2011 letter (dated 25 Feb 2012) |
| 2 | Gold ~$4,000 today ($4,031.40 close, 29 Oct 2026) | Yahoo Finance GC=F |
| 3 | Investing defined as transferring purchasing power now with the reasoned expectation of more purchasing power, after taxes, later; three categories | 2011 letter |
| 4 | Quote: "Their beta may be zero, but their risk is huge." | 2011 letter (checked) |
| 5 | "are not inspired by what the asset itself can produce – it will remain lifeless forever – but rather by the belief that others will desire it even more avidly in the future"; tulips; gold favourite of the fearful; limited industrial/decorative demand; bandwagon investors "create their own truth – for a while"; internet stocks and houses | 2011 letter (checked) |
| 6 | Quote: "You can fondle the cube, but it will not respond." | 2011 letter (checked) |
| 7 | "right to be fearful" about paper money | 2011 letter |
| 8 | Figure 6.2 (2026): 222,600 tonnes above-ground (end-Q2 2026); cube 22.6 m (~74 ft) | World Gold Council, https://www.gold.org/goldhub/data/how-much-gold |
| 9 | U.S. cropland value $6,020/acre (2026) × 400M acres ≈ $2.4T | USDA NASS, Land Values 2026 Summary (Jul 2026), https://www.nass.usda.gov/Publications/Todays_Reports/reports/land0726.pdf |
| 10 | Exxon Mobil shares 4,144,947,162 (31 Mar 2026) × $183.29 (29 Oct 2026) ≈ $760B; 2025 net income $28.844B | Exxon Mobil Form 10-Q Q1 2026 and Form 10-K 2025 (SEC XBRL companyfacts); Yahoo Finance XOM |
| 11 | Gold $1,775.10 (24 Feb 2012) → $4,031.40 (29 Oct 2026): $1,000 → ~$2,270; S&P 500 TR 2,352.34 → 17,324.68: $1,000 → ~$7,360 | Yahoo Finance GC=F, ^SP500TR; build/charts/data/ch06-*.json |
| 12 | Gold low $1,050.80 (17 Dec 2015, −41%); peak $5,318.40 (29 Jan 2026, 3.0×); ~24% below peak on 29 Oct; 2015 low → peak 5.1× vs S&P TR 4.1× | Yahoo Finance GC=F, ^SP500TR (calculated) |
| 13 | Quote: "But it is not a game in which Charlie and I wish to play. We bring nothing to the party, so why should we expect to take anything home?"; "in which the focus is not on what an asset will produce but rather on what the next fellow will pay for it"; "neither illegal, immoral nor un-American" | 2000 letter (checked) |
| 14 | "Nothing sedates rationality like large doses of effortless money"; "speculation is most dangerous when it looks easiest." | 2000 letter (checked) |
| 15 | 66,465 households, large discount broker, 1991–1996; most active 11.4%, market 17.9%, average household 16.4%, 75% annual turnover | Barber & Odean, "Trading Is Hazardous to Your Wealth", Journal of Finance 55(2), April 2000, abstract: https://ideas.repec.org/a/bla/jfinan/v55y2000i2p773-806.html |
| 16 | Fewer than 1% of day traders predictably and reliably earn positive abnormal returns net of fees (Taiwan) | Barber, Lee, Liu & Odean, "The cross-section of speculator skill: Evidence from day trading", Journal of Financial Markets 18 (2014), abstract: https://ideas.repec.org/a/eee/finmar/v18y2014icp1-24.html |
| 17 | "the size of that circle is not very important; knowing its boundaries, however, is vital" | 1996 letter (checked) |
| 18 | Four Berkshire falls of 37.1%–59.1%; "the strongest argument I can muster against ever using borrowed money to own stocks" | 2017 letter (checked) |
| 19 | Quote: "And as we all learned in third grade – and some relearned in 2008 – any series of positive numbers, however impressive the numbers may be, evaporates when multiplied by a single zero."; leverage "all too often produces zeroes, even when it is employed by very smart people." | 2010 letter (checked) |
| 20 | Liquidity: working level $20B in T-bills, $10B absolute minimum | 2011 letter |
| 21 | Position-sizing 5% / 50% example | labelled example |
| 22 | Bitcoin first Yahoo close $457.33 (17 Sep 2014); $77,775.11 (29 Oct 2026), ~170× | Yahoo Finance BTC-USD |
| 23 | Peaks/troughs: $19,497.40 (16 Dec 2017) → $3,236.76 (15 Dec 2018) −83.4%; $67,566.83 (8 Nov 2021) → $15,787.28 (21 Nov 2022) −76.6%; $124,752.53 (6 Oct 2025) → $58,558.86 (30 Jun 2026) −53.1% | Yahoo Finance BTC-USD (calculated) |
| 24 | 30 Apr 2022 annual meeting: $25 billion for 1% of U.S. farmland / apartment houses; Quote "Now if you told me you own all of the bitcoin in the world and you offered it to me for $25 I wouldn't take it because what would I do with it? I'd have to sell it back to you one way or another."; "The apartments are going to produce rent and the farms are going to produce food." | CNBC, 30 Apr 2022, https://www.cnbc.com/2022/04/30/warren-buffett-gives-his-most-expansive-explanation-for-why-he-doesnt-believe-in-bitcoin.html (verbatim, checked by hand against the CNBC transcript) |
| 25 | Thought experiment: 222,600 t × 32,150.75 oz/t ≈ 7.16B oz × $4,031.40 ≈ $28.9T; cropland $2.4T; remainder $26.4T ≈ 34 Exxons (~$25.8T) + ~$0.6T; 34 × $28.8B ≈ $980B a year | calculations from rows 8–10 |
| 26 | Buffett's 1986 farm valued from crops and costs | 2013 letter (see Chapter 1) |
Chapter 7 The Income Statement Without Tears
Letters cited by subject year (cached in .cache/letters/, checked with build/tools/check-quotes.py). Company figures from Form 10-K filings on sec.gov, read through the SEC XBRL companyfacts API (https://data.sec.gov/api/xbrl/companyfacts/CIK##########.json) and the filed documents, fetched 30 Oct 2026.
| # | Claim (as written) | Source |
|---|---|---|
| 1 | Boeing 2025: sales $89,463M; earnings from operations $4,281M; 2024 loss from operations $10,707M; "Gain on dispositions, net" $9,672M, of which $9,566M from selling Jeppesen, ForeFlight, AerData and OzRunways; result without the gain −$5,391M (−6.0%) | Boeing Form 10-K 2025 (accession 0001628280-26-004357, filed 30 Jan 2026), statement of operations and dispositions note |
| 2 | Coca-Cola 2025 (2024): revenues $47,941M ($47,061M); cost of goods $18,397M; gross profit $29,544M (61.6%); SG&A $14,521M; other operating charges $1,261M ($4,163M; 2023 $1,951M); operating income $13,762M (28.7%; 2024 $9,992M, 2023 $11,311M on $45,754M); interest income $786M; interest expense $1,654M; equity income $2,031M; other income $1,073M; pre-tax $15,998M; tax $2,861M (17.9%); consolidated net income $13,137M; noncontrolling $30M; attributable $13,107M; diluted EPS $3.04 ($2.46); diluted shares 4,313M | Coca-Cola Form 10-K 2025 (accession 0001628280-26-010047, filed 20 Feb 2026) |
| 3 | 2025 charges: $960M BodyArmor impairment; 2024: $3,109M fairlife contingent-consideration remeasurement, $760M BodyArmor; fairlife acquired 2020, liability $6,173M paid March 2025; BodyArmor acquired 2021 | Coca-Cola Form 10-K 2025, other operating charges note |
| 4 | Equity income = proportionate share of net income of equity-method investees | Coca-Cola Form 10-K 2025 |
| 5 | Coca-Cola D&A $1,050M; capital expenditures $2,112M (2025) | Coca-Cola Form 10-K 2025 (XBRL) |
| 6 | Boeing D&A $1,953M; capex $2,942M; R&D $3,615M (2025) | Boeing Form 10-K 2025 (XBRL) |
| 7 | Operating margins: Nvidia FY to Jan 2026 60.4% ($130,387M / $215,938M); Microsoft FY to Jun 2026 46.8% ($155,237M / $331,839M); Apple FY to Sep 2025 32.0% ($133,050M / $416,161M); Walmart FY to Jan 2026 4.2% ($29,825M / $713,163M); Costco FY to Aug 2026 3.9% ($11,685M / $303,154M), gross margin 12.8% | Company Form 10-K filings (XBRL); calculations by the author |
| 8 | Berkshire has owned Coca-Cola since 1988 | 2022 letter (purchases over seven years ending August 1994) |
| 9 | U.S. federal corporate tax rate 21% | Internal Revenue Code §11(b) (Tax Cuts and Jobs Act of 2017) |
| 10 | Quote: "The origins of these charges, though, are never explored. When it comes to corporate blunders, CEOs invoke the concept of the Virgin Birth."; "massive restructuring charges or write-offs that are casually waved off as “nonrecurring.”" | 2000 letter (checked) |
| 11 | "If compensation isn't an expense, what is it?" | 2015 letter (checked by hand, line 939 of cached text) |
| 12 | EBITDA makes them "shudder"; "the tooth fairy pays for capital expenditures" | 2000 letter (checked) |
| 13 | 1983 appendix: Blue Chip paid $17M over net tangible assets; $425,000 a year amortised over 40 years; See's earned $13M after tax on ~$20M net tangible assets (1983); Quote: "In other words, while accounting Goodwill regularly decreased from the moment of purchase, economic Goodwill increased in irregular but very substantial fashion." | 1983 letter, appendix (checked) |
| 14 | See's bought 3 Jan 1972 by Blue Chip Stamps; asking $30M net of $10M excess cash; $7M tangible net worth; $25M paid; 1972 sales $29M, pre-tax $4.2M; 1991 sales $196M, pre-tax $42.4M, record 21.6% pre-tax margin | 1991 letter |
| 15 | "misguided caution could have scuttled a terrific purchase"; competitive advantage not on the balance sheet, pricing power; Quote: "In other words, See's could be expected to gush cash for decades to come."; $1.9B pre-tax since 1972, $40M added investment | 2014 letter (checked) |
| 16 | 16M lb (1972) → 31M lb (2007), ~2%/yr; $8M capital (1972) → $40M; 2007 sales $383M, pre-tax $82M; $1.35B pre-tax since 1972, only $32M reinvested; typical company would need ~$400M to grow from $5M to $82M; Quote: "It's far better to have an ever-increasing stream of earnings with virtually no major capital requirements. Ask Microsoft or Google." | 2007 letter (checked) |
| 17 | Lemonade stand, $1M bottling line, $100M two-company experiment, sales needed at 27% / 5% margins | labelled examples; arithmetic |
| 18 | Top ten ≈ 40% of S&P 500 | Chapter 1 sources |
Chapter 8 The Balance Sheet: What It Owns, What It Owes
Chapter 8 · The Balance Sheet: What It Owns, What It Owes · sources
Checked 2026-10-30. "Letters" = Berkshire letters text in .cache/letters/, quotes verified with
build/tools/check-quotes.py. "LEH-10K" = Lehman Brothers Holdings Inc. Form 10-K for fiscal 2007
(year ended 30 Nov 2007), https://www.sec.gov/Archives/edgar/data/0000806085/000110465908005476/a08-3530_110k.htm
(opened and searched in full text). "BRK-10K-YYYY" = Berkshire Hathaway Form 10-K for that year, from
https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001067983&type=10-K (each filing's
consolidated balance sheet opened and read; each shows two year-ends).
| # | Claim (as written) | Source |
|---|---|---|
| 1 | Lehman FY ended 30 Nov 2007; "fourth consecutive year of record net revenues, net income and diluted EPS"; net income $4,192M; 28,556 employees | LEH-10K (MD&A, selected financial data) |
| 2 | Total assets $691,063M; total stockholders' equity $22,490M | LEH-10K, selected financial data and consolidated balance sheet |
| 3 | Bankruptcy filed Mon 15 Sep 2008; largest bankruptcy filing in U.S. history; more than $600B of assets | https://en.wikipedia.org/wiki/Bankruptcy_of_Lehman_Brothers |
| 4 | "Nine and a half months later" (30 Nov 2007 → 15 Sep 2008) | derived |
| 5 | Berkshire end-2025: total assets $1,222,176M; total liabilities $502,473M; Berkshire shareholders' equity $717,419M; noncontrolling interests $2,284M; unpaid losses etc. are the largest liability group | BRK-10K-2025, consolidated balance sheet |
| 6 | $59 / $41 per $100 of assets (Figure 8.1 uses total equity incl. noncontrolling, 719.7/1222.2 = 58.9%); Lehman $3 / $97 | derived from #2 and #5 |
| 7 | Book value: "For nearly three decades" the first item; dropped in 2018; "a metric that has lost the relevance it once had"; three reasons (operating businesses, mismark, buybacks above book) | Letters 2018 (quote checked) |
| 8 | See's bought early 1972 by Blue Chip Stamps for $25M; ~$8M net tangible assets; $17M goodwill amortised $425,000 a year for 40 years; inline quote "businesses logically are worth far more…market rates of return." | Letters 1983, goodwill appendix (quote checked) |
| 9 | Berkshire goodwill end-2025 $83.1B (55,945 + 27,129), ≈6.8% of assets | BRK-10K-2025; derived |
| 10 | See's sold for cash (no receivables), short production cycle minimised inventories | Letters 2007 |
| 11 | Berkshire leverage 1.70 (1,222,176 / 717,419) | BRK-10K-2025; derived |
| 12 | House with 20% down = leverage 5 | labelled example |
| 13 | Lehman leverage ratio 30.7× (2007), 26.2 (2006), 24.4 (2005), 23.9 (2004), 23.7 (2003), defined as total assets ÷ total stockholders' equity; assets 2003 $312,061M; equity 2003 $13,174M | LEH-10K, selected financial data and note (9) |
| 14 | 1% of assets ≈ $6.9B ≈ 31% of equity; 3.3% = 1/30.7 wipes out equity | derived |
| 15 | S&P 500 fell ≥3.3% in a day 19 times, Sep–Dec 2008 | Yahoo Finance ^GSPC daily closes (.cache/prices/GSPC.csv), computed |
| 16 | Quote card "Borrowers then learn that credit is like oxygen…that's all that is noticed."; inline "only cash will do the job." | Letters 2010 (checked) |
| 17 | Securities sold under agreements to repurchase $181,732M at 30 Nov 2007 | LEH-10K, consolidated balance sheet |
| 18 | Valukas report made public 11 Mar 2010; Repo 105 removed about $50B of assets at its peak in Q2 2008; reported net leverage 12.1 vs 13.9 without | https://en.wikipedia.org/wiki/Report_of_Anton_R._Valukas ; D&O Diary, https://www.dandodiary.com/2010/03/articles/subprime-litigation/lehman-bankruptcy-examiner-cites-companys-balance-sheet-manipulation/ (purpose: "manage its balance sheet") |
| 19 | Quote card "After all, you only find out who is swimming naked when the tide goes out." (context: reinsurers relying on retrocessionaires) | Letters 2001 (checked) |
| 20 | Lehman return on average common equity 20.8% in 2007; equity +70% 2003→2007 (13,174 → 22,490) | LEH-10K; derived |
| 21 | Bear Stearns: defunct 16 Mar 2008; JPMorgan $2 a share, raised to $10 on 24 Mar 2008 | https://en.wikipedia.org/wiki/Bear_Stearns |
| 22 | Q2 2008 loss $2.8B reported June 2008 | https://en.wikipedia.org/wiki/Bankruptcy_of_Lehman_Brothers (citing a 9 Jun 2008 report) |
| 23 | 9 Sep 2008 shares −45% to $7.79 after reports Korean talks on hold; Dow −500 points (−4.4%) on 15 Sep | same Wikipedia article |
| 24 | Berkshire invested $15.6B in 25 days of panic after Lehman's bankruptcy | Letters 2010 |
| 25 | Inline "The fundamental principle of auto racing is that to finish first, you must first finish."; pledge ≥$10B cash excl. utility/railroad, customarily ≥$20B; Katrina-scale losses | Letters 2010 (checked) |
| 26 | Quote card "We never want to count on the kindness of strangers…chance of extra profits." | Letters 2008 (checked) |
| 27 | Cash + T-bills by year-end ($B): 2015 64.6, 2016 74.9, 2017 116.0, 2018 111.9, 2019 128.0, 2020 138.3, 2021 146.7, 2022 128.6, 2023 167.6, 2024 334.2, 2025 373.3 (insurance-and-other cash + short-term T-bills + railroad/utilities/energy cash) | BRK-10K-2016, -2018, -2020, -2022, -2024, -2025 balance sheets; sums in build/charts/data/ch08-brk-cash.json. Cross-check: Letters 2017 ($116.0B), 2025 Abel letter ("now exceed $370 billion") |
| 28 | Equity securities on balance sheet $353.8B (2023) → $271.6B (2024) | BRK-10K-2024 |
| 29 | Borrowings end-2025 ≈ $129.1B (notes payable 45,763 + 83,318) | BRK-10K-2025 |
| 30 | Abel CEO from start of 2026; inline "We maintain a fortress-like balance sheet, ensuring Berkshire's foundation is never compromised." | Letters 2025 (Abel), Financial Strength section (checked); CEO date per sources/ch31.md (NBC San Diego) |
| 31 | Inline "earning a pittance at present. But we sleep well." ($20B-plus cash) | Letters 2009 (checked) |
| 32 | Five-question thresholds (under 2 conservative, above 5 high, banks 10+) | author's rule of thumb, labelled "as a rough guide" |
| 33 | Two houses thought experiment | labelled example |
| 34 | S&P 500 fell >30% from a high five times since 1973 (1973–74, 1987, 2000–02, 2007–09, 2020) | Yahoo ^GSPC closes, computed |
Dropped
- Lehman's $639B asset figure at filing (only secondary sources; used "more than $600 billion").
- Repo 105 amounts by quarter ($38.6B, $49.1B, $50.38B): could not open the examiner's report itself; kept "about $50 billion" at the Q2 2008 peak.
- "Overnight" funding detail: not verified in the 10-K; replaced by the repo balance.
Consistency edit, 2026-10-30
"Swimming naked" (2001 letter) quote card converted to inline; the card (2007 wording) lives in ch28.
Chapter 9 Cash Is a Fact: Cash Flow and Owner Earnings
Chapter 9 · Cash Is a Fact: Cash Flow and Owner Earnings · sources
Checked 2026-10-30. "Letters" = Berkshire letters text in .cache/letters/, quotes verified with
build/tools/check-quotes.py. "META-XBRL" = Meta Platforms 10-K figures from SEC XBRL company facts,
https://data.sec.gov/api/xbrl/companyfacts/CIK0001326801.json (fiscal-year 10-K values, fetched
2026-10-30). "META-Q3" = "Meta Reports Third Quarter 2026 Results",
https://investor.atmeta.com/investor-news/press-release-details/2026/Meta-Reports-Third-Quarter-2026-Results/default.aspx (opened).
| # | Claim (as written) | Source |
|---|---|---|
| 1 | Q3 2026 revenue $64.601B (+26%); purchases of property and equipment $33.942B; FCF −$2.120B (Q3 2025 +$10.625B); D&A $7.154B; SBC $7.363B; 2026 capex outlook $135–145B incl. finance-lease principal | META-Q3 |
| 2 | "first cash outflow in more than a decade"; shares −7.5% | Reuters via GV Wire, 22 Oct 2026, https://gvwire.com/2026/10/22/wall-street-sinks-as-nasdaq-falls-over-2-on-ai-cost-worries/ |
| 3 | Bakery, delivery truck, landlord, four-line recipe numbers | labelled examples |
| 4 | Inline "References to EBITDA make us shudder," and "the tooth fairy pays for capital expenditures?" | Letters 2000 (checked) |
| 5 | Quote card "I wish we could keep our businesses competitive…how to do so."; BNSF depreciation "falls far short of the capital outlays needed to merely keep the railroad running properly"; true at all railroads | Letters 2015 (checked) |
| 6 | FlightSafety bought 1996; 1996 pre-tax operating earnings $111M; depreciation since purchase $923M; capex $1.635B; simulators >$12M each (273 of them) to match new airplane models; 2007 pre-tax operating earnings $270M | Letters 2007 |
| 7 | Scott Fetzer bought 1986, includes World Book; appendix title "Purchase-Price Accounting Adjustments and the 'Cash Flow' Fallacy"; owner earnings (a)+(b)−(c); "to fully maintain its long-term competitive position and its unit volume"; working-capital increment; (c) a guess; Keynes "I would rather be vaguely right than precisely wrong."; oil industry; Scott Fetzer (c) ≈ old (b) of $8.3M | Letters 1986 and appendix (quotes checked) |
| 8 | Quote card "Most managers probably will acknowledge…competitive position." | Letters 1986 (checked) |
| 9 | Buffett on options as compensation since 1992 ("If options aren't a form of compensation, what are they?") | Letters 1992 |
| 10 | Quote card "If compensation isn't an expense, what is it? And, if real and recurring expenses don't belong in the calculation of earnings, where in the world do they belong?" | Letters 2015 (checked) |
| 11 | SBC usually ≥20% of total pay for top three or four executives at most large companies; Berkshire pays in cash and expenses it | Letters 2016 |
| 12 | Meta 2025: net income $60.46B; D&A $18.62B; SBC $20.43B; cash from operations $115.80B; purchases of P&E $69.69B; finance-lease principal $2.52B | META-XBRL |
| 13 | Derived 2025: FCF $43.59B; FCF − SBC $23.16B; NI + D&A − all capex (incl. leases) $6.87B; capex/D&A 3.7× | derived from #12 |
| 14 | Meta capex and D&A 2016–2024 (ratio ~1.9× to ~3.6×) | META-XBRL; build/charts/data/ch09-meta-capex.json |
| 15 | Q3 2026 capex/D&A ≈ 4.7× ("nearly five times") | derived from #1 |
| 16 | U.S. carrier capex $97B (2000), $77B (2001), $46–51B expected (2002), RHK data | Meghan Fuller, "Surviving the crunch in capital expenditures", Lightwave, 1 May 2002, https://www.lightwaveonline.com/business/earnings-statements/article/16648149/surviving-the-crunch-in-capital-expenditures |
| 17 | Global Crossing bankrupt January 2002, listed assets $22.4B, never a profitable year | https://en.wikipedia.org/wiki/Global_Crossing |
| 18 | SEC charged WorldCom 26 Jun 2002; ~$3.8B of costs capitalised instead of expensed ($3.055B in 2001, $797M in Q1 2002) | SEC litigation release 17588, https://www.sec.gov/litigation/litreleases/lr-17588 |
| 19 | WorldCom Chapter 11 on 21 Jul 2002, largest U.S. filing at the time | https://en.wikipedia.org/wiki/MCI_Inc. |
| 20 | Meta 2025 FCF $43.6B ("threw off") | derived from #12 |
| 21 | Meta presents spending as investment in AI data centres | general description; no number attached |
Dropped
- FDIC 2002 telecom paper (link dead) and all "percent of fibre lit" figures: sources disagree.
- Meta cash and securities at 30 Sep 2026 ($82.45B in Ch 31): not re-checked here, so not used.
- Inflation adjustment of the 2000 telecom figure: no CPI source opened; text says figures are nominal.
- FlightSafety pilot counts: not in the letter.
Consistency edit, 2026-10-30
2015 "If compensation isn't an expense" quote card converted to an inline quote of its first sentence; the card (1992 wording) lives in ch12.
Chapter 10 Return on Capital: How Much Each Dollar Earns
Chapter 10 · Return on Capital: How Much Each Dollar Earns · sources
Checked 2026-10-30. "Letters" = Berkshire letters text in .cache/letters/, quotes verified with
build/tools/check-quotes.py (the 1983 text has lost its apostrophes, so the 1983 card uses a
sentence without any).
| # | Claim (as written) | Source |
|---|---|---|
| 1 | See's bought early 1972 by Blue Chip Stamps (controlled by Buffett and Munger) for $25M; boxed chocolates; capital required $8M; pre-tax earnings < $5M; sales $30M | Letters 2007; Letters 1983 appendix ("early in 1972", ~$8M net tangible assets, ~$2M after tax) |
| 2 | 2007: sales $383M, pre-tax profits $82M, capital $40M; only $32M reinvested since 1972; pre-tax earnings totalled $1.35B, all but $32M sent to Berkshire/Blue Chip | Letters 2007 |
| 3 | USAir: $358M of 9.25% preferred, convertible at $60, 1989 | Letters 1989, 1996 |
| 4 | USAir lost $2.4B 1990–1994, wiping out common book equity; dividend suspended Sep 1994; written down 75% to $89.5M (25 cents on the dollar) at end-1994 | Letters 1994, 1996 |
| 5 | "we then got very lucky"; sold in 1998 for a hefty gain; bankrupt twice in the following decade | Letters 2007 |
| 6 | $10M on $200M vs $5M on $20M | labelled-style illustration (round numbers in prose, no company) |
| 7 | See's 1972 "60% pre-tax on invested capital"; sold for cash, short cycle | Letters 2007 |
| 8 | Quote card "What a business can be expected to earn on unleveraged net tangible assets…economic attractiveness of the operation." | Letters 1983 appendix (checked) |
| 9 | Lehman return on average common equity 20.8% (2007); net income $4.192B; assets $691.063B (0.6%); leverage ~31 | Lehman 2007 Form 10-K, https://www.sec.gov/Archives/edgar/data/0000806085/000110465908005476/a08-3530_110k.htm (see sources/ch08.md) |
| 10 | Typical company needs ~$400M to grow from $5M to $82M; inline "growing businesses have both working capital needs that increase in proportion to sales growth and significant requirements for fixed asset investments."; "nothing shabby"; ~20.5% | Letters 2007 (checked); 82/400 derived |
| 11 | See's 2007 return 205% (82/40); margin 21.4% (82/383); turnover 9.6 (383/40) | derived from #2 |
| 12 | FlightSafety: bought 1996, pre-tax $111M → $270M in 2007 (+$159M); net fixed assets $570M → $1.079B (incremental investment $509M); "good, but far from See's-like"; return ≈31% | Letters 2007; 159/509 derived |
| 13 | Store example (3% margin × 10 turnover = 30%) | labelled example |
| 14 | Inline "attracted by growth when they should have been repelled by it." | Letters 2007 (checked) |
| 15 | Great/good/gruesome savings accounts; utilities in the "good" category; quote card "Finally, the gruesome account…disappointing returns." | Letters 2007 (checked) |
| 16 | Inline "a holdover from the days when regulation protected profits."; analysis "superficial and wrong"; history/librarians quote card; Branson "Start as a billionaire and then buy an airline."; penalty dividends 5 points over prime, compounding at 13.25–14%; $47.9M paid in 2H 1996; tried to sell at 50% of face in 1995 ("Fortunately, I was unsuccessful") | Letters 1996 (checked) |
| 17 | "unforced error" (1990 Annual Report) | Letters 1990, 1994 |
| 18 | 1997: arrears made up; common from low $4 to recent high $73; Stephen Wolf; "unblemished by success" | Letters 1997 |
| 19 | See's earns most revenue in a few states; per-capita consumption extremely low and not growing; 16M lbs (1972) → 31M lbs (2007), ~2% a year | Letters 2007 |
| 20 | Quote card "There's no rule that you have to invest money where you've earned it."; often a mistake; great businesses can't reinvest a large portion at high returns for long | Letters 2007 (checked) |
| 21 | Lemonade stand / railroad: $1,379, $216, $769 ($200 + $569) | example computed by the author (30% vs 8%, $200 cap, 10 years, no tax) |
| 22 | 21% U.S. federal corporate tax rate used in the Try-it | U.S. federal statutory rate since 2018 (Tax Cuts and Jobs Act); labelled as an example rate |
Dropped
- See's "chain of shops in California": not in the letters opened; replaced with "boxed chocolates with its own shops".
- Ten-year Treasury comparison for a 5% return: not re-sourced here.
- FlightSafety pilot volumes; ROIC bars for named listed companies (would need a separate dataset with consistent definitions).
Chapter 11 Debt: The Friend Who Turns on You
Chapter 11 · Debt: The Friend Who Turns on You · sources
Checked 2026-10-30. In order of appearance. "Derived" = arithmetic by the author from the sourced inputs.
Short names
| Short | Source |
|---|---|
| PWG | President's Working Group on Financial Markets, "Hedge Funds, Leverage, and the Lessons of Long-Term Capital Management", April 1999, https://www.cftc.gov/sites/default/files/tm/tmhedgefundreport.htm (full text read) |
| MCD | William J. McDonough (FRBNY), testimony to the House Committee on Banking and Financial Services, 1 Oct 1998, BIS Review 78/1998, https://www.bis.org/speeches/19981012-mr-mcdonough-describes-role-frbny-events-leading-private-sector-recapitalization-long-term-capital-management.pdf |
| FRH | Federal Reserve History, "Near Failure of Long-Term Capital Management", https://www.federalreservehistory.org/essays/ltcm-near-failure |
| UF98 | Buffett, lecture at the University of Florida School of Business, 15 October 1998. PARAPHRASE ONLY since 2026-10-30: no official recording or reputable transcript found; the two fan transcripts disagree on wording (novelinvestor.com excerpt: "risked what they did have and did need. That is foolish"; intelligentinvestorclub transcript PDF hosted at https://www.rbcpa.com/wp-content/uploads/2016/12/Buffett_UofFL_19981015.pdf: "risked what they did have and what they did need. That is just plain foolish; it doesn't matter what your IQ is"). Quote card removed; prose paraphrase without quote marks. |
| SECMARGIN | SEC, "Margin: Borrowing Money to Pay for Stocks", https://www.sec.gov/reportspubs/investor-publications/investorpubsmarginhtm.html |
| IGMARGIN | Investor.gov glossary, "Margin Call", https://www.investor.gov/introduction-investing/investing-basics/glossary/margin-call |
| COX | SEC press release 2008-48, Chairman Cox letter to the Basel Committee, 20 Mar 2008, https://www.sec.gov/news/press/2008-48.htm |
| L2005 / L2008 / L2010 / L2017 | Berkshire letters, berkshirehathaway.com/letters (checked with build/tools/check-quotes.py) |
| YF | Yahoo Finance daily closes for ^GSPC, .cache/prices/GSPC.csv (fetched 2026-10-30) |
Claims in order
| Claim | Source |
|---|---|
| 23 Sep 1998 meeting at FRBNY; investor-group offer with 12:30 p.m. deadline, not accepted; 14 firms agree that evening | MCD |
| Offer from a group led by Buffett ($250M for partners plus $3.75B injection) | FRH |
| LTCM capital $4.8B on 1 Jan 1998; $2.3B at end of Aug; >$125B assets on 31 Aug 1998 | PWG |
| 14 firms, about $3.6B ($3.625B) for 90% | PWG; FRH |
| Two Nobel laureates among principals; Merton and Scholes named | FRH; UF98 |
| S&P 500 finished 1998 up (970.43 → 1,229.23, +26.7%) | YF; derived |
| $10,000 + $10,000 margin examples; 1/leverage wipe-out rule | Example arithmetic |
| Quote card "When leverage works… leverage is addictive." | L2010 |
| "very few people retreat to more conservative practices" | L2010 |
| Chart 11.1 ratios: Reg T 50% (2 to 1); big bank holding cos ~14 to 1 and five largest investment banks 27 to 1 at year-end 1998; LTCM >25 to 1 | SECMARGIN; PWG |
| Regulation T up to 50%; at least 25% maintenance; can lose more than invested; may sell "without consulting you" | SECMARGIN |
| Firm decides which securities to sell; may sell before the stated deadline | IGMARGIN |
| Berkshire fell 50.7% from 19 Sep 2008 to 5 Mar 2009 (four falls table) | L2017 |
| Call at about a one-third fall at 2 to 1 (equity/value = 25% when value = 2/3 of start) | Derived |
| Quote card "When major declines occur… not handicapped by debt." | L2017 |
| Quote card "Companies with large debts often assume…usually valid." ; "a worldwide shortage of credit"; only cash will do | L2010 |
| Bear Stearns liquidity pool $18.0B (7 Mar), $18.1B (10 Mar), $11.5B (11 Mar), $12.4B (12 Mar), $2B (13 Mar); JPMorgan deal Sun 16 Mar 2008; capital met standards; quote "Counterparty withdrawals…caused Bear's demise" | COX |
| Lehman six months later (Sep 2008) | Chapter 8 sources; Reuters via Mail & Guardian, 13 Mar 2010, https://mg.co.za/article/2010-03-13-examiner-sees-accounting-gimmicks-in-lehman-demise |
| Covenant "three times operating profit" | Example |
| LTCM founded early 1994 by John Meriwether, former Salomon vice chairman | PWG; FRH |
| Convergence trades; ~80% of balance-sheet positions in G-7 government bonds | PWG |
| Returns ~40% after fees 1995 and 1996, a little under 20% 1997; $2.7B returned end-1997, capital down ~36% to $4.8B; positions not reduced | PWG |
| >$500B futures, >$750B swaps, >$150B options/OTC; >60,000 trades | PWG |
| Russia devaluation and debt moratorium 17 Aug 1998; flight to quality | PWG |
| 31 Jul 1998 capital $4.1B (−15%); August loss $1.8B | PWG |
| Collateral demands; Bear Stearns as prime broker required collateral; "bleak" by 21 Sep; default possible 23 Sep | PWG |
| Original owners written down to 10% | PWG |
| Rescuers' $3.6B returned by end of 1999 | FRH |
| Losses "greatly exceeded what conventional risk models, estimated during more stable periods, suggested were probable" | PWG (verbatim) |
| 16 partners, high average IQ; paraphrase: risked money they had and needed to make money they neither had nor needed, foolish whatever your IQ (quote card REMOVED 2026-10-30, wording unverifiable) | UF98 |
| "a long string of impressive numbers multiplied by a single zero always equals zero" | L2005 |
| Three model failures (size of losses, correlations, liquidity) | PWG |
| "stupefying losses"; history-based models; quote card "Investors should be skeptical… Beware of geeks bearing formulas." | L2008 |
| "to finish first, you must first finish"; penalize returns "by a minor amount"; cash lets him sleep well | L2010 |
| S&P 500 peak 1,565.15 on 9 Oct 2007; first close ≤ 2/3 of peak 7 Oct 2008 (996.23); first close ≤ half 20 Nov 2008 (752.44); low 676.53 on 9 Mar 2009 (−56.8%); first close above peak 28 Mar 2013 (1,569.19) | YF; derived |
Chapter 12 When the Numbers Lie: Accounting Red Flags
Chapter 12 · When the Numbers Lie: Accounting Red Flags · sources
Checked 2026-10-30. In order of appearance. "Derived" = arithmetic by the author from the sourced inputs.
Short names
| Short | Source |
|---|---|
| ENRON8K | Enron Corp. Form 8-K filed 8 Nov 2001, https://www.sec.gov/Archives/edgar/data/1024401/000095012901503835/h91831e8-k.txt (Table 1 Restatements; LJM description) |
| WIKI-ENRON | Wikipedia, "Enron scandal" (raw text read 2026-10-30), https://en.wikipedia.org/wiki/Enron_scandal |
| WIKI-AA | Wikipedia, "Arthur Andersen", https://en.wikipedia.org/wiki/Arthur_Andersen (Big Five; 31 May 2005 Supreme Court reversal) |
| WIKI-WC | Wikipedia, "WorldCom scandal", https://en.wikipedia.org/wiki/WorldCom_scandal |
| SECWC | SEC v. WorldCom, complaint 26 Jun 2002, https://www.sec.gov/litigation/complaints/complr17588.htm ; Litigation Release 17588, 27 Jun 2002, https://www.sec.gov/litigation/litreleases/lr17588.htm |
| TIME02 | Time, "Persons of The Year 2002: The Whistleblowers", Lacayo and Ripley, https://content.time.com/time/subscriber/article/0,33009,1003998,00.html |
| SECWM | SEC Litigation Release 17435, 26 Mar 2002 (Waste Management), https://www.sec.gov/litigation/litreleases/lr17435.htm |
| SECBMS | SEC press release 2004-105, 4 Aug 2004 (Bristol-Myers Squibb), https://www.sec.gov/news/press/2004-105.htm |
| SECSUN | SEC Litigation Release 17001, 15 May 2001 (Sunbeam), https://www.sec.gov/litigation/litreleases/lr17001.htm |
| REPO105 | Reuters via Mail & Guardian, 13 Mar 2010, "Examiner sees accounting gimmicks in Lehman demise", https://mg.co.za/article/2010-03-13-examiner-sees-accounting-gimmicks-in-lehman-demise |
| L1992 / L1998 / L2000 / L2002 / L2004 | Berkshire letters (checked with build/tools/check-quotes.py) |
Claims in order
| Claim | Source |
|---|---|
| 8 Nov 2001 restatement of 1997–2000 and 2001 quarters; unconsolidated entities | ENRON8K |
| Revenue more than $100B in 2000 ($100.7B) | WIKI-ENRON |
| $591M overstatement 1997–2000 (96+113+250+132) | ENRON8K; derived |
| Bankruptcy 2 Dec 2001; $63.4B assets; largest until WorldCom | WIKI-ENRON |
| Shares $90.75 high Aug 2000; $0.61 close on 28 Nov 2001 | WIKI-ENRON |
| Andersen one of the "Big Five" | WIKI-AA |
| Red-flags figure (compiled) | all case sources below; L2002 |
| "it's okay to manipulate earnings to satisfy what they believe are Wall Street's desires"; "actually their duty"; "Son of Gresham" | L1998 |
| Quote card "Managers that always promise…make up the numbers." | L2002 |
| Restructuring charge; golf analogy (140, 80, 80, 80, 80 vs 91, 94, 89, 94, 92) | L1998 |
| Recurring net income $515M vs reported $105M vs restated $9M (1997); chart values 1997–2000 | ENRON8K |
| "the tooth fairy pays for capital expenditures" | L2000 |
| WorldCom second-largest U.S. long-distance company | WIKI-WC |
| Line costs; transfers "sufficient to keep WorldCom's earnings in line with the analysts' consensus"; from at least Q1 2001 | SECWC |
| Line costs reported $14.739B vs ~$17.794B; pre-tax $2.393B reported vs ~$662M loss; Q1 2002 $240M vs ~$557M loss; ~$3.8B capitalized | SECWC |
| Cynthia Cooper, internal audit; Time Persons of the Year 2002 with Watkins and Rowley | TIME02; WIKI-WC |
| Bankruptcy 21 Jul 2002, largest at the time; >$11B; Ebbers 25 years in 2005 | WIKI-WC; WIKI-ENRON |
| Truck example ($200,000; 8 vs 12 years; $20,000 salvage; 10,000 trucks → $100M) | Example arithmetic |
| Waste Management 1992–1997 scheme; useful lives and salvage values; landfill write-offs; capitalized expenses; restatement Feb 1998 ~$1.7B, largest at the time; Andersen "repeatedly issued unqualified audit reports"; >$6B lost, stock down >33%; new CEO review mid-1997 | SECWM |
| Bristol-Myers $150M settlement, Q1 2000–Q4 2001 channel stuffing, $1.5B revenue, carrying costs and guaranteed return | SECBMS |
| Sunbeam: at least $60M of $189M 1997 income; channel stuffing; worse 1998 | SECSUN |
| Receivables test (10% vs 40%) | Example |
| Lucent–Winstar >$700M | Chapter 27 sources (RCR Wireless News, 23 Apr 2001) |
| Chewco, JEDI, LJM; Fastow managed LJM general partners; debt restated +$711M (1997), +$628M (2000); $1.2B equity reduction Q3 2001; related-party review | ENRON8K |
| Repo 105, ~$50B removed temporarily in 2008; examiner report March 2010 | REPO105 |
| Quote card "In our view, however, derivatives are financial weapons of mass destruction…" | L2002 |
| Derivatives footnotes: "we don't understand how much risk the institution is running" (paraphrased) | L2002 |
| Quote card "Second, unintelligible footnotes…doesn't want you to." ; "Enron's descriptions of certain transactions still baffle me." | L2002 |
| Mark-to-market; Blockbuster 20-year deal July 2000, >$110M estimated profit after pilots, withdrawn March 2001 | WIKI-ENRON |
| Watkins letter to Kenneth Lay, summer 2001 | TIME02 |
| Q3 2001 loss $618M; $1.2B equity cut (16 Oct 2001 announcement date) | ENRON8K (amounts); WIKI-ENRON (date) |
| Skilling resigned 14 Aug 2001, about six months in, personal reasons | WIKI-ENRON |
| Andersen convicted 15 Jun 2002; Supreme Court reversed unanimously 31 May 2005 (jury instructions) | WIKI-ENRON; WIKI-AA |
| Auditors "generally viewed the CEO, rather than the shareholders or directors, as their client"; four audit-committee questions | L2002 |
| Quote card "If options aren't a form of compensation…" | L1992 |
| Option expensing mandatory from 15 June 2005 | L2004 |
| Quote card "Berkshire has kept entirely clear…than with our accounting." | L1998 |
| Visible low road → hidden low road (2002 "Three suggestions") | L2002 |
| Enron's shares fell six more weeks after 16 Oct 2001, to $0.61 on 28 Nov | WIKI-ENRON |
Chapter 13 What a Moat Is, and How Long It Lasts
Chapter 13 · What a Moat Is, and How Long It Lasts · sources
Checked 2026-10-30. In order of appearance. "Derived" = arithmetic by the author from the sourced inputs.
Short names
| Short | Source |
|---|---|
| EK97 | Eastman Kodak Form 10-K for 1997, https://www.sec.gov/Archives/edgar/data/31235/0000031235-98-000001.txt (Summary of Operating Data 1993–1997; MD&A; restructuring note) |
| EK01 | Eastman Kodak Form 10-K for 2001, https://www.sec.gov/Archives/edgar/data/31235/0000031235-02-000002.txt (Summary of Operating Data 1997–2001; Employment) |
| EK11 | Eastman Kodak Form 10-K for 2011, https://www.sec.gov/Archives/edgar/data/31235/000003123512000036/ek2011_10k.htm (Chapter 11 filing 19 Jan 2012; Summary of Operating Data; employees; digital camera phase-out; "competitive pricing pressures") |
| KO97 | The Coca-Cola Company Form 10-K for 1997, https://www.sec.gov/Archives/edgar/data/21344/0000021344-98-000004.txt (Selected Financial Data 1994–1997, return on common equity) |
| KO11 | The Coca-Cola Company Form 10-K for 2011, https://www.sec.gov/Archives/edgar/data/21344/000002134412000007/a2011123110-k.htm (income statement; CCE North America acquisition 2 Oct 2010) |
| AP12 | Associated Press via CBC News, "Kodak slides into U.S. bankruptcy protection", 19 Jan 2012, https://www.cbc.ca/news/business/kodak-slides-into-u-s-bankruptcy-protection-1.1178868 (1975 Sasson camera; 19,576 patents; 1,100 patents for sale; $950M Citigroup) |
| RTR12 | Reuters via Daily FT, "Kodak files for bankruptcy, secures $950 m lifeline", 20 Jan 2012, https://www.ft.lk/international/kodak-files-for-bankruptcy-secures-950-m-lifeline/49-67110 (quote; Rochester employment; no annual profit since 2007) |
| YF | Yahoo Finance daily closes for KO, .cache/prices/KO.csv (split-adjusted) |
| L1986 / L1993 / L1995 / L2007 | Berkshire letters (checked with build/tools/check-quotes.py) |
Claims in order
| Claim | Source |
|---|---|
| Kodak 1996 sales $15,968M, net earnings $1,288M | EK97 |
| Kodak ROE 38.9% (1998), 35.2% (1999), 38.3% (2000) | EK01 |
| Chapter 11 on 19 Jan 2012 | EK11 |
| Coca-Cola 1996 revenue $18,673M, net income $3,492M | KO97 |
| Coca-Cola 2011 revenue $46,542M, net income $8,572M | KO11 |
| Kodak 2011 net loss $764M; sales $6,022M | EK11 |
| "a kind of moat that protects a valuable and much-sought-after business castle" (GEICO) | L1986 |
| Quote card "In business, I look for economic castles protected by unbreachable 'moats.'" | L1995 |
| Quote card "A truly great business must have an enduring 'moat'…earning high returns." | L2007 |
| 25% vs 8% returns | Example |
| Castle figure: Coke 44% share; Kodak 19,576 patents | L1993; AP12 |
| Coke ~44% of world soft drinks; share rising in recent years | L1993 |
| Kodak ROE 15.1% (1994), 27.4% (1995), 26.1% (1996), 0.1% (1997); Coca-Cola ROE 52.0%, 56.2%, 60.5%, 61.3% (Fig 13.2) | EK97; KO97 |
| Kodak shares outstanding 345.9M (end 1995) → 290.5M (end 2000) | EK97; EK01 |
| "Roman Candles"; "whose moats proved illusory and were soon crossed"; quote card "Our criterion of 'enduring'…"; "creative destruction"; quote card "A moat that must be continuously rebuilt…" | L2007 |
| Bill Snyder widens the moat "by driving down costs still more"; expense ratio 24.1% → 23.5% (1985–86) | L1986 |
| 1995: underwriting and loss-adjustment expenses 23.6% of premiums, nearly a point below 1994; "GEICO's moat widened in 1995" | L1995 |
| Fig 13.3 sales/profit 1996 and 2011 | EK97; EK11; KO97; KO11 |
| Kodak more than a century in business (130-year-old) | RTR12 |
| 1975 Steve Sasson built the world's first digital camera | AP12 |
| 1997: worldwide film sales level, volume +7%, lower effective prices; ~$440M digital losses; Dec 1997 $1.5B charge, ~16,100 jobs | EK97 |
| Timeline: 2001 sales $13,234M, net earnings $76M, 75,100 employees | EK01 |
| Last profitable year 2007 (net earnings $676M) | RTR12; EK11 |
| $950M Citigroup financing | AP12; RTR12 |
| Feb 2012 plan to phase out digital cameras; "competitive pricing pressures" | EK11 |
| Coca-Cola 1997 gross profit $12,853M vs $11,935M (+7.7%); revenue $18,868M vs $18,673M (+1.0%) | KO97; derived |
| CCE North American business acquired 2 Oct 2010 | KO11 |
| Reuters quote "failed to quickly embrace…a product it even invented"; Rochester >60,000 → ~7,000 | RTR12 |
| ~1,100 digital-imaging patents, sale failed | AP12 |
| Fig 13.4 employees 97,500 (1997), 75,100 (2001), ~17,100 FTE (2011) | EK97; EK01; EK11 |
| Quote card "The partnership's moat will go when the surgeon goes…" | L2007 |
| Scorecard facts | EK97; KO97; L1993; AP12 |
| KO July 1998 high (14 Jul 1998, 43.97 split-adjusted) first exceeded 8 Oct 2014 | YF; derived |
Consistency edit, 2026-10-30
Two cross-refs for the 1998–2014 Coca-Cola stall now point to Chapter 2 (was Chapter 15).
Chapter 14 Pricing Power: The See's Candies Lesson
Letters cited by subject year, cached in .cache/letters/ and checked with build/tools/check-quotes.py (see ch01.md for URLs). FCIC interview: transcript by Santangel's Review of the FCIC staff audiotape, 26 May 2010, https://dericbownds.net/uploaded_images/Buffett_FCIC_transcript.pdf (opened and matched by hand).
| # | Claim (as written) | Source |
|---|---|---|
| 1 | Early 1972 Blue Chip Stamps bought See's for $25M; family asked $30M; price three times net tangible assets | 2014 letter; 1991 letter ($40M asking less $10M excess cash = $30M) |
| 2 | $1.9B pre-tax earned by 2014; added investment only $40M | 2014 letter |
| 3 | Quote "the single most important decision in evaluating a business is pricing power" and card "You've got the power to raise prices … then you got a terrible business." ("(laughs)" omitted, no ellipsis needed as it is a stage note) | FCIC interview transcript, 26 May 2010 (verbatim, by hand) |
| 4 | Two characteristics, "rather easily (even when product demand is flat and capacity is not fully utilized) without fear of significant loss of either market share or unit volume"; very few have both | 1981 letter (checked) |
| 5 | Mary See, Los Angeles, "quaint stores staffed by friendly salespeople"; "A full century ago" → 1921 | 2020 letter; 1921 = 101 years before 2022 per 2022 letter ("101 years") |
| 6 | 1972: 16,954,000 lb, 167 shops | 1983/1984 letter table |
| 7 | Industry: low per-capita consumption, no growth, brands disappeared, three companies with more than token profits in 40 years; See's ~half of industry earnings; quote "Let's look at the prototype of a dream business, our own See's Candy." | 2007 letter (checked) |
| 8 | Four weeks before Christmas: 40% of volume, ~75% of profits | 1984 letter |
| 9 | Sales ~$30M, ~$2M after tax, ~$8M net tangible assets, ~25% after tax on NTA, no leverage | 1983 letter appendix; 2007 letter |
| 10 | Sold for cash, short production cycle | 2007 letter |
| 11 | 1972–1984: pounds +46% (16.954M → 24.759M); sales $31.3M → $135.9M; profit after tax $2.08M → $13.38M | 1983/1984 letter tables; ratios by the author |
| 12 | $1.85/lb (1972, derived); $5.49/lb (1984) | 1984 letter states $5.49; 1972 derived from table |
| 13 | CPI-U annual average 41.8 (1972) → 103.9 (1984), ≈2.5×; See's ≈3× | BLS CUUR0000SA0 via api.bls.gov (fetched 2026-10-30); chart data ch14-cpi-scaled.json, ch14-sees-per-pound.json |
| 14 | Quote "In our See's purchase, Charlie and I had one important insight: We saw that the business had untapped pricing power." | 1991 letter (checked) |
| 15 | Goodwill appendix: everyday vs economic goodwill; reputation from countless pleasant experiences; quote "Such a reputation creates a consumer franchise …" | 1983 letter appendix (checked) |
| 16 | Rivals added preservatives or froze product; See's refused | 1984 letter |
| 17 | "haven't been materially altered in 101 years"; "Don't mess with my candy." | 2022 letter; 2020 letter (checked) |
| 18 | 1979–84 ~24M lb a year; same-store poundage down ~8% since 1979; uncertain cause | 1983 letter |
| 19 | 1984 per-pound realization up 1.4% | 1984 letter |
| 20 | 1986 minimal price increases, margin maintained, same-store volume stable | 1986 letter |
| 21 | Record 25.1M lb in 1988 | 1988 letter |
| 22 | 1991: dollar sales flat, pounds −4% in last two months; recession; California sales tax 7–8.5%; profit +7%; record 21.6% pre-tax margin | 1991 letter |
| 23 | Two-business example: $2M on $8M vs $2M on $18M (11%); prices double; +$8M vs +$18M; $50M vs $36M; >$3 vs $1 per $1; quote "Businesses needing little in the way of tangible assets simply are hurt the least." | 1983 letter appendix (checked) |
| 24 | "the company's mere $7 million of tangible net worth"; "dumb insistence"; "could have scuttled a terrific purchase" | 1991 letter; 2014 letter (checked) |
| 25 | Chuck Huggins put in charge on day one; handshake pay deal ~5 minutes, never written; Brad Kinstler CEO 2006 | 1991 letter; 2011 letter |
| 26 | 2007: sales $383M, pre-tax $82M, 31M lb, capital $40M; $32M reinvested since 1972 | 2007 letter |
| 27 | Pre-tax 1972 $4.2M, 1991 $42.4M | 1991 letter |
| 28 | 2011 record pre-tax $83M; cumulative $1.65B; carrying value net of cash below zero after Christmas | 2011 letter |
| 29 | Expansion attempts "were largely futile"; rabbits breeding; "a business education about the value of powerful brands" | 2014 letter (checked) |
| 30 | 2022 meeting: $400,309 over two days, ~10 sales a minute | 2022 letter |
| 31 | CPI +6.5% Dec 2021–Dec 2022; June 2022 yearly rate 9.1% | BLS CPI-U NSA index 278.802 → 296.797 and 271.696 → 296.311 via api.bls.gov; BLS CPI releases Jan 2023 and Jul 2022 |
| 32 | Coca-Cola 2022: price/mix +11%, unit case volume +5%, comparable operating margin 28.7% both years | Coca-Cola Q4/FY2022 release, 14 Feb 2023, https://investors.coca-colacompany.com/news-events/press-releases/detail/1076/coca-cola-reports-fourth-quarter-and-full-year-2022-results |
| 33 | Hershey 2022: price realization 8.0 pts, volume/mix 4.0 pts; operating margin 22.8% → 21.7%; operating profit +10.6% | Hershey FY2022 release, Feb 2023, https://www.tipranks.com/news/press-releases/hershey-reports-fourth-quarter-and-full-year-2022-financial-results-provides-2023-outlook |
| 34 | Target 2022: operating income margin 8.4% → 3.5%; operating income −57.0%; reasons incl. markdowns, freight, excess inventory; quote "partially offset by the benefit of retail price increases" | Target 2022 Form 10-K, Item 7, https://corporate.target.com/investors/annual/2022-annual-report/10-k-report/10-k-part-ii/item-7-management-s-discussion-and-analysis-of-financial-condition-and-results-of-operations |
| 35 | Opener: drawn SVG of a generic candy box, no brand | build/art/openers/ch14-opener.py |
Chapter 15 Brands That Live in Your Head: Coca-Cola, 1988
Letters cited by subject year (see ch01.md), checked with build/tools/check-quotes.py. Prices and dividends from Yahoo Finance chart API (KO, split-adjusted), fetched 2026-10-30.
| # | Claim (as written) | Source |
|---|---|---|
| 1 | Buying began summer 1988; 14,172,500 shares, cost $592.5M at end-1988; 23,350,000 shares, cost $1,023.9M, market $1,803.8M at end-1989 | 1988 and 1989 letters (holdings tables); 1989 letter ("summer of 1988") |
| 2 | First year's purchases ≈ a sixth of net worth | Derived: 1988 letter, net worth gain $569M = 20.0% → year-end ≈ $3.41B; $592.5M / $3.41B ≈ 17% |
| 3 | First Coke 1935/36; 1936 six for 25 cents from Buffett & Son, sold at 5 cents; "the extraordinary consumer attractiveness and commercial possibilities of the product"; 52 years; street railways, windmills, anthracite, textiles, trading stamps; quote "Only in the summer of 1988 did my brain finally establish contact with my eyes."; "response time to the next glaringly attractive idea"; "well under 50 years" | 1989 letter (checked) |
| 4 | Goizueta CEO 1981; Keough former neighbour; overseas sales "virtually exploding"; marketing/finance mesh | 1989 letter |
| 5 | Coke ~44% of world soft drinks; increasing worldwide share; quote "The might of their brand names …" | 1993 letter (checked) |
| 6 | New Coke announced 23 Apr 1985, first formula change in 99 years; original returned as Coca-Cola Classic 11 Jul 1985, 79 days later | History.com, "New Coke debuts", https://history.com/this-day-in-history/new-coke-debuts-one-of-the-biggest-product-flops-in-history; Coca-Cola Company history page |
| 7 | Coke launched in an Atlanta drug store in 1886; products "traveled" | 2023 letter |
| 8 | 1938 Fortune quote "but comes regretfully to the conclusion that he is looking too late. The specters of saturation and competition rise before him."; 207M cases (1938) vs ~10.7B (1993), 50-fold; $40 in 1919 → $3,277 by 1938; fresh $40 in 1938 → $25,000 by 1993 | 1993 letter (checked) |
| 9 | "The Inevitables"; GM, IBM, Sears; Impostors; "But I would rather be certain of a good result than hopeful of a great one."; quote "You can, of course, pay too much for even the best of businesses."; "now be quite high for the purchasers of virtually all stocks, The Inevitables included" | 1996 letter (checked) |
| 10 | Quote "In fact, when we own portions … our favorite holding period is forever."; "just the opposite"; Peter Lynch "cutting the flowers and watering the weeds" | 1988 letter (checked) |
| 11 | Purchases completed Aug 1994; 400M shares; $1.3B; 1994 dividend $75M; 2022 dividend $704M; "just as certain as birthdays" | 2022 letter |
| 12 | "Rip Van Winkle slumber"; quote "When you find a truly wonderful business, stick with it. Patience pays, and one wonderful business can offset the many mediocre decisions that are inevitable." | 2023 letter (checked) |
| 13 | 1998 peak close $43.97 on 14 Jul 1998; first close above it 8 Oct 2014; low $18.54 on 10 Mar 2003 (−58%) | Yahoo Finance KO daily closes (.cache/prices/KO.csv) |
| 14 | Stake worth ≈$17.6B at peak, ≈$7.4B at 2003 low | Derived: 400M × $43.97 and × $18.54 |
| 15 | Stake worth $13.4B at end-1998 (200M pre-2012-split shares) | 1998 letter, holdings table |
| 16 | "a big mistake in not selling several of our larger holdings during The Great Bubble"; "So do I." | 2003 letter (checked) |
| 17 | 1991–93 Coke operating EPS +38%, price +11%; Graham voting/weighing machine | 1993 letter |
| 18 | Dividend per share 1998 $0.30 → 2014 $1.22 (≈4×); price 1998 peak $43.97 → end-2014 $42.22 | Yahoo Finance KO dividend history and closes (split-adjusted); 2001 dropped (Yahoo lists a duplicate $0.18 payment on 12 Sep 2001) |
| 19 | Yearly dividends on 400M shares: 1995 $88M, 2000 $136M, 2005 $224M, 2010 $352M, 2015 $528M, 2020 $656M; 2025 $816M; % of $1,299M cost | Yahoo dividend sums × 400M (author); 2025 and cost from 2025 letter equity table |
| 20 | ≈$12B of dividends 1995–2025 | Derived: Yahoo calendar-year sums × 400M = $12,188M minus duplicate 2001 entry ($72M) ≈ $12.1B |
| 21 | Stake 8.1% of Coca-Cola end-1997; 9.3% end-2025; value $27,964M | 1997 letter and 2025 letter tables |
| 22 | Opener: drawn SVG of a planet ringed by generic, unlabelled red bottles | build/art/openers/ch15-opener.py |
Consistency edit, 2026-10-30
Coca-Cola price stall section trimmed (owner: ch2): ch15-ko-price chart, Bucky note and 2003 admission quotes removed; ch15-price-vs-dividend kept. 2023 "truly wonderful business" card now inline (card lives in ch35).
Chapter 16 The Low-Cost Moat: GEICO
Letters cited by subject year (see ch01.md), checked with build/tools/check-quotes.py. Where letters disagree, the chapter uses: founding capital $100,000 (2020 letter; the 2004 letter says $200,000); Berkshire's 1976–80 cost $45.7M (1995 letter; 2010 says $46M, 2018 "$47 million" for the half-interest); Nicely CEO 1993 (2014/2016/2018 letters; 2006 says 1992).
| # | Claim (as written) | Source |
|---|---|---|
| 1 | Saturday in January 1951, train to Washington, building closed, custodian, one man on the sixth floor, Lorimer Davidson, ~four hours, most excited ever | 1995 letter; 2010 letter |
| 2 | $2.3B for the half Berkshire didn't own; second-largest car insurer | 1995, 2018 letters; 2013 letter |
| 3 | "an enduring position as the low cost producer in an industry" | 1983 letter appendix (checked) |
| 4 | Example $25 vs $15 per $100 of premium | labelled example |
| 5 | Quote "No one likes to buy auto insurance. Almost everyone, though, likes to drive."; savings matter; only a low-cost operation | 2014 letter (checked) |
| 6 | Nebraska Furniture Mart: 90% bought 1983; Mrs. Blumkin started with $500; rivals pressured suppliers; Fair Trade cases won; sold the judge $1,400 of carpet; >$100M sales from one store; more than all Omaha competitors; quote "One question I always ask myself …"; "wrestle grizzlies"; expense ratios; savings passed on | 1983 letter (checked; card has no apostrophes, so it matches the cache) |
| 7 | Leo and Lillian Goodwin, 1936, $100,000, rivals with 1,000× capital | 2020 letter |
| 8 | Goodwin's reasoning: no unnecessary links; insurance mandatory and costly; consumers knew what they needed; mailed to government employees, then phone, then internet | 2004 letter |
| 9 | "gave it an enormous cost advantage over competitors that sold through agents"; "a form of distribution so ingrained …" | 1995 letter (checked) |
| 10 | Quote "Low costs permit low prices, and low prices attract and retain good policyholders."; referrals >1M a year, >half of new business, lower acquisition costs | 1996 letter (checked) |
| 11 | Quote "Float is money we hold but don't own." | 1995 letter (checked) |
| 12 | Underwriting profits $15.5B pre-tax since purchase; float $2.5B → $22.1B | 2018 letter |
| 13 | Berkshire float $39M (1970), $1,632M (1990), $87,722M (2015) | 2015 letter table |
| 14 | 1936–1975 to 4% share, fourth-largest; "unstoppable"; Davidson retired 1970; under-reserving; 1976 brink; Byrne "almost single-handedly", major price increases; share 1.8% by 1980; unwise diversification; 1.9% by 1993 | 2004 letter |
| 15 | 2.3 million loss-making policies; net worth approaching zero | 2018 letter |
| 16 | Stock fell more than 95% | 2010 letter |
| 17 | Berkshire bought ~1/3 in H2 1976 and later; $45.7M by end-1980 | 1995 letter |
| 18 | Nicely joined 1961 at 18; CEO 1993 | 2018 letter |
| 19 | Ad spending $31M (1995), $238M (2003), $631M (2006); $502M (2005); $800M (2009); $900M (2010); "to obtain policyholders who deliver us no immediate profits"; "If we could spend twice that amount productively, we would happily do so though short-term results would be further penalized." | 2006, 2005, 2009, 2010 letters (checked) |
| 20 | Customers valued at ~97% of annual premium in 1996 | 2010 letter |
| 21 | Market share 2.5% (1995) → 8.1% (2009); ~12% (2016); employment 8,575 → 36,085; passed Allstate (2013); 3.5% (1998); 6.1% (2005); 9.7% (2012); 10.8% (2014) | 2009, 2016, 2013, 1998, 2005, 2012, 2014 letters |
| 22 | 2023 shares: Progressive 15.3%, Berkshire 12.4% (preliminary NAIC); Progressive passed GEICO in 2022 direct premiums written | S&P Global Market Intelligence, Mar 2023 and Mar 2024: https://www.spglobal.com/market-intelligence/en/news-insights/articles/2023/3/progressive-passes-geico-for-no-2-spot-in-us-private-auto-insurance-market-74576033 and …/2024/3/preliminary-naic-data-show-state-farm-progressive-widen-auto-lead-over-geico-80663992 |
| 23 | Policies 5.7M → 8.1M (2003–06), +42%; employees −3.5% | 2006 letter |
| 24 | 1998 margin 6.7%, rates cut 3.3%, 4% target | 1998 letter |
| 25 | Customers saved ~$1B in 2004 | 2004 letter |
| 26 | "works without pay" | 2014 letter |
| 27 | 1951: 350 shares for $10,282; $13,125 at year-end, >65% of net worth; sold 1952 for $15,259; ~one times earnings; grew to ~$1.3M in 20 years; "taught me a lesson about the inadvisability of selling a stake in an identifiably-wonderful company" | 1995 letter (checked) |
| 28 | Sales ~$8M in 1951; that much every three hours in 2016 | 2016 letter |
| 29 | ~3.7M cars insured, seventh largest at purchase | 1995 letter |
| 30 | $238,288 in 1937; $35B in 2020 | 2020 letter |
| 31 | Nicely added >$50B to intrinsic value; first half ~$47M, second ~50×; "and people say I never pay up!" | 2018 letter (checked) |
| 32 | "a moat – an enduring one – that competitors are unable to cross" | 2016 letter (checked) |
| 33 | GEICO pre-tax underwriting: −$1,880M (2022), $3,635M (2023), $7,813M (2024); 2022 loss from higher claims severity | Berkshire Form 10-K 2023 (https://www.sec.gov/Archives/edgar/data/1067983/000095017024019719/brka-20231231.htm) and 2024 (https://www.sec.gov/Archives/edgar/data/1067983/000095017025025210/brka-20241231.htm) |
| 34 | Todd Combs, five years reshaping; "a long-held gem that needed major repolishing"; "spectacular" | 2024 letter (checked) |
| 35 | 2025 letter (Greg Abel): rate increases "have restored margins but come at the cost of lower retention"; segmentation and pricing of risk; preserving low-cost position | 2025 letter (checked) |
| 36 | Opener: drawn SVG of a generic office building at night, not the actual GEICO building | build/art/openers/ch16-opener.py |
Chapter 17 Switching Costs and Networks: Apple and the Platforms
Chapter 17 · Switching Costs and Networks: Apple and the Platforms · sources
Checked 2026-10-30. "Letters" = Berkshire letters text in .cache/letters/, verified with
build/tools/check-quotes.py. "13F" = Berkshire Hathaway Inc. Form 13F-HR information tables on SEC EDGAR
(CIK 1067983), Apple CUSIP 037833100, summed across all Berkshire managers in each filing. Apple share counts
come from the cover page of each Apple Form 10-K (XBRL dei:EntityCommonStockSharesOutstanding,
https://data.sec.gov/api/xbrl/companyfacts/CIK0000320193.json).
Consistency rules
- Year-end value of Berkshire's Apple stake: letter equity tables where the letter prints one (2016–2021, 2025); 2022 from the 2022 annual report note 4 ($119.0B); 2023 and 2024 from the 13F for 31 Dec ($174,347M; $75,126M). The 2023 annual report prints $174.3B, consistent.
- Apple split adjustment: ×28 for counts before June 2014 (7:1 split), ×4 for counts before August 2020 (4:1 split).
In order of appearance
| Claim | Source |
|---|---|
| May 2016: Berkshire disclosed 9,811,747 Apple shares (as of 31 Mar 2016), worth about $1 billion | MacRumors, 16 May 2016, https://www.macrumors.com/2016/05/16/berkshire-hathaway-stake-in-apple |
| "why we don't own stocks of tech companies" | Letters 1999 |
| By mid-2018 Berkshire had spent $36B, owned 5.2% / slightly more than one billion shares split-adjusted; began buying late 2016; first shares were a small separately managed holding later sold | Letters 2020 |
| End-2023 stake worth $174.3B; about half of the stock portfolio ($174.3B of $353.8B = 49%) | Berkshire 2023 annual report, note 4 (https://www.berkshirehathaway.com/2023ar/2023ar.pdf); 13F 31 Dec 2023 (905,560,000 shares, $174,347M) |
| Installed base passed 2.5 billion active devices (Jan 2026) | Apple Q1 FY2026 results, 8-K ex. 99.1, 29 Jan 2026, https://www.sec.gov/Archives/edgar/data/320193/000032019326000005/a8-kex991q1202612272025.htm |
| World population about 8.2 billion (for "one for every three people") | UN World Population Prospects 2024 (8.2 billion in 2024), https://www.un.org/development/desa/pd/world-population-prospects-2024 |
| Economic franchise quote; "price aggressively"; media franchises "managed loosely", "greatly broadened choices", 500 million eyeballs and a 24-hour day | Letters 1991 |
| FY2025 (to 27 Sep 2025): devices sales $307,003M, cost $194,116M (gross margin 36.8%); services $109,158M, cost $26,844M (75.4%); total sales $416,161M; services gross profit 42% of $195,201M total; net income $112,010M vs $93,736M (+19.5%), a record | Apple Q4 FY2025 results, 8-K ex. 99.1, 30 Oct 2025, https://www.sec.gov/Archives/edgar/data/320193/000032019325000077/a8-kex991q4202509272025.htm ; prior net income records via companyfacts (FY2022 $99,803M) |
| End-2016: 1.1% of Apple, cost $6,747M, market $7,093M | Letters 2016 equity table |
| 2020 sale of a small portion for about $11B; dividends averaging about $775M a year; 5.4% at end-2020; each Berkshire holder owns 10% more of Apple than in July 2018 | Letters 2020 |
| Year-end market values $28,213M (2017), $40,271M (2018), $73,667M (2019), $120,424M (2020), $161,155M (2021) | Letters 2017–2021 equity tables |
| 2021: 5.39% → 5.55%; each 0.1% of Apple's 2021 earnings = $100M; dividends $785M; share of earnings $5.6B; Tim Cook quote | Letters 2021 |
| 2022 year-end value $119.0B | Berkshire 2022 annual report, note 4, https://www.berkshirehathaway.com/2022ar/2022ar.pdf |
| 30 Sep 2024: 300,000,000 shares; 31 Dec 2024: 300,000,000 shares, $75,126M; 31 Dec 2025: 227,917,808 shares (sold ~678M of 905.6M, 74.8%) | 13F filings 0000950123-24-011775, 0000950123-25-002701, 0001193125-26-054580 |
| End-2025: 1.6% of Apple, cost $6,255M, market $61,962M, 2025 dividends $280M; equity portfolio $297.8B | Letters 2025 (equity table; "$297.8 billion equity securities portfolio") |
| May 2024 meeting: selling tied partly to taxes, 21% federal corporate rate expected to rise (paraphrase, no quote) | The Motley Fool, 8 May 2024, https://www.fool.com/investing/2024/05/08/meet-2-stocks-warren-buffett-confessed-to-selling |
| Apple share count 26.34B (Oct 2012) → 14.78B (Oct 2025), −44%; Oct 2016 21.33B → Oct 2025, −31% | Apple 10-K covers via companyfacts (see header), split-adjusted |
| Buybacks FY2013–FY2025 sum $816B (PaymentsForRepurchaseOfCommonStock: 22.86, 45.00, 35.25, 29.72, 32.90, 72.74, 66.90, 72.36, 85.97, 89.40, 77.55, 94.95, 90.71 $B); ×1.96 FY2025 sales | Apple 10-Ks via companyfacts |
| Three partners, $3,000 business, $900 / $1,100, ±$50 | Letters 2016 |
| News Corp paid $580M for Myspace in 2005, sold for about $35M in June 2011 | AP via Salon, 29 Jun 2011, https://www.salon.com/2011/06/29/us_news_corp_myspace_sale/ |
| European Commission fined Apple €500M under the Digital Markets Act (anti-steering), 22–23 Apr 2025, among the first DMA fines | MacRumors, 23 Apr 2025, https://www.macrumors.com/2025/04/23/apple-breach-digital-markets-act-eu/ ; Pinsent Masons, https://www.pinsentmasons.com/en-gb/out-law/news/first-fines-issued-eu-digital-markets-act |
| "precludes our following standard diversification dogma"; concentration quote | Letters 1993 |
| Apple share of Berkshire's stock portfolio: 2021 161.2/350.7 = 46%; 2022 119.0/308.8 = 39%; 2023 174.3/353.8 = 49%; 2024 75.1/271.6 = 28%; 2025 62.0/297.8 = 21% | Annual reports 2022–2024 note 4 (totals $350,719M, $308,793M, $353,842M, $271,588M); 13F; Letters 2025 |
Dropped
- Claim that Apple was the biggest stock purchase in Berkshire's history: not found in a primary source.
- Buffett's on-stage words at the 2024 meeting: only secondary paraphrases found, so no quote marks.
Consistency edit, 2026-10-30
1993 concentration quote card converted to short inline quotes ("may well decrease risk", "the intensity with which an investor thinks about a business"); the card lives in ch33.
Chapter 18 Managers, Capital Allocation and Integrity
Chapter 18 · Managers, Capital Allocation and Integrity · sources
Checked 2026-10-30. "Letters" = Berkshire letters text in .cache/letters/, verified with
build/tools/check-quotes.py (every quote card and every inline quote of 5+ words FOUND in the year named).
The 2025 letter is signed by Gregory E. Abel, Chief Executive Officer.
In order of appearance
| Claim | Source |
|---|---|
| WPC bought mid-1973 for $10.6M; end-1974 market value $8M (loss about 25%); proceeds of 1985 redemption plus year-end 1985 market value $221M; same money in favourite media stocks $40–60M; extra $160M or so "in very large part" from Kay Graham's decisions | Letters 1985 |
| "for every dollar retained by the corporation, at least one dollar of market value will be created for owners"; the 5% / 15% subsidiaries example | Letters 1984 |
| One-dollar-test numbers ($10B kept, $25B / $4B rise) | Illustrative, labelled "example" |
| Tom Murphy, Berkshire director; acquisition advice quote; "proved disappointing"; "more than a few were outright disasters" | Letters 2019 (director also Letters 2012) |
| $20,000 assistant treated as a $3 million decision, story told thirty years earlier; "more people, more toilet paper" | Letters 2004 |
| "$2 of present value for $1" quote and the signalling benefit of repurchases | Letters 1984 |
| Three partners, $3,000, $900/$1,100, ±$50; "The same math applies with corporations and their shareholders"; companies rarely state a price limit | Letters 2016 |
| "The first law of capital allocation…" quote; two conditions incl. "material discount" and "conservatively calculated"; buybacks to offset dilution don't suffice; $20B cash floor and "financial strength that is unquestionable takes precedence over all else"; 110% of book value limit (Sept 2011) | Letters 2011 |
| Limit raised to 120% of book value in Dec 2012 | Letters 2012 |
| Book-value metric retired / buybacks above book but below intrinsic value | Letters 2018 |
| Rule boiled down to two conditions (sell for less than worth; ample cash left) | Letters 2019 |
| Abel's 2025 letter: buy back "when they trade below our estimate of intrinsic value, conservatively determined" | Letters 2025 |
| American CEOs' "embarrassing record"; 2020 buybacks $24.7B, equivalent of 80,998 A shares, ownership +5.2% | Letters 2020 |
| Berkshire's one cash dividend, 1967 | Letters 2024 (see sources/ch01.md) |
| WPC valued at $100M in 1973 vs $400–500M intrinsic; "to well below 20 cents on the dollar of intrinsic value"; Graham "the brains and courage to repurchase…"; triple dip | Letters 1985 |
| Cap Cities: "the best of any publicly-owned company in the country"; 3M shares at $172.50 helped finance $3.5B ABC purchase; full price; Murphy votes Berkshire's stock | Letters 1985 |
| 20,000,000 Cap Cities/ABC shares, cost $345.0M, market $2,467.5M at end-1995; exchange for cash and Disney stock early 1996 | Letters 1995 |
| Murphy and Burke vs Wells Fargo managers (pay able people well, head count, costs at record profits, stick to what they understand) | Letters 1990 |
| Murphy and Burke the best managerial duo; "Start with Tom Murphy…" | Letters 2015 |
| Institutional imperative quote, four points ("as if governed by Newton's First Law of Motion", "to soak up available funds", "mindlessly imitated"), "not venality or stupidity", biggest surprise | Letters 1989 |
| 1990 bank losses, "with lemming-like zeal" | Letters 1990 |
| Apple buybacks about $91B in FY2025 ($90,711M) | Apple 10-K FY2025 via SEC companyfacts (see sources/ch17.md) |
| Berkshire $700M Salomon convertible preferred (agreed 27 Sep 1987), Buffett joins board; Mozer broke the 35% rule Dec 1990 and Feb 1991; management told late April 1991, did not report; Buffett first called 8 Aug; stock fell, run on notes; Gutfreund and Strauss resign 16 Aug; Treasury ban and partial rescission 18 Aug; Maughan elected 18 Aug; Buffett back in Omaha May 1992; Mozer nearly four months in prison; $290M settlement | Carol J. Loomis, "Warren Buffett's Wild Ride at Salomon", Fortune, 27 Oct 1997, https://fortune.com/article/warren-buffett-salomon |
| Buffett elected Interim Chairman 18 Aug 1991 | Letters 1991 |
| $290M fines and restitution paid in 1992; Gutfreund $100,000 civil penalty, barred for life from heading a securities firm | UPI, 3 Dec 1992, https://www.upi.com/Archives/1992/12/03/SEC-settles-with-ex-Salomon-officials/6125723358800/ |
| Testimony quote, 1991; clip played at every meeting for over 25 years | Letters 2025 |
| Testimony given in September 1991 (4 Sep per several reports) | Benzinga, Jan 2025, https://www.benzinga.com/news/25/01/42755123/warren-buffetts-chilling-warning-to-employees-lose-a-shred-of-reputation-for-the-firm-and-i-will-be (secondary; text uses the month only) |
| Biennial memo: "We can afford to lose money…" quote; memos for more than 25 years; front-page test "by an unfriendly but intelligent reporter"; "Everybody else is doing it" | Letters 2010 (memo dated 26 Jul 2010) |
| .350/.150 hitter; options for overall responsibility only; carrying-cost factor; bonuses uncapped, independent of Berkshire's stock price | Letters 1985 |
| Thought experiment numbers ($1B, 60% of value, $1.67 per dollar) | Illustrative |
Dropped
- How Mozer broke the rule (bids in customers' names): only secondary sources opened; the text says only that he broke the 35% rule.
Consistency edit, 2026-10-30
Washington Post purchase detail REMOVED from ch18 (end-1974 $8M value; $100M market value vs $400–500M; "well below 20 cents on the dollar"); ch18 keeps the Katharine Graham buyback/management angle and cross-refers to Chapters 21 and 25.
Chapter 19 Intrinsic Value: The Cash You Can Take Out
Chapter 19 · Intrinsic Value: The Cash You Can Take Out · sources
Checked 2026-10-30. "Letters" = Berkshire letters text in .cache/letters/ (the owner's manual is
owners-manual.txt), verified with build/tools/check-quotes.py; the two owner's-manual quotes were matched by
hand with grep. "Yahoo" = daily closes in .cache/prices/ (fetched 2026-10-30).
Consistency rules
- Per-share book value by year is derived by compounding the annual % changes in the 2018 letter's performance
table from $19.46 (1964), then scaled by 0.99846 so 2018 equals the letter's stated overall gain of 1,091,899%
($212,503). Derived values sit within 0.2% of the levels printed in individual letters (e.g. 1990 $4,603 vs
$4,612.06; 2017 $211,656 vs $211,750). Data:
build/charts/data/ch19-brk-pb.json. - Price/book uses Yahoo BRK-A year-end closes (1980–2018).
In order of appearance
| Claim | Source |
|---|---|
| 1964 book value $19.46 "with certitude"; overstated value; textile assets sub-profitable | Letters 1994; owner's manual |
| End-2018 book value about $212,500; first paragraph switched away from book value; three reasons (shift to operating businesses, carrying values far below current value, buybacks above book/below intrinsic value); quote "Each transaction…"; "extremely capricious"; market price best long-run measure | Letters 2018 (overall gain 1,091,899% → $212,503) |
| Definition quote "It is the discounted value of the cash…"; "will almost inevitably come up with at least slightly different intrinsic value figures"; never give estimates; college-education analogy; "book value is meaningless as an indicator of intrinsic value"; "a rough, albeit significantly understated" | An Owner's Manual (1996), owners-manual.txt (also in Letters 1994) |
| Nebraska farm valued on production | Letters 2013 (see sources/ch01.md) |
| Laundromat, $100-in-ten-years, money-through-time numbers ($51, $26, $7; sum of 40 years $1,333; forever $1,429), $1-forever math, $80–$120 range | Calculations by the author, labelled "example" |
| Owner earnings definition; most managers need to spend more than depreciation to hold their ground; "cash flow" in Wall Street material; "the commercial counterpart of the Pyramids"; Keynes line "I would rather be vaguely right than precisely wrong." | Letters 1986 |
| 10-year Treasury yield: highest close 15.84% on 30 Sep 1981; lowest close 0.499% on 9 Mar 2020 (both within 1970–2026 data); 4.989% on 29 Oct 2026 | Yahoo ^TNX |
| Media math: 6% growth forever, 10% rate, $1M after-tax earnings → "a whopping $25 million"; "bob around" → $10 million | Letters 1991 |
| "impossible to pinpoint but essential to estimate" quote | Letters 1994 |
| "Present that task to Charlie and me separately…" quote | Letters 2010 |
| Two-column table of per-share investments and operating earnings | Letters 1999 |
| Three pillars; per-share investments $66 (1970) → $94,730 (2010), 19.9% a year; non-insurance pre-tax EPS $2.87 → $5,926.04, 21.0%; share price 22.1% a year; "often follow very different paths – sometimes for extended periods – but eventually they meet"; third element quote; fifty-cent pieces / two-dollar bills; Sears Roebuck, Montgomery Ward, Sam Walton | Letters 2010 |
| Sam Walton founded Walmart | Common knowledge |
| "had neither going-concern nor liquidation values equal to their carrying values"; Hollywood mogul "Don't worry, the liabilities are solid." | Letters 1994 |
| Scott Fetzer: bought start of 1986 for $315.2M; book value $172.6M; premium $142.6M; intrinsic value close to double book; 22 businesses; World Book, Kirby, Campbell Hausfeld; earnings/dividends/book value table 1986–1994 (dividends total $634.0M vs earnings $555.4M); 1994 earnings $79.3M on ending book value $94.0M (84%); first on the Fortune 500 for ROE excluding bankruptcy windfalls | Letters 1994 (sums by the author) |
| Book value "an understated proxy for intrinsic-value"; premium seldom swings wildly | Letters 2010 |
| 1994 book value +13.9% "and that was the approximate gain in intrinsic value also" | Letters 1994 |
| Buybacks up to 110% of book (Sept 2011), "clearly increase" per-share intrinsic value; "a material discount"; only a few days in the market, $67M bought before the price passed the limit | Letters 2011 |
| Limit raised to 120% in Dec 2012 when a block became available at about 116% of book | Letters 2012 |
| Price/book 1.05× (1982) to 2.23× (1995); 1.15× at end-2011, lowest year-end since 1982; moves of over a quarter in one year (1984→85 +31%, 1988→89 +28%, 1989→90 −28%) | Derived: Yahoo BRK-A ÷ derived book value |
| Thought experiment arithmetic ($12.50, $20, $50; +60%, +150%) | Calculation by the author |
Dropped
- Munger's remark that he never saw Buffett do a discounted cash flow calculation: not found in a source I could open.
Chapter 20 Valuing a Business With Pencil and Paper
Letters are cited by subject year, from https://www.berkshirehathaway.com/letters/ (cached in .cache/letters/, quotes checked with build/tools/check-quotes.py). Coca-Cola figures come from its Form 10-K for fiscal 1997, Item 6 / Exhibit 13 "Selected Financial Data" (11-year table, restated, split-adjusted), https://www.sec.gov/Archives/edgar/data/21344/0000021344-98-000004.txt, cross-checked against the FY1993 10-K table (https://www.sec.gov/Archives/edgar/data/21344/0000950144-94-000600.txt; small restatement differences, e.g. 1988 revenue $8,065M vs $8,076M; the chapter uses the 1997 10-K throughout).
| # | Claim (as written) | Source |
|---|---|---|
| 1 | End-1988 total market value of Coca-Cola common stock $15,834M ("$15.8 billion") | KO 10-K FY1997, selected financial data, 1988 column |
| 2 | 1988 net income $1,045M; ~15× ($15,834/$1,045 = 15.2) | same |
| 3 | S&P 500 P/E Dec 1988 about 12 (11.64) | multpl.com S&P 500 PE ratio by month (https://www.multpl.com/s-p-500-pe-ratio/table/by-month), fetched 2026-10-30 |
| 4 | Buffett started buying summer 1988; 23,350,000 shares at end 1989, cost $1,023,920K | 1989 letter (equity table and Coca-Cola passage) |
| 5 | End-1997 market value $164,766M | KO 10-K FY1997, 1997 column |
| 6 | Quote: "It is the discounted value of the cash that can be taken out of a business during its remaining life." | An Owner's Manual (1996), .cache/letters/owners-manual.txt (verbatim, checked by hand) |
| 7 | 9% example: $109 next year = $100 today; $1 in ten years ≈ 42 cents (1/1.09^10 = 0.422) | arithmetic |
| 8 | John Burr Williams, The Theory of Investment Value, 1938 | 1992 letter ("written over 50 years ago"); publication year: https://en.wikipedia.org/wiki/John_Burr_Williams |
| 9 | Quote card: "The value of any stock, bond or business today is determined by …" | 1992 letter (verbatim, checked) |
| 10 | Inline "must himself estimate the future 'coupons.'" | 1992 letter (letter uses double quotes around coupons; checked by hand) |
| 11 | 1988 depreciation $167M, capital expenditures $387M; owner earnings ≈ $825M; 79% of net income | KO 10-K FY1997 1988 column; arithmetic |
| 12 | Owner earnings definition, maintenance capex only | 1986 letter, Appendix (owner earnings); Chapter 9 |
| 13 | Fortune, May 1977, "How Inflation Swindles the Equity Investor"; inline "stocks, in economic substance, are really very similar to bonds."; ~12% return on equity; "equity coupon" | Fortune Classics republication, https://fortune.com/2011/06/12/buffett-how-inflation-swindles-the-equity-investor-fortune-classics-1977/ (read via Wayback snapshot 2024-07-09; editor's note dates it May 1977) |
| 14 | 1988 return on common equity 34.7% | KO 10-K FY1997, other key financial measures |
| 15 | Shareholders' equity end 1988 $3,345M ("$3.3 billion") | same |
| 16 | 30-year Treasury yield about 9.0% (June 1988 9.00, Dec 1988 9.01) | FRED GS30 monthly |
| 17 | Owner-earnings yield 5.2% ($825M / $15,834M) | arithmetic |
| 18 | Worked table: 15% for 10 yrs, 5% after, 9% discount → $11,209M + $37,008M = $48,217M; terminal value $87,612M | author's calculation (build/art/diagrams/ch20-art.py reproduces it) |
| 19 | Profit from continuing operations grew ~17%/yr 1983–1988 ($504M → $1,089M) | KO 10-K FY1993 selected financial data (1983) and FY1997 (1988) |
| 20 | Aesop paraphrase; inline "which we consider to be the yield on long-term U.S. bonds." and "And, of course, don't literally think birds. Think dollars." | 2000 letter (checked) |
| 21 | Inline "we're not smart enough to predict future cash flows." | 1992 letter (checked) |
| 22 | 10-year Treasury about 1.5% in 2021 (monthly averages 1.08–1.69%, Dec 1.47%) | FRED GS10 |
| 23 | Quote card: "Using precise numbers is, in fact, foolish; working with a range of possibilities is the better approach." | 2000 letter (checked) |
| 24 | Heat grid values $12.4B–$98.2B; 16 of 20 cells above $15.8B; implied 10-year growth ≈ 1% at 9%/5% | author's calculation |
| 25 | Inline "that no useful conclusion can be reached."; "Inefficient Bush Theory" | 2000 letter (checked) |
| 26 | Inline "virtually exploding" (overseas sales) | 1989 letter |
| 27 | Goizueta CEO 1981; Don Keough; inline "first rethought and focused the company's policies and then energetically carried them out." | 1989 letter (checked) |
| 28 | First Coke 1935 or 1936; six for 25 cents from Buffett & Son, sold for 5 cents; "carefully avoided buying even a single share"; 52 years; "Only in the summer of 1988," "did my brain finally establish contact with my eyes." | 1989 letter (checked) |
| 29 | 10% growth → ≈ $32B (32.4); 15% → ≈ $48B | author's calculation |
| 30 | Timeline: end 1988 14,172,500 shares, cost $592,540K | 1988 letter, equity table |
| 31 | Timeline: end 1989 market value $1,803,787K | 1989 letter |
| 32 | Timeline: Aug 1994 finished buying, 400 million shares, $1.3 billion | 2022 letter |
| 33 | Timeline: 1997 net income $4,129M; ~40× ($164,766/$4,129 = 39.9) | KO 10-K FY1997 |
| 34 | Timeline: KO close peaked 14 Jul 1998 ($43.97 split-adjusted); first higher close 8 Oct 2014 | Yahoo Finance daily closes for KO (.cache/prices/KO.csv) |
| 35 | Chart 20.4: income from continuing operations 1988–1997 ($1,089M … $4,129M); ~16%/yr (15.96%) | KO 10-K FY1997; build/charts/data/ch20-ko-profit.json |
| 36 | 1997 owner earnings ≈ $3.4B = 4,129 + 384 − 1,093; yield ≈ 2.1% on $164.8B | KO 10-K FY1997; arithmetic |
| 37 | Long bond about 6% at end 1997 (GS30 Dec 1997 5.99%) | FRED GS30 |
| 38 | Inline "a big mistake in not selling several of our larger holdings during The Great Bubble." | 2003 letter (checked) |
| 39 | Terminal growth 6% → $61.0B vs $48.2B | author's calculation |
| 40 | Inline "can destroy value if it requires cash inputs in the early years of a project or enterprise that exceed the discounted value of the cash that those assets will generate in later years." | 2000 letter (checked) |
| 41 | Sanity check ≈ 58× owner earnings ($48.2B / $0.825B) | arithmetic |
| 42 | Thought experiment: 13% → $41.2B, 17% → $56.4B | author's calculation |
Dropped: "Coca-Cola sold in more than 160 countries in 1988" (no primary source opened); a KO share-price chart (Chapters 2 and 15 already chart the 1998–2014 price stall), replaced with the profit-vs-assumption chart.
Consistency edit, 2026-10-30
Owner's Manual quote card converted to inline; the card lives in ch19.
Chapter 21 Margin of Safety
Letters are cited by subject year, from https://www.berkshirehathaway.com/letters/ (cached in .cache/letters/, quotes checked with build/tools/check-quotes.py). The 1984 talk: Warren E. Buffett, "The Superinvestors of Graham-and-Doddsville," Hermes, Columbia Business School, Fall 1984, PDF at http://www8.gsb.columbia.edu/rtfiles/cbs/hermes/Buffett1984.pdf (opened via Wayback snapshot 2016-10-15; scanned page 12 read by OCR and checked word for word against the page image).
| # | Claim (as written) | Source |
|---|---|---|
| 1 | 1984 Columbia talk printed in Hermes; WPO in 1973 selling for $80 million; assets could be sold to any one of ten buyers for not less than $400 million; owned the Post, Newsweek, TV stations in major markets | Hermes, Fall 1984, p. 12 |
| 2 | End 1974 holding down about 25% ($8M vs $10.6M cost) | 1985 letter |
| 3 | "about a fifth" = $80M / $400M; "a fifth to a quarter" combines the 1984 talk ($80M vs ≥$400M) and the 1985 letter ($100M vs $400–500M; "not more than one-fourth") | Hermes 1984; 1985 letter |
| 4 | "the cornerstone of investment success" (paraphrase of "cornerstone of investment success") | 1992 letter |
| 5 | Graham taught Buffett at Columbia; The Intelligent Investor bought in 1949; "My financial life changed with that purchase." (paraphrased) | 2013 letter |
| 6 | Inline Graham motto "Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety." | 1990 letter (checked) |
| 7 | Quote card: "Forty-two years after reading that, I still think those are the right three words." | 1990 letter (checked) |
| 8 | Quote card: "If we calculate the value of a common stock to be only slightly higher than its price, we're not interested in buying." | 1992 letter (checked) |
| 9 | $60/$80/$100/$120, 25%/40%/37% margins | labelled examples; arithmetic |
| 10 | Inline "relatively simple and stable in character." | 1992 letter (checked) |
| 11 | Recovery math 11/33/100/300/900% | arithmetic, 1/(1−loss)−1 |
| 12 | Inline "An investor needs to do very few things right as long as he or she avoids big mistakes." | 1992 letter (checked) |
| 13 | Quote card: "You don't try and buy businesses worth $83 million for $80 million. You leave yourself an enormous margin. When you build a bridge, you insist it can carry 30,000 pounds, but you only drive 10,000-pound trucks across it." | Hermes, Fall 1984, p. 12 (verified against page image) |
| 14 | Case: "at a price of not more than one-fourth of the then per-share business value of the enterprise"; "required no unusual insights"; $400–500 million; $100 million market value "published daily for all to see"; efficient-market academics | 1985 letter (checked) |
| 15 | Quote card: "Our advantage, rather, was attitude: …" | 1985 letter (checked) |
| 16 | Business did fine 1973–74, intrinsic value grew; $8M vs $10.6M; "ridiculously cheap a year earlier had become a good bit cheaper." | 1985 letter (checked) |
| 17 | Kay Graham repurchased large quantities at bargain prices; "triple dip"; $221 million incl. 1985 redemption proceeds | 1985 letter |
| 18 | Timeline/chart values: 1977 $33.4M … 1985 $205.2M … 1997 $840.6M; ~80× ($840.6/$10.6 = 79.3) | Berkshire letters 1977–1997, equity holdings tables; build/charts/data/ch21-wpo-stake.json |
| 19 | 2008: ConocoPhillips bought near the peak of oil and gas prices, cost "several billion dollars"; $244M on two Irish banks that "appeared cheap", written down to $27M (89% loss), declined further | 2008 letter (checked) |
| 20 | Dagger-on-the-steering-wheel argument; Quote card: "The roads of business are riddled with potholes; a plan that requires dodging them all is a plan for disaster." | 1990 letter (checked) |
| 21 | Tampa TV station: interest exceeded gross revenues; even with donated labor | 1990 letter |
| 22 | Inline "provide a healthy margin of safety" (insurance pricing) | 1990 letter (checked) |
| 23 | Sold holdings he'd rather keep to hold ample cash; "When forced to choose, I will not trade even a night's sleep for the chance of extra profits." | 2008 letter (checked) |
| 24 | Sizing chart | labelled example |
| 25 | 1997: S&P 500 +33.4% with dividends; stocks not overvalued if rates and returns on equity hold; inline "today's price levels, though, have materially eroded the 'margin of safety' that Ben Graham identified as the cornerstone of intelligent investing." (letter: "Today's … "margin of safety""; capital and inner quote marks adjusted, checked by hand) | 1997 letter; 2025 letter performance table |
| 26 | S&P 500 with dividends: 1998 +28.6%, 1999 +21.0%, 2000 −9.1%, 2001 −11.9%, 2002 −22.1% | 2025 letter, performance table |
| 27 | Thought experiment numbers ($100/$80/$130, $64, $55–70) | labelled hypothetical |
Dropped: a Washington Post share-price chart for 1973–1980 (no price source in the cache; replaced with the stake's year-end market values from the letters); "Graham taught at Columbia in the early 1950s" (date not checked against a source).
Consistency edit, 2026-10-30
Washington Post case trimmed: timeline (1977 $33.4M, 1985 $221M), triple-dip paragraph and the 1985 "attitude" quote REMOVED (Chapter 25 owns them); kept: purchase vs value, end-1974 $8M, "ridiculously cheap…", end-1997 $840.6M (1997 letter equity table) and the ch21-wpo-stake chart. Cross-ref "Chapter 20 ended with" corrected to "built".
Chapter 22 Price Tags Compared: P/E, Earnings Yield and the Buffett Indicator
Letters are cited by subject year, from https://www.berkshirehathaway.com/letters/ (cached in .cache/letters/, quotes checked with build/tools/check-quotes.py). Valuation series fetched 30 Oct 2026 from multpl.com monthly tables (data from Robert Shiller and S&P): S&P 500 P/E (https://www.multpl.com/s-p-500-pe-ratio/table/by-month), Shiller CAPE (https://www.multpl.com/shiller-pe/table/by-month), earnings yield (https://www.multpl.com/s-p-500-earnings-yield/table/by-month), dividend yield (https://www.multpl.com/s-p-500-dividend-yield). FRED series fetched 30 Oct 2026: NCBEILQ027S, GDP, GS10, CP (https://fred.stlouisfed.org/). Fortune 2001: "Warren Buffett on the Stock Market," Warren Buffett and Carol Loomis, Fortune, 10 Dec 2001, http://web.archive.org/web/20220331214759/https://archive.fortune.com/magazines/fortune/fortune_archive/2001/12/10/314691/index.htm (full text read). Fortune 1999: .cache/sources/fortune-1999-11-22.txt (https://fortune.com/1999/11/22/warren-buffett-on-stock-market/).
| # | Claim (as written) | Source |
|---|---|---|
| 1 | March 2009 S&P 500 P/E about 110 (110.37, 1 Mar 2009); S&P 500 close 676.53 on 9 Mar 2009, lowest since 12 Sep 1996 | multpl P/E table; Yahoo Finance ^GSPC (.cache/prices/GSPC.csv) |
| 2 | Start of 2009 to end of 2018, dividends reinvested: ×3.43 ("more than tripled"), ~13.1%/yr | 2025 letter performance table (S&P 500 with dividends), author's compounding |
| 3 | Dec 1999 P/E about 30 (29.66) | multpl P/E table |
| 4 | 2000–2009 S&P 500 with dividends: −9.1% total | 2025 letter performance table, author's compounding |
| 5 | 29 Oct 2026 P/E 26.33; mean since 1871 16.24 | multpl P/E page |
| 6 | Forward P/E 19.0 mid-Oct 2026, 10-yr avg 19.1; 2026 earnings growth about a third | FactSet Earnings Insight, 16 Oct 2026, https://insight.factset.com/sp-500-earnings-season-update-october-16-2026 (as cited in sources/ch31.md) |
| 7 | Quote card: "Common yardsticks such as dividend yield, …" | 2000 letter (checked) |
| 8 | Inline "act on financial valuations the way gravity acts on matter: The higher the rate, the greater the downward pull." | Fortune, 22 Nov 1999 (matched in cached text) |
| 9 | Sep 1981 earnings yield 12.91% vs 10-yr 15.32%; Dec 1999 3.37% vs 6.28%; Sep 2026 3.85% vs 4.99% | multpl earnings-yield table; FRED GS10 |
| 10 | Bond yield above earnings yield in 119 of 120 months of the 1990s | same series, author's count (build/charts/data/ch22-ey-vs-10y.json) |
| 11 | 2020/2021 earnings yield far above bond (Mar 2020 4.39% vs 0.87%; Dec 2021 4.23% vs 1.47%) | same |
| 12 | P/E of 25 → 4 cents per dollar | arithmetic |
| 13 | May 2009 P/E 123.73, earnings yield 0.81% | multpl P/E and earnings-yield tables |
| 14 | CAPE: Shiller; ten-year average of inflation-adjusted earnings | multpl Shiller PE page (definition) |
| 15 | CAPE Mar 2009 13.32; Dec 1999 44.19 (record since 1871); Oct 2026 40.81 (1 Oct) / 40.88 (29 Oct), reached before only Mar 1999–Sep 2000 | multpl CAPE table, author's scan |
| 16 | CAPE above long-run mean (17.44) every month since 1992 except Oct 2008–Jul 2009 | multpl CAPE table, author's scan |
| 17 | Averages since 1950: P/E 18.9, CAPE 20.9 | multpl tables, author's average of monthly values |
| 18 | Concept box numbers | labelled example |
| 19 | Dividend yield 1.05% on 29 Oct 2026, lowest on record; mean 4.20% | multpl dividend-yield page |
| 20 | Book value dropped from the letter's first page after 2018 | 2018 letter (and Chapter 19) |
| 21 | Fortune 10 Dec 2001 essay by Buffett and Carol Loomis; chart "starting almost 80 years ago"; market value of all publicly traded securities as % of GNP; inline "has certain limitations in telling you what you need to know" | Fortune 2001 (full text) |
| 22 | Quote card: "Still, it is probably the best single measure of where valuations stand at any given moment." | Fortune 2001 (verbatim) |
| 23 | Inline "then you need to have the line go straight off the top of the chart. That won't happen." (5% GNP vs 10% market) | Fortune 2001 (verbatim) |
| 24 | Quote card: "If the percentage relationship falls to the 70% or 80% area, buying stocks is likely to work very well for you. If the ratio approaches 200% – as it did in 1999 and a part of 2000 – you are playing with fire." (original uses "--" double hyphens; set as spaced en dashes) | Fortune 2001 (verbatim) |
| 25 | GuruFocus publishes a broader total-market version that reads higher (no number given in text; one-line note only) | https://www.gurufocus.com/economic_indicators/4602/usa-ratio-of-total-market-cap-over-gdp |
| 26 | Nonfinancial market value / GDP: Q4 1999 155.4%, Q1 2000 162.6% (peak before 2020), Q1 2009 69.0% (first time below the 1950–2026 mean of 87% since Q3 2002), passes 162.6 in Q2 2020 (173.1), Q2 2026 255.0%; 255/87 ≈ 2.9×, 255/162.6 = 1.57 | FRED NCBEILQ027S ÷ GDP, author's calculation (build/charts/data/ch22-mcap-gdp.json) |
| 27 | Inline "you have to be wildly optimistic to believe that corporate profits as a percent of GDP can, for any sustained period, hold much above 6%." | Fortune, 22 Nov 1999 (matched in cached text) |
| 28 | After-tax corporate profits / GDP: Q4 1999 6.0%; Q2 2026 13.1% | FRED CP ÷ GDP, author's calculation |
| 29 | Buffett in 2001 recalled venturing "perhaps 7%" a year, before costs, in 1999 | Fortune 2001 |
| 30 | S&P 500 closes 1,527.46 (24 Mar 2000), 776.76 (9 Oct 2002), −49%; 1,115.10 end 2009 vs 1,469.25 end 1999 | Yahoo Finance ^GSPC |
| 31 | 2008 letter: $14.5 billion of fixed-income purchases from Wrigley, Goldman Sachs and General Electric; inline "a substantial equity participation as a bonus." | 2008 letter (checked) |
| 32 | 2026 summary: 10-year Treasury about 5% (TNX 4.989 on 29 Oct 2026) | Yahoo Finance ^TNX |
| 33 | Timeline: 22 Nov 1999 Fortune; investors' hopes 12.9%–22.6% ("13% to 23%"); Dec 2001 ratio "recently 133%" | Fortune 1999 and 2001 |
| 34 | Quote card: "Our goal is more modest: we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."; inline "two super-contagious diseases, fear and greed."; "euphoria prevails" | 1986 letter (checked) |
| 35 | Oct 2007: P/E 20.68, CAPE 27.32, earnings yield 4.84%, 10-yr 4.53%; S&P 500 pre-crisis peak 9 Oct 2007 (1,565.15) | multpl tables (1 Oct 2007); FRED GS10; Yahoo ^GSPC |
| 36 | Thought experiment: 20.4×, 52.8×, 100.9× | author's calculation, labelled example |
Not used: a Fortune 2001 statement about the level of his chart in early 2000 beyond "approaches 200%" (the chart itself is not in the archived text); a claim that 2009 earnings fell "mostly because of bank write-offs" (no source opened).
Consistency edit, 2026-10-30
1986 "fearful/greedy" quote card converted to inline (card lives in ch3). Buffett indicator: GuruFocus 233.6% removed; book standardised on the Fed Z.1 nonfinancial series (row 26), GuruFocus kept only as a one-line note.
Chapter 23 Growth and Value Are Joined at the Hip
Chapter 23 · Growth and Value Are Joined at the Hip · sources
Checked 2026-10-30. In order of appearance. "Derived" = arithmetic by the author from the sourced inputs.
Price data: Yahoo Finance chart API daily closes, cached in .cache/prices/ (split-adjusted, not dividend-adjusted), turned into chart data with build/tools/prices.mjs and indexed by the author.
Short names
Claims in order
| Claim | Source |
|---|---|
| JetBlue IPO Fri 12 Apr 2002 at $27, closed about $45 | JBIPO |
| JetBlue commenced service February 2000 (11 Feb 2000) | JB02 |
| JetBlue 2002 net income $54.9M; "unprecedented losses in 2002 and 2001" for the industry | JB02 |
| Amazon 2002 net loss $149.1M; public since May 1997 (first YF close 15 May 1997) | AM02; YF |
| JetBlue sales $635.2M (2002) → $9,062M (2025) = 14.3× | JB02; JB25; derived |
| Amazon net sales $3,932.9M (2002) → $716,924M (2025) = 182× | AM02; AM25; derived |
| $100 at 12 Apr 2002 close: JBLU → $22.88; AMZN → $36,633; ^GSPC → $695 (29 Oct 2026) | YF; derived |
| 1992 letter: "value"/"growth", "as a form of intellectual cross-dressing", fuzzy thinking he once engaged in | L1992 |
| Quote card "In our opinion, the two approaches are joined at the hip…" | L1992 (verbatim) |
| "value investing" redundant; low P/B, low P/E, high yield "far from determinative" | L1992 |
| Quote card "Growth benefits investors only when…"; "In the case of a low-return business requiring incremental funds, growth hurts the investor." | L1992 (verbatim) |
| Fig 23.1 values ($50/$100/$150/$300) | example, derived |
| See's bought 1972 for $25M; sales $30M; pre-tax < $5M; capital $8M; ~60% pre-tax on capital; cash sales, short cycle | L2007 |
| 16M lb (1972) → 31M lb (2007), 2% a year; 2007 pre-tax $82M on $40M capital; $32M reinvested; $1.35B pre-tax earnings | L2007 |
| FlightSafety bought 1996; simulator > $12M; pre-tax $111M → $270M; incremental investment $509M; ~31% = 159/509 | L2007; derived |
| Quote card "The worst sort of business… Think airlines." | L2007 (verbatim) |
| Three savings accounts (great / good / gruesome) | L2007 |
| JetBlue total assets $1,378.9M, Amazon $1,990.4M at end 2002 | JB02; AM02 |
| JetBlue 2002 operating margin 16.5%; 39 A320s "currently" (10-K filed early 2003); property and equipment $997.2M | JB02 |
| Amazon vendor terms "that extend beyond the amount of time necessary to collect proceeds from our customers"; accounts payable $618.1M; inventories $202.4M; operating cash flow $174.3M; fixed-asset purchases $39.2M (2002) | AM02 |
| JetBlue highest close 9 Oct 2003, 2.34× first close | YF JBLU |
| 2 May 2019 CNBC interview; "I've been a fan, and I've been an idiot for not buying"; "no personality changes taking place" | AP2019 |
| Amazon 2025 net income $77,670M; total assets $818,042M | AM25 |
| JetBlue 2025 net loss $602M; 288 aircraft; total assets $16,570M (12× 2002) | JB25; derived |
| JBLU close $3.05 on 29 Oct 2026, −77% from first close | YF; derived |
| Berkshire did not buy Amazon until 2019, 22 years after the 1997 listing | AP2019; YF; derived |
| Amazon 2025 operating cash flow $139,514M; payments for property and equipment $131,819M | AM25 |
| "regularly poured money into the domestic airline business to finance profitless (or worse) growth"; quote card on Orville and Kitty Hawk | L1992 (verbatim) |
| USAir preferred 1989; "as the ink was drying on our check"; dividend stopped; sold 1998 at a gain; bankrupt twice in the following decade | L2007 |
| Acquisition example ($1B for $40M a year = 4%) | example |
| See's: family wanted $30M, Munger said worth it, Buffett bid $25M, "made me gulp", three times net tangible assets; $1.9B pre-tax on $40M added investment; 1972 "a turning point" | L2014 |
| Munger's blueprint "Forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices." | L2014 (verbatim) |
| Coca-Cola 1972 P/E 46.4, warranted 82.3; Polaroid 94.8, warranted 11.9 | SIEGEL Table 1 |
| Thought experiment figures | example |
| Cost of capital 8–10% range | labelled example in text |
Consistency edit, 2026-10-30
See's Candies trimmed (Chapters 10 and 14 own it): sales $30M, 60% pre-tax, 16M→31M pounds, $82M on $40M, the numbers box, the $30M asking price/Munger, and $1.9B/$40M REMOVED; kept $25M, $8M, ~2%/yr volume, $32M, $1.35B (2007 letter) and "made me gulp" (2014 letter, verified).
Chapter 24 Cheap for a Reason: Cigar Butts, Value Traps and the Textile Mill
Chapter 24 · Cheap for a Reason: Cigar Butts, Value Traps and the Textile Mill · sources
Checked 2026-10-30. In order of appearance. "Derived" = arithmetic by the author from the sourced inputs.
Every factual claim in this chapter comes from the Berkshire Hathaway shareholder letters, https://www.berkshirehathaway.com/letters/ (cached in .cache/letters/<year>.txt; quote cards and inline quotes checked with build/tools/check-quotes.py). Short names: L1977, L1978, L1985, L1989, L2014.
Claims in order
| Claim | Source |
|---|---|
| First BPL purchase of Berkshire in December 1962 at $7.50; working capital $10.25 and book value $20.20 per share | L2014 |
| $7.50 / $20.20 = 37 cents per dollar of net worth | derived |
| Buying control was the first mistake | L1989 ("My first mistake, of course, was in buying control of Berkshire"); L2014 |
| Mills closed in 1985 | L1985; L2014 |
| NICO bought inside Berkshire rather than BPL "diverted $100 billion or so" from BPL partners | L2014 |
| Had to learn the lesson "several times over" | L1989 |
| Graham taught him the bargain technique | L2014 ("Ben Graham had taught me that technique") |
| Quote card "A cigar butt found on the street…"; "some hiccup in the fortunes of the business" | L1989 (verbatim) |
| Concept-box example ($10 vs $7, ~40%) | example |
| "many dozens of free puffs" in the 1950s; "by far the best of my life"; scalable "only to a point"; "the wrong foundation on which to build a large and enduring enterprise"; dating vs marriage; Berkshire "a highly satisfactory date" | L2014 |
| $8M purchase / $10M sale example; "only a few percent on cost" | L1989 |
| Fig 24.1 returns 28.0 / 14.6 / 10.5 / 7.3 / 5.0% (3% yearly payout on $8M assumed) | example, derived (IRR) |
| Quote card "Time is the friend of the wonderful business, the enemy of the mediocre." | L1989 (verbatim) |
| "probably will not turn out to be such a steal after all"; "no sooner is one problem solved than another surfaces"; "never is there just one cockroach in the kitchen"; "quickly eroded by the low return that the business earns" | L1989 (verbatim) |
| 1948: predecessors earned almost $18M after tax, 10,000 employees; IBM $28M; decade after 1955 merger: sales $595M, aggregate loss $10M; two mills by 1964; "So much for single year snapshots as adequate portrayals of a business" | L1977 |
| Hochschild Kohn: bought shortly after Berkshire at a substantial discount from book; first-class people; unrecorded real estate values and LIFO cushion; "How could I miss?"; sold three years later for about what he paid | L1989 |
| 1955 merger: fourteen plants, 10,000 employees, "the giant of New England textiles"; board minutes 29 July 1954 (industry going out of business forty years earlier); seven years of overall loss; net worth −37%; nine plants closed; buybacks | L2014 |
| May 6, 1964 offer for 225,000 shares at $11.375; Stanton agreed $11.50; Buffett didn't tender; "monumentally stupid decision"; control at early-May 1965 board meeting; ~40% annual return if he had tendered | L2014 |
| Net worth $22M at control, all in textiles | L1985; L2014 |
| 1967 NICO purchase for $8.6M funded partly by textile cash, inventories, receivables and fixed assets | L2014 ($8.6M); L1985 (funding) |
| 1975 Waumbec Mills, a "bargain", closed not many years later | L2014; L1985 ("synergy (a term widely used in business to explain an acquisition that otherwise makes no sense)") |
| 1978: textile earnings $1.3M on $17M capital; "Slow capital turnover, coupled with low profit margins on sales, inevitably produces inadequate returns on capital"; "The problem, of course, is that our competitors are just as diligently doing the same thing." | L1978 |
| July 1985 decision to close; Business Week: 250 textile mills closed since 1980 | L1985 |
| Ken Chace, Garry Morrison excellent managers; textile business "never became a good earner, not even in cyclical upturns" | L1985 |
| Textile pre-tax operating earnings 1977–1985 ($000): −620, 2,916, 1,723, −508, −2,669, −1,545, −100, 418, −2,395 (sum −2,780) | L1978–L1985 earnings tables (each year's figure from that year's letter) |
| See's pre-tax earnings, whole company, 1977–1985 ($000): 12,840; 12,482; 12,785; 15,031; 21,891; 23,884; 27,411; 26,644; 28,989 (sum 181,957) | same tables |
| See's bought for $25M in 1972 | L2007; L2014 |
| 1978 reasons for staying in textiles; "average modest cash returns relative to investment"; "was very wrong" about (4); cash consumed after 1979 | L1978; L1985 |
| Capex proposals that each looked like winners; competitors' matching investment; parade / tiptoe image; "all the players had more money in the game and returns remained anemic" | L1985 |
| Burlington: largest U.S. textile company 1964 and 1985; sales $1.2B vs $50M (1964); ~$3B capex 1964–85; sales ~$2.8B (1985); 2-for-1 split 1965; $60 → 34 (adjusted ~68); CPI more than tripled; one-third the purchasing power | L1985 |
| Quote card "Should you find yourself in a chronically-leaking boat…"; "is far more a function of what business boat you get into than it is of how effectively you row" | L1985 (verbatim) |
| Auction early 1986: ~750,000 sq ft in New Bedford; "eminently usable"; cost ~$13M incl. $2M in 1980–84; replacement $30–50M; gross proceeds $163,122; net less than zero; looms bought for $5,000 in 1981, no takers at $50, scrapped at $26; two Buffalo paper routes or one See's store; over 1,000 people employed | L1985 |
| Quote card "It's far better to buy a wonderful company at a fair price…"; Charlie understood early, "I was a slow learner"; liquidator exception | L1989 |
| Munger's blueprint; See's at three times net tangible assets; $1.9B pre-tax by 2014 | L2014 |
| Dexter Shoe 1993: "in no way looked to me like a cigar butt"; $433M; value to zero; shares now worth about $5.7B | L2014 |
| Ice-cube thought experiment and Fig 24.3 ($100M cash, 20% burn, $50M price) | example, derived |
Consistency edit, 2026-10-30
Cross-ref for See's ($1.9B by 2014) now points to Chapter 14 (was Chapter 23).
Chapter 25 1973–74: The Nifty Fifty and the Washington Post
Chapter 25 · 1973–74: The Nifty Fifty and the Washington Post · sources
Checked 2026-10-30. In order of appearance. "Derived" = arithmetic by the author from the sourced inputs.
Price data: Yahoo Finance chart API daily closes, cached in .cache/prices/ (prices only), turned into chart data with build/tools/prices.mjs.
Short names
| Short | Source |
|---|---|
| YF | Yahoo Finance daily closes, https://query1.finance.yahoo.com/v8/finance/chart/%5EGSPC (fetched 2026-10-30) |
| L1977 / L1978 / L1985 | Berkshire shareholder letters, https://www.berkshirehathaway.com/letters/ (cached .cache/letters/<year>.txt; checked with build/tools/check-quotes.py) |
| L1977–L1990 tables | Equity holdings tables in the 1977–1985 letters (Washington Post Company line: shares, cost, market) |
| BRKTABLE | Berkshire 2025 letter, "Berkshire's Performance vs. the S&P 500", https://www.berkshirehathaway.com/letters/2025ltr.pdf (build/charts/data/brk_vs_spx.json) |
| SIEGEL | Jeremy J. Siegel, "Valuing Growth Stocks: Revisiting the Nifty Fifty", AAII Journal, October 1998, https://www.aaii.com/journal/article/valuing-growth-stocks-revisiting-the-nifty-fifty ; Table 1 image https://www.aaii.com/images/journal/6924-table-1.jpg (both saved to .cache/sources/aaii-siegel-1998*) |
| OIL | U.S. Department of State, Office of the Historian, "Oil Embargo, 1973–1974", https://history.state.gov/milestones/1969-1976/oil-embargo |
| CPI | Economic Report of the President 2017, Table B-10 (CPI-U Dec–Dec change, 1974: 12.3%), https://www.govinfo.gov/content/pkg/ERP-2017/pdf/ERP-2017-table10.pdf ; cross-check https://cpiinflationcalculator.com/1974-cpi-inflation-united-states/ (Dec 1974: 12.3%) |
| UNEMP | BLS, Monthly Labor Review, March 1982, https://www.bls.gov/opub/mlr/1982/03/art1full.pdf (May 1975 9.0%, postwar high) |
| RECESSION | 1973–75 recession, https://en.wikipedia.org/wiki/1973%E2%80%931975_recession (search summary) |
| FORBES74 | "Look At All Those Beautiful, Scantily Clad Girls Out There!", Forbes, 1 Nov 1974, as reprinted at ValueWalk, https://www.valuewalk.com/buffett-graham-proclaim-1974-time-buy/ and The Value Investor blog, https://thevalueinvestorblog.blogspot.com/2010/07/warren-buffett-1974.html (wording matched in both) |
| WPOIPO | Washington Post Company IPO, 1971 (Class B, ~1.35M shares): Encyclopedia.com company history, https://www.encyclopedia.com/books/politics-and-business-magazines/washington-post-company ; June 1971 date and $26 price per search summaries (scripophily.com, zippia.com) |
| WATERGATE | Watergate scandal, https://en.wikipedia.org/wiki/Watergate_scandal (break-in 17 June 1972; Nixon resigned 9 Aug 1974; Woodward and Bernstein) |
Claims in order
| Claim | Source |
|---|---|
| S&P 500 record close 120.24 on 11 Jan 1973; 62.28 on 3 Oct 1974; −48.2%; 21 months | YF; derived |
| Oil prices quadrupled; a president resigned | OIL; WATERGATE |
| Berkshire share price −48.7% in 1974, S&P with dividends −26.4% | BRKTABLE |
| Nifty Fifty: Xerox, IBM, Polaroid, Coca-Cola named in text; Avon, McDonald's, Disney in Table 1; list from Morgan Guaranty Trust; "virtually none" cut dividends since WWII; size let institutions buy without moving prices | SIEGEL |
| "were often called one-decision stocks: buy and never sell." | SIEGEL (verbatim) |
| Average P/E 41.9 vs S&P 18.9 (1972); over one-fifth above 50; Polaroid 94.8 | SIEGEL; Table 1 |
| Earnings yield at 95× about 1% | derived |
| Pension managers: record 122% of net funds into equities in 1971 "at full prices"; record low 21% in 1974 "after the bottom had fallen out"; 9% in 1978 (new record low) | L1978 |
| Arab members of OPEC embargo, October 1973 (during the 1973 Arab-Israeli war); lifted March 1974; price "first doubled, then quadrupled" | OIL |
| CPI-U +12.3% Dec 1973–Dec 1974 | CPI |
| Recession 1973–75; unemployment 9.0% in May 1975, postwar high | RECESSION; UNEMP |
| Stagflation concept example (2% vs 8%) | example |
| Bear market −48%; S&P first close above 120.24 on 17 Jul 1980 (121.44), about 7.5 years later | YF; derived |
| Forbes retrospective "popular delusions and the madness of crowds"; "The delusion was that these companies were so good it didn't matter what you paid for them" | SIEGEL (quoting Forbes) |
| Warranted P/E concept; study Dec 1972–Aug 1998 | SIEGEL |
| Fig 25.2 values: Coca-Cola 46.4/82.3; Philip Morris 24.0/68.5; McDonald's 71.0/63.2; Avon 61.2/24.2; Xerox 45.8/19.4; Polaroid 94.8/11.9; S&P 18.9/18.9 | SIEGEL Table 1 |
| EPS growth through 1996: Coca-Cola 13.5%, Philip Morris 17.9%, Polaroid −2.9%, Xerox 5.1% | SIEGEL Table 1 |
| Equal-weighted rebalanced portfolio 12.5% a year vs S&P 500 12.7% (Dec 1972–Aug 1998); "but by a very small margin" | SIEGEL; Table 1 |
| Berkshire vs S&P 1972–1977 yearly figures (Fig 25.3) | BRKTABLE |
| Unrealized loss of $17M at end of 1974 | L1977 |
| Quote card "Most of our large stock positions are going to be held for many years…" | L1977 (verbatim) |
| Forbes 1 Nov 1974: "How do you contemplate the current stock market…"; "Like an oversexed guy in a harem"; "This is the time to start investing"; "Now is the time to invest and get rich." | FORBES74 |
| Four tests; "(4) priced very attractively"; "(4) often prevents action"; 1971 insurance stocks $10.7M cost / $11.7M market; "equities of identifiably excellent companies available - but very few at interesting prices" | L1978 |
| End 1975: $39.3M market = cost; end 1978: cost $129.1M, market $216.5M; Dow 852 → 805 | L1978 |
| Quote card "It was a marvelous period for the value-oriented equity buyer."; prefers no quick upward revaluation | L1978 (verbatim) |
| Washington Post Company public in 1971 (June); newspaper and television stations | WPOIPO |
| Watergate break-in June 1972; Woodward and Bernstein; Nixon resigned 9 Aug 1974 | WATERGATE |
| Bought all WPC holdings mid-1973 at "not more than one-fourth" of per-share value; analysts' estimate $400–500M; $100M market value "was published daily for all to see" | L1985 |
| End 1974: loss of about 25%, $8M vs $10.6M cost; WPC "continued to do fine"; below 20 cents on the dollar | L1985 |
| Stake market values: 1977 $33.4M; 1978 $43.4M; 1979 $39.2M; 1980 $42.3M; 1981 $58.2M; 1982 $103.2M; 1983 $136.9M; 1984 $150.0M; 1985 $205.2M plus redemption = $221M total | L1977–L1985 tables; L1985 |
| $33.4M = 3.1× cost; $221M = 21× | derived |
| Triple dip; Kay Graham's buybacks; $40–60M in other media favourites; extra $160M "in very large part" from her decisions; left WPC board early 1986 because of Capital Cities | L1985 |
| Quote card "Our advantage, rather, was attitude…"; institutions treated business value as of minor relevance; efficient-market academics; "enormously indebted to those academics" | L1985 (verbatim) |
| Price arithmetic: 95× halved ≈ 47×; quarter of value falling a quarter → under a fifth | derived |
| Thought-experiment answer and Try-it multiples (15, 20–25) | example |
Chapter 26 Black Monday, 1987
Chapter 26 · Black Monday, 1987 · sources
Checked 2026-10-30. In order of appearance. "Derived" = arithmetic by the author from the sourced inputs.
Price data: Yahoo Finance chart API daily closes, cached in .cache/prices/ (split-adjusted, not dividend-adjusted), turned into chart data with build/tools/prices.mjs.
Short names
| Short | Source |
|---|---|
| YF | Yahoo Finance daily closes, https://query1.finance.yahoo.com/v8/finance/chart/ |
| L1987 / L1988 / L1989 | Berkshire shareholder letters, https://www.berkshirehathaway.com/letters/1987.html, 1988.html, 1989.html (cached in .cache/letters/; quote cards checked with build/tools/check-quotes.py) |
| L2025 | Berkshire 2025 letter, https://www.berkshirehathaway.com/letters/2025ltr.pdf (performance table; holdings table "The Coca-Cola Company") |
| BRADY | Report of the Presidential Task Force on Market Mechanisms (Nicholas F. Brady, chairman), January 1988. PDF copy: https://pages.nes.ru/aobizhaeva/BradyReport_1988_on_market_crash.pdf (PDF page numbers below) |
| FEDHIST | Donald Bernhardt and Marshall Eckblad, "Stock Market Crash of 1987", Federal Reserve History, https://www.federalreservehistory.org/essays/stock-market-crash-of-1987 |
| BEA | Real GDP, percent change from preceding year (A191RL1A225NBEA), U.S. Bureau of Economic Analysis via FRED, https://fred.stlouisfed.org/series/A191RL1A225NBEA |
| SEC-MWCB | SEC Release No. 34-93281 (2021), Phlx filing on market-wide circuit breakers, https://www.sec.gov/files/rules/sro/phlx/2021/34-93281.pdf ("first adopted in 1988 and, in 2012 … amended"; four Level 1 halts on 9, 12, 16 and 18 March 2020) |
Claims in order
| Claim | Source |
|---|---|
| S&P 500 closed 224.84 on Mon 19 Oct 1987, from 282.70 on Fri 16 Oct, −20.47% | YF ^GSPC |
| Dow −508 points, −22.6% on 19 Oct | FEDHIST; BRADY p.21 |
| Berkshire Class A $3,890 (16 Oct) → $3,170 (19 Oct) | YF BRK-A |
| 1929: Dow −12.8% on 28 Oct 1929 and −11.7% the next day; no 1929 day matches 19 Oct | BRADY p.21 |
| Trading session 9:30 a.m. to 4 p.m. ("six and a half hours") | BRADY (4 p.m. close, p.56); NYSE hours |
| Berkshire net worth per share +19.5% in 1987 | L1987, first paragraph |
| Real GDP +3.5% (1987), +4.2% (1988) | BEA |
| S&P 500 finished 1987 at 247.08 vs 242.17 at end of 1986 | YF ^GSPC |
| 604 million shares on 19 Oct; just under $21 billion | BRADY p.56 |
| S&P 500 with dividends +5.1% in 1987; Berkshire share price +4.6% | L2025 performance table (build/charts/data/brk_vs_spx.json) |
| Washington Post bought 1973 at $5.63/share, earned $10.30/share in 1987; GEICO bought 1976, 1979, 1980 at avg $6.67, earned $9.01 in 1987 | L1987 |
| S&P peak 336.77 on 25 Aug 1987; +39% from 242.17 | YF ^GSPC; derived |
| Trade deficit for August $15.7 billion, ~$1.5 billion above expectations, announced 8:30 a.m. 14 Oct; Ways and Means takeover-tax legislation | BRADY p.17 ("The Market Break") and p.35 |
| S&P −2.95% (14 Oct), −2.34% (15 Oct), −5.16% (16 Oct) to 282.70 | YF ^GSPC |
| Dow −769 points, −31%, Tue 13 Oct close to Mon 19 Oct close; value of all U.S. stocks down almost $1.0 trillion | BRADY p.21 |
| Chart 26.1: 13 Oct close 314.52; 4 Dec low 223.92 | YF ^GSPC |
| Portfolio insurance popular 1986–87 | L1987 ("embraced in 1986-1987"); BRADY p.27 |
| Typical model: sell >20% of portfolio after a 10% fall; $60–90 billion under portfolio insurance; assets grew more than fourfold in 1987 | BRADY p.49 (and footnote) ; L1987 cites the same $60–90 billion |
| Most insurers traded index futures, some authorised to trade only futures | BRADY p.27 |
| 19 Oct: three insurers' sell programs just under $2 billion of ~$21 billion NYSE sales; insurer futures sales equivalent to $4 billion, 34,500 contracts, over 40% of futures volume excluding locals; top 15 stock sellers ~20% of sales ($4.1 billion) | BRADY p.56 |
| "an exotically-labeled version of the small speculator's stop-loss order" | L1987 (FOUND by check-quotes) |
| Quote card "After buying a farm…" | L1987 |
| Ford / General Electric example; buying back after prices rebound | L1987 |
| Advisor told client to sell 70% of remaining equities on Monday | BRADY p.49 |
| Mutual fund redemptions | BRADY pp.17, 49 |
| S&P 500 futures −29% on 19 Oct; Dow fell almost 300 points in last hour and a quarter, closed at 1,738 | BRADY p.56 |
| Chart 26.3: largest one-day % falls since Jan 1970 (19 Oct 1987 −20.47; 16 Mar 2020 −11.98; 12 Mar 2020 −9.51; 15 Oct 2008 −9.03; 1 Dec 2008 −8.93; 29 Sep 2008 −8.81; 26 Oct 1987 −8.28) | YF ^GSPC, derived |
| Fed statement 20 Oct 1987, verbatim "consistent with its responsibilities as the Nation's central bank, affirmed today its readiness to serve as a source of liquidity to support the economic and financial system" | FEDHIST |
| Fed encouraged banks to keep lending on usual terms; 10 largest New York banks nearly doubled lending to securities firms that week | FEDHIST |
| Dow regained 288 points, 57% of the loss, in two sessions | FEDHIST |
| Low for the year 223.92 on 4 Dec 1987 | YF ^GSPC |
| Circuit breaker rules first adopted 1988, amended 2012; four halts March 2020 | SEC-MWCB |
| Permanent holdings Capital Cities/ABC, GEICO, Washington Post; little to do in stocks for several years; tax-exempt bonds around $900 million; $700 million Salomon 9% convertible preferred | L1987 |
| BRK-A $4,250 on 2 Oct 1987 (high close of 1987); $2,675 on 27 Oct (low); −37% | YF BRK-A; derived |
| S&P over same span: 328.07 (2 Oct) to 227.67 (26 Oct), about −31% | YF ^GSPC; derived |
| "a few stocks fell to prices that interested us, but we were unable to make meaningful purchases before they rebounded"; no major holding over $50 million except permanent/arbitrage at year end | L1987 |
| Coke purchases from summer 1988 after 52 years; 23,350,000 shares at end 1989, cost $1,023.9 million, market $1,803.8 million | L1989 |
| Berkshire share price +59.3% (1988) vs S&P +16.6%; +84.6% (1989) vs +31.7% | L2025 performance table |
| Timeline: Fed statement; Berkshire year-end figures; 14,172,500 Coke shares cost $592.5 million at end 1988 | FEDHIST; L1987; L1988 |
| "he is forced, by either financial or psychological pressures, to sell at untoward times" | L1987 |
| Quote card "Such markets are ideal…" and context (commentators on small investors) | L1987 |
| Coke −24.7% on 19 Oct 1987 (2.5312 → 1.9062 split-adjusted) | YF KO |
| Goizueta CEO from 1981, with Don Keough; overseas sales "virtually exploding" | L1989 |
| Coke near its 16 Oct 1987 price in summer 1988 (2.44 on 30 Jun 1988, 2.76 on 29 Sep 1988 vs 2.53) | YF KO |
| First Coke 1935 or 1936; 1936 buying six for 25 cents at Buffett & Son, selling for 5 cents; list "street railway companies, windmill manufacturers…" | L1989 |
| Chart 26.4 index levels (KO 229.6, BRK 171.6, S&P 116.8 at end 1990; Berkshire low 68.8 on 27 Oct 1987) | YF; derived |
| ~$42/share average 1988 cost ($592.54M ÷ 14,172,500) | L1988; derived |
| End 2025: 400 million Coke shares (9.3%), cost $1,299 million, market value $27,964 million, 2025 dividends $816 million; 816/1,299 ≈ 63% | L2025 holdings table; derived |
| Quote card "In fact, when we own portions…" | L1988 |
| Example: $100,000 → about $79,500 on 19 Oct | derived (−20.47%) |
| S&P first close above 282.70 after the crash: 282.88 on 20 Oct 1988; first close above 336.77: 338.05 on 26 Jul 1989 | YF ^GSPC |
| Monthly average S&P: Aug 1987 ≈ 329.4, Nov 1987 ≈ 245.0 (about 26% lower) | YF ^GSPC; derived |
Dropped
- Dow's exact close 1,738.74: Yahoo's ^DJI history starts in 1992; the chapter uses the Brady Report's "1,738".
- Exact date of the Salomon purchase (reported as late September 1987 in the press): not confirmed in a source I opened, so the chapter just says "that year".
- "Many forecasters expected a depression": no source opened, cut.
Consistency edit, 2026-10-30
Coca-Cola backstory trimmed (owner: ch15); 1988 "holding period is forever" card now inline (card lives in ch15).
Chapter 27 The Dotcom Bubble, 1995–2002
Chapter 27 · The Dotcom Bubble, 1995–2002 · sources
Checked 2026-10-30. In order of appearance. "Derived" = arithmetic by the author from the sourced inputs.
Price data: Yahoo Finance chart API daily closes, cached in .cache/prices/ (split-adjusted, not dividend-adjusted), turned into chart data with build/tools/prices.mjs.
Short names
Claims in order
| Claim | Source |
|---|---|
| Nasdaq closed 5,048.62 on Fri 10 Mar 2000; about 1,005 on 9 Aug 1995 ("about four and a half years… from roughly 1,000") | YF ^IXIC |
| Berkshire Class A closed $41,300 on 10 Mar 2000; $80,900 on 19 Jun 1998 (21 months earlier); −49% | YF BRK-A |
| Nasdaq −77.9% to 1,114.11 on 9 Oct 2002 | YF ^IXIC |
| BRK-A $72,750 at end of 2002, about 10% (10.1%) below $80,900 | YF BRK-A |
| 10 Mar 2000 is BRK-A's lowest close since June 1998 | YF BRK-A (minimum of all closes from 1998-06-19 to 2026-10-29) |
| Sun Valley talk July 1999 at Allen & Co.; second talk Sept 1999; Loomis article 22 Nov 1999, reviewed by Buffett | FORTUNE99 (intro paragraph) |
| "information revolution" (which he "wholeheartedly" believes in) | FORTUNE99 |
| At least 2,000 car makes; one page out of 70; three U.S. car companies by the 1990s | FORTUNE99 |
| Airline profits since the dawn of aviation zero as of 1992 | FORTUNE99 |
| "farsighted enough, and public-spirited enough"; Kitty Hawk 1903, Orville Wright | FORTUNE99 (verbatim) |
| "disappointed that the Buffett family was not short horses" | FORTUNE99 (verbatim) |
| Quote card "The key to investing is not assessing…durability of that advantage." | FORTUNE99 (verbatim) |
| Netscape IPO 9 Aug 1995, priced $28, trading delayed about two hours, opened $71, closed $58.25 | NETSCAPE |
| Netscape founded about 16 months earlier (4 Apr 1994) | NSFOUND |
| Greenspan, 5 Dec 1996, "when irrational exuberance has unduly escalated asset values" (verbatim fragment) | GREENSPAN |
| Nasdaq close 1,300.12 on 5 Dec 1996; rose ~3.9× to Mar 2000 ("almost fourfold… three years and three months") | YF ^IXIC; derived |
| Chart title "almost sevenfold in five years": 743.58 (3 Jan 1995) → 5,048.62 = 6.8× | YF; derived |
| Average first-day IPO return about 15% for 1990–1998 (14.8%); 71% in 1999 (71.2%); 1995–2002 yearly values in Fig 27.2 | RITTER Table 1 |
| 14 IPOs doubled on day one in 1997–98 together (0+2+0+0+0+2+3+7); 115 in 1999 (19+24+27+45) | RITTER Table 5 |
| 856 IPOs in 1999–2000, 78% with negative earnings; 32% for 1990–1998 | RITTER Table 9 |
| Paine Webber–Gallup survey released July 1999: investors under 5 years' experience expected 22.6% a year | FORTUNE99 |
| December 1999 survey average 19% a year | L2000 |
| S&P 500 with dividends about 4.5% a year 2000–2016 | BRKTABLE; derived (compounded 2000–2016 = 4.52%/yr) |
| Quote card "Nothing sedates rationality like large doses of effortless money." | L2000 (verbatim) |
| "never bright and clear"; "when most market participants have recently enjoyed triumphs" | L2000 (verbatim) |
| Cisco FY2000 (ended July 2000): sales +55% to $18.93B; net income $2.67B; pro forma $3.91B | CSCO10K |
| Cisco closed $80.06 on Mon 27 Mar 2000; market value about $555B; most valuable company, ahead of Microsoft | YF CSCO; CSCOMV |
| ~200× profit ($555B / $2.67B = 208); ~140× pro forma ($555B / $3.91B = 142) | derived |
| Earnings yield about half a cent per dollar (0.48%) | derived |
| 10-year Treasury about 6.2% on 27 Mar 2000 (6.195) | YF ^TNX |
| Cisco FY2025 sales $56.7B, net income $10.5B; about 4× 2000 profit (3.9×) | CSCO25; derived |
| Cisco fell 89% to $8.60 on 8 Oct 2002; first close above $80.06 was $80.25 on 10 Dec 2025 (25.7 years) | YF CSCO |
| Cisco's first dividend in 2011 (declared 18 Mar 2011, paid 20 Apr 2011) | CSCODIV |
| "a bird in the hand is worth two in the bush"; ~600 B.C.; three questions (quote card) | L2000 (verbatim) |
| Steam engine, electricity, automobile didn't change the formula "one iota", nor will the Internet; yardsticks only clues to amount and timing of cash flows (paraphrase) | L2000 |
| Lucent lent Winstar more than $700M in 1998; Winstar bankrupt April 2001; $10B lawsuit vs Lucent over the supply agreement / further financing | WINSTAR |
| Chip makers today investing in customers (cross-reference to Ch 31) | Ch 31 sources (Nvidia–OpenAI, AMD–OpenAI) |
| Fed raised its key rate six times, June 1999–May 2000, 4.75% → 6.5% | FED |
| AOL–Time Warner announced 10 Jan 2000, about $165B in AOL stock | AOL |
| AOL Time Warner 2002 net loss $98.7B, then the largest annual loss reported; mostly goodwill write-down | AOL |
| Pets.com IPO Feb 2000 at $11; announced shutdown early Nov 2000, about nine months later | PETS |
| Quote card "At bottom, the 'business model'… But a pin lies in wait for every bubble." | L2000 (verbatim) |
| value "is destroyed, not created, by any business that loses money over its lifetime, no matter how high its interim valuation may get." | L2000 (verbatim) |
| S&P 500 −49.1% (1,527.46 on 24 Mar 2000 → 776.76 on 9 Oct 2002) | YF ^GSPC |
| Fig 27.5 drawdowns, peak close in 1999–2000 to lowest close before end-2003: AMZN −94.4, CSCO −89.3, QCOM −86.8, ORCL −84.2, INTC −82.3, Nasdaq −77.9, MSFT −65.2, S&P −49.1 | YF; derived |
| Fig 27.6 years to regain peak close, and today's price ÷ peak (to 29 Oct 2026): S&P 7.2 (5.1×), AMZN 9.9 (45.7×), Nasdaq 15.1 (5.2×), MSFT 16.8 (8.9×), ORCL 16.8 (3.0×), QCOM 19.8 (2.1×), INTC 25.6 (1.2×), CSCO 25.7 (1.4×) | YF; derived |
| S&P 500 held most of these companies in 2000 (Amazon was not yet a member) | general; wording kept to "most" |
| Quote card circle of competence ("If we have a strength…far beyond our perimeter.") | L1999 (verbatim) |
| 1999: BRK −19.9%, S&P +21.0%; 2000 +26.6 vs −9.1; 2001 +6.5 vs −11.9; 2002 −3.8 vs −22.1 | BRKTABLE |
| "the worst absolute performance of my tenure and, compared to the S&P, the worst relative performance as well"; "Even Inspector Clouseau could find last year's guilty party: your Chairman." | L1999 (verbatim) |
| Barron's "What's Wrong, Warren?", 27 Dec 1999, Andrew Bary; suggested he'd lost his touch | BARRONS |
| 1999–2002: $100 → ~$104 (BRK), ~$75 (S&P with dividends) | BRKTABLE; derived (1.039, 0.755) |
| Dow at 11,194 at the July 1999 talk; most probable return ~6% a year for 17 years (2% inflation, frictional costs) | FORTUNE99 |
| Thought experiment: 1.1^10 = 2.59; $555B → $1.44T; ÷20 = $72B; ÷ $2.67B = 27× (labelled example arithmetic) | derived |
| "speculation is most dangerous when it looks easiest" | L2000 (verbatim) |
| Compare panel "Expect around 20% a year (survey average)" | L2000 (19%) and FORTUNE99 (22.6%) |
Dropped or softened
- Pets.com sock-puppet aside (not needed, not sourced).
- Nortel named as a vendor-financing lender in the diagram (no primary figure found); diagram says "e.g. Lucent".
- AOL deal value kept as "about $165 billion in its own stock" (CNN $164.75B); the SEC purchase-price figure (~$147B) differs because of the share-price date.
- Industry-wide vendor-financing totals ($25–30B in 2000) not used: single secondary source.
Chapter 28 The 2008 Financial Crisis: Leverage Comes Due
Chapter 28 · The 2008 Financial Crisis: Leverage Comes Due · sources
Checked 2026-10-30. In order of appearance. "Derived" = arithmetic by the author from the sourced inputs.
Price data: Yahoo Finance chart API daily closes, cached in .cache/prices/ (split-adjusted, not dividend-adjusted), turned into chart data with build/tools/prices.mjs.
Short names
| Short | Source |
|---|---|
| YF | Yahoo Finance daily closes, https://query1.finance.yahoo.com/v8/finance/chart/ |
| L1986, L2002, L2007, L2008, L2009 | Berkshire shareholder letters, https://www.berkshirehathaway.com/letters/ (cached in .cache/letters/; checked with build/tools/check-quotes.py) |
| L2025 | Berkshire 2025 letter, performance table (build/charts/data/brk_vs_spx.json) |
| LEH10K | Lehman Brothers Holdings Form 10-K for fiscal 2007, https://www.sec.gov/Archives/edgar/data/806085/000110465908005476/a08-3530_110k.htm (Selected Financial Data: total assets $691,063m; leverage ratio 30.7x 2007, 26.2x 2006, 24.4x 2005, 23.9x 2004, 23.7x 2003; stockholders' equity $22,490m) |
| LEHBK | Lehman bankruptcy, 15 Sep 2008, ~$639 billion of assets, largest U.S. bankruptcy filing: Encyclopaedia Britannica, "Bankruptcy of Lehman Brothers", https://www.britannica.com/print/article/2208103 ; Time, 16 Sep 2008, https://content.time.com/time/specials/packages/article/0,28804,1841334_1841431,00.html (search summaries) |
| GS8K | Goldman Sachs releases of 23 and 24 Sep 2008 (Form 8-K exhibit), https://www.sec.gov/Archives/edgar/data/886982/000095012308011720/y71480exv3w1.htm |
| GE8K | General Electric Form 8-K, 1 Oct 2008, https://www.sec.gov/Archives/edgar/data/40545/000119312508204654/d8k.htm |
| BRK10K11 | Berkshire Hathaway 2011 Form 10-K, https://www.sec.gov/Archives/edgar/data/1067983/000119312512079022/d280149d10k.htm (GS preferred redeemed 18 Apr 2011, $5.5 billion; GE preferred redeemed 17 Oct 2011, $3.3 billion; 43,478,260 GS warrants at $115) |
| GS10K13 | Goldman Sachs 2013 Form 10-K, https://www.sec.gov/Archives/edgar/data/886982/000119312514073792/d655877d10k.htm (13.1 million shares delivered 4 Oct 2013) |
| GS10K11 | Goldman Sachs 2011 Form 10-K, https://www.sec.gov/Archives/edgar/data/886982/000119312512085822/d276319d10k.htm (Series G preferred redeemed during 2011) |
| CS | S&P CoreLogic Case-Shiller U.S. National Home Price Index (CSUSHPINSA), FRED, https://fred.stlouisfed.org/series/CSUSHPINSA |
| UNRATE | U.S. unemployment rate, BLS via FRED, https://fred.stlouisfed.org/series/UNRATE |
| FEDRATE | Federal funds target range upper limit (DFEDTARU), FRED, https://fred.stlouisfed.org/series/DFEDTARU |
| FEDSPEC | John Weinberg, "Support for Specific Institutions", Federal Reserve History, https://www.federalreservehistory.org/essays/support-for-specific-institutions |
| FEDAIG | Federal Reserve press release, 16 Sep 2008, https://www.federalreserve.gov/newsevents/pressreleases/other20080916a.htm |
| NYFED | Thomas C. Baxter Jr., testimony on AIG, New York Fed, 26 May 2010, https://www.newyorkfed.org/newsevents/speeches/2010/bax_dah100526.html |
| BSC | Bear Stearns / JPMorgan release, 16 Mar 2008 (Form 425), https://www.sec.gov/Archives/edgar/data/0000777001/000089882208000286/pressrelease.htm ; amended agreement 24 Mar 2008, https://www.sec.gov/Archives/edgar/data/0000019617/000089882208000319/pressrelease.htm ; Bear Stearns merger proxy (DEFM14A), https://www.sec.gov/Archives/edgar/data/777001/000119312508092860/ddefm14a.htm (price table: Q1 2007 high close $171.51; background: 13 March 2008 funding) |
| TARP | U.S. Treasury, "About TARP", https://home.treasury.gov/data/troubled-assets-relief-program/about-tarp |
| NYT08 | Warren E. Buffett, "Buy American. I Am.", The New York Times, 17 Oct 2008, https://www.nytimes.com/2008/10/17/opinion/17buffett.html . NYT blocks automated reading; text taken from two independent reposts dated October 2008 that match word for word: https://itsmorethanmoney.blogspot.com/2008/10/warren-buffett-op-ed-buy-american-i-am.html and https://michaelliew1983.blogspot.com/2008/10/buy-american-i-am.html (saved to .cache/sources/nyt-2008-10-17-buffett-oped.txt) |
Claims in order
| Claim | Source |
|---|---|
| Lehman filed 15 Sep 2008, ~$639 billion of assets, largest U.S. bankruptcy filing | LEHBK; FEDSPEC (date) |
| Lehman $691 billion assets, $22.5 billion equity, 30 Nov 2007 ("ten months earlier") | LEH10K |
| Berkshire $5 billion into Goldman, 10%, 23 Sep 2008 ("eight days after") | GS8K |
| "about $30 for every dollar it owned" | LEH10K (30.7x) |
| "accelerating at a pace that I have never before witnessed" | L2008 |
| S&P 500 1,565.15 (9 Oct 2007) → 676.53 (9 Mar 2009), −56.8% | YF ^GSPC |
| Home prices +85% Jan 2000 (100) → Jul 2006 (184.6); −27% to Feb 2012 (134.0); back above 2006 level Jan 2017 | CS; derived |
| HPA quote "made a borrower's income…would cure all problems" | L2007 |
| Quote card "You only learn who has been swimming naked…" | L2007 (written early 2008) |
| Clayton: 198,888 borrowers; median FICO 644 vs national 723; ~35% below 620; delinquency 3.6% at end 2008 vs 2.9% in 2006; "Lending 101" | L2008 |
| "borrowers who shouldn't have borrowed being financed by lenders who shouldn't have lent"; packaged ("securitized") and sold "to unsuspecting investors" | L2008 |
| "Beware of geeks bearing formulas." | L2008 |
| Securitisation example ($100 million pool) | example by the author |
| Leverage example ($500,000 home) | example by the author |
| Lehman leverage 30.7x vs 23.7x in 2003 | LEH10K |
| Borrowed $668.6 billion (691.063 − 22.490); 3.3% (1/30.7) | derived from LEH10K |
| 1% spread × 30 ≈ 30% on equity | example arithmetic |
| 2002 letter: collateral on downgrade spiral; dealers "could quickly infect the others"; Gen Re derivatives being unwound | L2002 |
| Quote card "In our view, however, derivatives are financial weapons…" | L2002 |
| AIG FP credit default swaps on multi-sector CDOs; collateral calls on downgrade; "clearly would have been directly impacted by an AIG bankruptcy filing" | NYFED |
| AIG: up to $85 billion, 79.9% equity interest, 16 Sep 2008 | FEDAIG |
| AIG ~$1 trillion reported assets mid-2008 | FEDSPEC |
| Bear Stearns ~$400 billion assets March 2008 | FEDSPEC |
| Bear high close $171.51 (Q1 2007) | BSC (proxy price table, closing prices) |
| 13 March 2008 counterparties/lenders unwilling to fund on customary terms | BSC (proxy background) |
| 16 Mar 2008 deal ~ $2/share (0.05473 JPM shares); NY Fed to finance up to $30 billion of less liquid assets | BSC (16 Mar release); FEDSPEC (Sunday 16 March) |
| Raised to ~$10/share (0.21753), 24 Mar 2008, after shareholder protest | BSC (amended release; proxy) |
| 16 Sep: a prominent money market fund couldn't redeem at $1 per share | FEDSPEC |
| $700 billion TARP, law 3 Oct 2008 | TARP |
| Fed target to 0–0.25%, 16 Dec 2008 | FEDRATE |
| "In poker terms, the Treasury and the Fed have gone 'all in.'"; inflation side effect; "was essential last year if the financial system was to avoid a total breakdown." | L2008 |
| Unemployment 5.0% Dec 2007 → 10.0% Oct 2009 | UNRATE |
| S&P first close above 1,565.15: 1,569.19 on 28 Mar 2013 | YF ^GSPC |
| "Gibraltar-like financial position"; $58.5 billion float | L2008 |
| Goldman terms: $5 billion perpetual preferred, 10%, callable any time at 10% premium; warrants on $5 billion at $115 for five years; 24 Sep public offering ~$5 billion at $123 | GS8K |
| GE terms: $3 billion 10% cumulative perpetual preferred, redeemable after three years at 110%; warrants for 134.8 million shares at $22.25 for five years; announced 1 Oct 2008 | GE8K |
| GS closed $52 on 20 Nov 2008 | YF GS |
| BRK-A $149,200 (10 Dec 2007) → $72,400 (5 Mar 2009), −51.5% | YF BRK-A |
| GE preferred redeemed 17 Oct 2011 for $3.3 billion; GS preferred redeemed 18 Apr 2011 for $5.5 billion | BRK10K11; GS10K11 |
| 13.1 million GS shares delivered 4 Oct 2013 | GS10K13 |
| "worth about $2 billion" = 13.1m × $156.55 (4 Oct 2013 close) | YF GS; derived |
| Figure 28.4 "$500 million a year" = 10% × $5 billion | derived from GS8K |
| Quote card "When the financial system went into cardiac arrest…" | L2009 |
| "too-big-to-fail is not a fallback position at Berkshire"; "dwarfed by our own liquidity." | L2009 |
| "I will not trade even a night's sleep for the chance of extra profits." | L2008 |
| ConocoPhillips near the peak, cost several billion; $244 million in two Irish banks written down to $27 million (−89%); sold parts of J&J, P&G, ConocoPhillips to fund Wrigley/Goldman/GE | L2008 |
| Berkshire net worth per share −9.6% in 2008, worst year; S&P −37.0% with dividends | L2008; L2025 table |
| Op-ed 17 Oct 2008; personal account previously only U.S. government bonds; non-Berkshire net worth soon 100% U.S. equities; quotes "I haven't the faintest idea…", "well before either sentiment or the economy turns up", "So if you wait for the robins, spring will be over." | NYT08 |
| Quote card "Our goal is more modest: we simply attempt to be fearful when others are greedy…" | L1986 |
| S&P 940.55 on 17 Oct 2008; −28% to 676.53; 1,257.64 at end of 2010 (+34%) | YF ^GSPC; derived |
Dropped
- Bear Stearns "fifth-largest investment bank" and its Friday 14 March close of about $30: only secondary sources found.
- The Reserve Primary Fund by name: Federal Reserve History says "a prominent money market fund"; kept unnamed.
- Lehman leverage bar chart (2003–2007) cut for layout; the 23.7x figure stays in the text.
Consistency edit, 2026-10-30
1986 fearful/greedy card and 2002 "financial weapons of mass destruction" card converted to inline (cards live in ch3 and ch12).
Chapter 29 March 2020: The Fastest Crash
Chapter 29 · March 2020: The Fastest Crash · sources
Checked 2026-10-30. In order of appearance. "Derived" = arithmetic by the author from the sourced inputs.
Price data: Yahoo Finance chart API daily closes, cached in .cache/prices/ (split-adjusted, not dividend-adjusted), turned into chart data with build/tools/prices.mjs (indexed series via a short script; source note inside each data file).
Short names
| Short | Source |
|---|---|
| YF | Yahoo Finance daily closes, https://query1.finance.yahoo.com/v8/finance/chart/ |
| L1987, L2007, L2016, L2019, L2020, L2021 | Berkshire shareholder letters, https://www.berkshirehathaway.com/letters/ (cached in .cache/letters/; checked with build/tools/check-quotes.py) |
| L2025 | Berkshire 2025 letter, performance table (build/charts/data/brk_vs_spx.json) |
| Q1-20 / Q2-20 | Berkshire Hathaway Form 10-Q, quarters ended 31 Mar 2020 and 30 Jun 2020, https://www.berkshirehathaway.com/qtrly/1stqtr20.pdf and https://www.berkshirehathaway.com/qtrly/2ndqtr20.pdf |
| SEC-MWCB | SEC Release No. 34-93281 (2021), Phlx filing on market-wide circuit breakers, https://www.sec.gov/files/rules/sro/phlx/2021/34-93281.pdf |
| FED0315 | Federal Reserve press release, 15 Mar 2020, https://www.federalreserve.gov/newsevents/pressreleases/monetary20200315a.htm |
| FED0323 | Federal Reserve press release, 23 Mar 2020, https://www.federalreserve.gov/newsevents/pressreleases/monetary20200323b.htm |
| FEDRATE | Federal funds target range upper limit (DFEDTARU), FRED, https://fred.stlouisfed.org/series/DFEDTARU |
| CARES | U.S. Treasury, "About the CARES Act", https://home.treasury.gov/policy-issues/coronavirus/about-the-cares-act |
| UNRATE | U.S. unemployment rate (BLS) via FRED, https://fred.stlouisfed.org/series/UNRATE |
| DAL10Q | Delta Air Lines Form 10-Q, quarter ended 30 Jun 2020, https://www.sec.gov/Archives/edgar/data/27904/000002790420000010/dal-20200630.htm |
| REUTERS | Reuters report of the 2 May 2020 Berkshire meeting, as republished by Malay Mail, 3 May 2020, https://www.malaymail.com/news/money/2020/05/03/berkshire-sells-entire-stakes-in-us-airlines/1862516 ; MercoPress, 4 May 2020, https://en.mercopress.com/2020/05/04/buffett-sold-its-entire-stakes-at-the-four-largest-us-airlines-the-world-has-changed |
Claims in order
| Claim | Source |
|---|---|
| S&P 500 3,386.15 (Wed 19 Feb 2020) → 2,237.40 (Mon 23 Mar), −33.9%; 33 calendar days | YF ^GSPC; derived |
| 22 trading days from record to first close ≥30% below (20 Mar 2020); fastest such fall since 1970 | YF ^GSPC (1970–2026); derived |
| New record 3,389.78 on 18 Aug 2020 | YF ^GSPC |
| Berkshire cash and cash equivalents $38.7bn + T-bills $94.6bn (insurance and other) + $3.9bn (railroad, utilities and energy) ≈ $137bn at 31 Mar 2020 | Q1-20 balance sheet; derived |
| Chapters 26 and 28 references (Coca-Cola, Goldman $5bn at 10%) | see sources/ch26.md and sources/ch28.md |
| VIX record close 82.69 on 16 Mar 2020; 14.38 on 19 Feb; 2008 peak close 80.86 on 20 Nov 2008; range 12.10–18.84 from 1 Dec 2019 to 19 Feb 2020 | YF ^VIX |
| Record to −30%: Jan 1973 → Jul 1974 373 trading days (540 calendar); Mar 2000 → Sep 2001 369 (542); Oct 2007 → Oct 2008 250 (363); Aug 1987 → Oct 1987 38; Feb 2020 → Mar 2020 22 | YF ^GSPC; derived |
| Daily moves: 9 Mar −7.60%; 12 Mar −9.51%; 13 Mar +9.29%; 16 Mar −11.98% (second-worst since 1970) | YF ^GSPC; derived |
| Circuit breakers first adopted 1988, amended 2012; Level 1 7%, Level 2 13%, Level 3 20%; L1/L2 before 3:25 p.m. halt 15 minutes; L3 halts for rest of day; four L1 halts on 9, 12, 16, 18 Mar 2020, each resumed 15 minutes later | SEC-MWCB |
| Black Monday −20.5% would trigger Level 3 | derived (ch26 sources; SEC-MWCB thresholds) |
| 3 Mar 2020 half-point cut (target upper 1.75 → 1.25) | FEDRATE |
| 15 Mar: 0–0.25%; at least $500bn Treasuries, at least $200bn agency MBS | FED0315 |
| 23 Mar: purchases "in the amounts needed"; PMCCF and SMCCF for corporate bonds; programmes up to $300bn of new financing; $30bn Treasury equity | FED0323 |
| CARES Act signed into law 27 Mar 2020 | CARES |
| Unemployment 3.5% Feb 2020 (lowest since 1969, ~50 years); 14.8% Apr 2020 (highest in series since 1948; previous high 10.8% Nov 1982); 8.4% Aug 2020; 4.4% Mar → 14.8% Apr, the largest monthly rise in the series | UNRATE; derived |
| Concept box ($10 a year for 30 years) | example by the author |
| Kitty Hawk joke | see sources/ch27.md (Fortune 1999) |
| Quote card "The airline industry's demand for capital…bottomless pit…" | L2007 |
| First airline stakes in year-end 2016 table: Delta 7.5%, Southwest 7.0% (no airline holdings in the 2015 table) | L2016 |
| Year-end 2019: Delta 11.0% (cost $3,125m), Southwest 9.0% ($1,940m), United 8.7% ($1,195m); total $6.26bn | L2019 holdings table; derived |
| American Airlines about 10% at end of 2019 | REUTERS (MercoPress) |
| Delta June-quarter 2020 operating revenue down $11.1 billion, or 88% | DAL10Q |
| 2 May 2020 meeting held online; sold entire stakes in the four largest U.S. airlines in April; "the world has changed" for airlines; around $7bn or $8bn invested; did not take out anything like that; his mistake; his decision | REUTERS (both versions) |
| L1987 selling rules: "to be more valuable than the underlying facts would indicate it is"; "just because they have appreciated or because we have held them for a long time"; "misread the fundamental economics of a business"; "it is usually far easier to exit" | L1987 |
| Delta $58.51 (19 Feb 2020), $25.91 (30 Apr 2020, −56%) | YF DAL |
| Recovery above 19 Feb 2020 close: UAL 30 Oct 2024 ($80.42 vs $79.42); DAL 6 Nov 2024 ($62.32 vs $58.51); LUV and AAL below on 29 Oct 2026 | YF; derived |
| 29 Oct 2026 vs 19 Feb 2020: S&P ×2.28, DAL ×1.40, UAL ×1.32, LUV ×0.76, AAL ×0.45 | YF; derived (chart 29.4 data) |
| 29 Oct 2026 vs 30 Apr 2020: DAL ×3.15, UAL ×3.56, AAL ×1.06, LUV ×1.40, S&P ×2.65 | YF; derived |
| Airline lows 15 May 2020 ("close to the bottom") | YF |
| First half 2020: sales of equity securities $15,743m; purchases $4,800m | Q2-20 cash flow statement |
| Cash + T-bills ≈ $146.6bn at 30 Jun 2020 ($32.3bn + $110.5bn + $3.8bn) | Q2-20; derived |
| PCC the largest business in Berkshire's manufacturing segment; aerospace; ~$10bn of Q2 2020 impairment charges related to PCC | Q2-20 (MD&A and notes) |
| $11 billion write-down, PCC bought 2016, "I paid too much"; quote card "I was wrong, however…" | L2020 |
| Q2 2020 buybacks ≈ $5.0bn (acquisition of treasury stock $6,739m H1 − $1,741m Q1) | Q1-20, Q2-20 cash flow statements; derived |
| 2020 buybacks $24.7bn, ownership +5.2% | L2020 |
| Berkshire share price +2.4% in 2020; S&P 500 +18.4% with dividends | L2025 performance table |
| Quote card "We want your company to be financially impregnable…" | L2021 |
| Chapter 33 = circle of competence | outline.md |
| March 2020 S&P closes as low as 33.9% below the record ("up to a third off") | YF ^GSPC; derived |
Dropped
- Buffett's exact words at the 2020 meeting: the CNBC transcript archive refused automated access, so meeting remarks are paraphrased from Reuters and MercoPress, without quote marks except the short phrase reported in both.
- "Berkshire sells its whole position rather than trimming": only in a search summary, not in an article I opened.
- Size of the CARES Act: the Treasury page I opened gives the dates but not the dollar size.
- Berkshire's later 2020 purchases (Dominion gas assets, Japanese trading houses): not needed and not sourced, cut.
Chapter 30 Free Money: Meme Stocks, SPACs and the 2022 Rate Shock
Chapter 30 · Free Money: Meme Stocks, SPACs and the 2022 Rate Shock · sources
Checked 2026-10-30. "Yahoo" = Yahoo Finance daily closes in .cache/prices/ (fetched 2026-10-30 with
build/tools/fetch-prices.sh; stocks split-adjusted, dividends excluded). "Letters" = Berkshire letters
in .cache/letters/, verified with build/tools/check-quotes.py.
GameStop prices in the prose are shown as quoted at the time. Yahoo's GME file is split-adjusted; every January 2021 close in it is exactly one quarter of the price quoted at the time (e.g. 86.8775 × 4 = 347.51), so the prose figures are Yahoo × 4.
In order of appearance
| Claim | Source |
|---|---|
| GME close $17.25 on 4 Jan 2021 (first trading day); $347.51 on 27 Jan 2021 (×20.1) | Yahoo GME (4.3125 and 86.8775, × 4); SEC staff report (below) uses 4 Jan as the starting close |
| S&P 500 closed 12 Oct 2022 at 3,577.03, 25.4% below its 3 Jan 2022 record close of 4,796.56 | Yahoo ^GSPC |
| ARK Innovation ETF −81%: close high $156.58 (12 Feb 2021) to close low $29.64 (28 Dec 2022) | Yahoo ARKK |
| Fed cut target range to 0–¼% on 15 Mar 2020; ≥$500B Treasury purchases | https://www.federalreserve.gov/newsevents/pressreleases/monetary20200315a.htm |
| Range stayed 0–¼% until first hike 17 Mar 2022 | https://www.federalreserve.gov/monetarypolicy/openmarket.htm |
| 10-year yield close 0.499% on 9 Mar 2020; under 1% for most of 2020 (year-end 0.917) | Yahoo ^TNX |
| 10-year 0.93% at year-end 2020, down 94% from 15.8% in Sept 1981; "bonds are not the place to be these days" | Letters 2020 |
| Quote card "Long-term interest rates that are low push…" | Letters 2021 |
| Rates "act on financial valuations the way gravity acts on matter" (Bucky paraphrase, 1999) | Fortune, 22 Nov 1999, https://fortune.com/1999/11/22/warren-buffett-on-stock-market/ (as in ch31 sources) |
| Quote card Aesop "bird in the hand"; three questions (paraphrased) | Letters 2000 |
| Duration chart and figures ($100 in 30 yrs = $74 at 1%, $31 at 4%; 20 yrs $82 → $46) | Author's arithmetic, $100/(1+r)^t |
| Schwab, TD Ameritrade, E*Trade cut online commissions to zero, first week of Oct 2019 | Reuters via Yahoo Finance, 1 Oct 2019, https://finance.yahoo.com/news/brokerage-charles-schwab-end-commissions-135311772.html ; InvestmentNews, https://www.investmentnews.com/industry-news/etrade-follows-schwab-td-and-cuts-commissions-to-zero/170299 |
| Robinhood confetti celebrated "firsts"; Massachusetts 2020 complaint "gamification strategies to manipulate customers"; removed 31 Mar 2021, "distraction" | CNBC/NBC, 31 Mar 2021, https://www.nbcboston.com/news/business/money-report/robinhood-gets-rid-of-confetti-feature-amid-scrutiny-over-gamification-of-investing/2343214/ |
| OCC 2021: 9,870,168,340 exchange-listed option contracts, up 32.2%; 2020 was the previous record (7.52B total contracts) | OCC press release 4 Jan 2022, https://www.theocc.com/newsroom/press-releases/2022/01-04-occ-clears-record-setting-9-93-billion-total |
| Quote card "For whatever reasons… daily tempts the occupants."; inline "feverish activity", "whatever foolishness can be marketed will be vigorously marketed." | Letters 2023 |
| GME short interest 122.97% of float in Jan 2021; accounts trading GME <10,000 → nearly 900,000 by 27 Jan; 9,220 → 60,515 on 13 Jan; 197.2M shares on 22 Jan; restrictions 28 Jan; low $40.59 on 19 Feb; NSCC waiver, one broker's ECP charge would have been more than double its $1.4B requirement | SEC staff, "Staff Report on Equity and Options Market Structure Conditions in Early 2021", 14 Oct 2021, https://www.sec.gov/files/staff-report-equity-options-market-struction-conditions-early-2021.pdf (pp. 19–22, 33–35) |
| Robinhood restricted purchases 28 Jan – 5 Feb 2021 due to NSCC deposit requirements | Robinhood S-1 (1 Jul 2021) as quoted in the SEC staff report, n. 93 |
| GME close $53.50 on 4 Feb 2021 (−84.6% from 27 Jan) | Yahoo GME (13.375 × 4) |
| SPAC: shares often $10; sponsor ~20% of shares after IPO; 24-month time frame typical; SPAC IPOs 59 (2019), 248 (2020), 613 (2021), 86 (2022), 31 (2023); 63% of U.S. IPOs in 2021; proceeds $3.9B (2015) … $162.5B (2021), $13.4B (2022), $3.8B (2023) | SEC, "Special Purpose Acquisition Companies, Shell Companies, and Projections", Release 33-11265 (24 Jan 2024), https://www.sec.gov/files/rules/final/2024/33-11265.pdf (pp. 6–9 and table) |
| SPAC proceeds 2024 $9.6B, 2025 $30.4B | SPAC Analytics, https://www.spacanalytics.com/ (table, read 2026-10-30) |
| 2024 rules: disclosure on sponsor compensation, conflicts, dilution, projections | SEC press release 2024-8, https://www.sec.gov/newsroom/press-releases/2024-8 ; Release 33-11265 |
| Quote card "a bubble market has allowed the creation of bubble companies…" | Letters 2000 |
| ARKK more than tripled from 31 Dec 2019 ($50.05) to 12 Feb 2021 ($156.58); 85.97 on 29 Oct 2026 (45% below peak); S&P 500 record close 7,818.93 on 6 Oct 2026 | Yahoo ARKK, ^GSPC |
| Of ARKK's top 25 positions, 20 had lost half or more in 2022 as of 21 Dec | The Motley Fool, 23 Dec 2022, https://www.fool.com/investing/2022/12/23/cathie-woods-ark-innovation-etf-just-hit-a-5-year (citing Morningstar) |
| First Fed hike 17 Mar 2022 (ARKK peak 13 months earlier) | Fed open market table |
| CPI +9.1% in 12 months to June 2022, largest since Nov 1981 | BLS CPI release, 13 Jul 2022, https://www.bls.gov/news.release/archives/cpi_07132022.htm |
| 2022 hikes: 17 Mar +25, 5 May +50, 16 Jun, 28 Jul, 22 Sep, 3 Nov +75 each, 15 Dec +50 → 4.25–4.50%; 27 Jul 2023 → 5.25–5.50% | https://www.federalreserve.gov/monetarypolicy/openmarket.htm ; https://www.federalreserve.gov/newsevents/pressreleases/monetary20230726a.htm |
| 10-year 1.63% (3 Jan 2022) → 4.23% (24 Oct 2022); 4.99% on 19 Oct 2023 | Yahoo ^TNX |
| Nasdaq −36.4%: 16,057.44 (19 Nov 2021) → 10,213.29 (28 Dec 2022) | Yahoo ^IXIC |
| Thought experiment: A = $918, B = $1,359 at 4%; $2,000 each at 0% | Author's arithmetic (example) |
| "Today, though, we find little that excites us"; low rates push up prices | Letters 2021 |
| Repurchased 9% of shares for $51.7B in 2020–2021; ~10% more of every business | Letters 2021 |
| Q1 2022: Berkshire spent more than $51B on stocks incl. larger Chevron stake and Occidental; cash fell more than $40B to about $106B | Reuters via Malay Mail, 30 Apr 2022, https://www.malaymail.com/news/money/2022/04/30/berkshire-bought-us51b-stock-as-buffett-combats-supply-chain-operating-resu/2056543 |
Dropped
- GameStop "lost money in each of the previous two years" (not checked against filings in time).
- ARKK "assets near $28 billion at the peak" (Bloomberg/ThinkAdvisor pages blocked; only a search snippet).
- "Fastest rate rises in four decades" and "highest rate in more than twenty years" (no primary source opened).
Chapter 31 The AI Boom, 2023–2026
Chapter 31 · The AI Boom, 2023–2026 · sources
Checked 2026-10-30. "Yahoo" = Yahoo Finance daily closes in .cache/prices/ (stocks split-adjusted,
dividends excluded), fetched 2026-10-30. "Letters" = Berkshire letters text in .cache/letters/,
verified with build/tools/check-quotes.py. Short names for the episode factsheet sources
(RTR-CLOSE etc.) are defined with URLs in notes/v1/factsheet.md; the URLs are repeated here.
Consistency rule for 22 October 2026
Day moves for 22 Oct 2026 in the prose use Reuters' closing wrap (SOX −6.3%, Meta −7.5%, P&G +6%, S&P 500 −1.41%). Yahoo closes give slightly different figures (SOX −6.72%, Meta −6.98%, S&P −1.21%); the chart (Figure 31.6 SOX) uses Yahoo closes and its caption quotes only the multi-week move.
In order of appearance
| Claim | Source |
|---|---|
| 22 Oct 2026: chip index −6.3%; Meta −7.5% after sales +26%; P&G about +6%; S&P 500 −1.41% ("a little more than 1 percent") | Reuters wrap, https://gvwire.com/2026/10/22/wall-street-sinks-as-nasdaq-falls-over-2-on-ai-cost-worries/ |
| P&G makes Tide and Pampers | https://us.pg.com/brands/ |
| Sun Valley, July 1999, Allen & Co.; Fortune version Nov 1999; ≥2,000 car makes; three U.S. car companies by the 1990s; airline money "zero" as of 1992; "not short horses" (paraphrased) | Fortune, 22 Nov 1999, https://fortune.com/1999/11/22/warren-buffett-on-stock-market/ (full text read from page HTML) |
| Inline quote "the competitive advantage of any given company and, above all, the durability of that advantage." (card dropped to avoid repeating Ch 27) | same Fortune article, matched word for word in page HTML |
| ChatGPT released 30 Nov 2022 | RTÉ, https://www.rte.ie/news/business/2023/1130/1419291-chatgpt-turns-one-today |
| ~100 million unique visitors in Jan 2023 (Similarweb); UBS "cannot recall a faster ramp" (paraphrased) | The Guardian, 3 Feb 2023, via https://uk.finance.yahoo.com/news/chatgpt-reaches-100-million-users-204611268.html |
| Nvidia FY2023 revenue $26.97B, flat; data-centre $15.01B | https://nvidianews.nvidia.com/news/nvidia-announces-financial-results-for-fourth-quarter-and-fiscal-2023 |
| Nvidia FY2024 revenue up 126% to $60.9B (released Feb 2024) | https://nvidianews.nvidia.com/news/nvidia-announces-financial-results-for-fourth-quarter-and-fiscal-2024 |
| Nvidia FY2025 revenue $130.5B | https://nvidianews.nvidia.com/news/nvidia-announces-financial-results-for-fourth-quarter-and-fiscal-2025 |
| Nvidia FY2026 revenue $215.9B (+65%); data-centre $193.7B; released 25 Feb 2026 | https://nvidianews.nvidia.com/news/nvidia-announces-financial-results-for-fourth-quarter-and-fiscal-2026 |
| Nvidia passed $4T (July 2025) and was first to $5T on 29 Oct 2025 (close $207.04 matches Yahoo) | https://www.aljazeera.com/economy/2025/10/29/chipmaker-nvidia-hits-5-trillion-valuation ; Yahoo NVDA |
| NVDA ×14.1 from 30 Nov 2022 close ($16.92) to 6 Oct 2026 high ($239.24); S&P 500 ×1.92 (4,080.11 → 7,818.93) | Yahoo NVDA, ^GSPC (derived) |
| Nvidia is the largest S&P 500 member (7.78% on 10 Oct 2026) | Slickcharts via https://cryptodaily.co.uk/2026/10/top-10-sp-500-stocks-index-weight-2026 |
| DeepSeek day 27 Jan 2025: NVDA 142.62 → 118.42 (−17.0%); ~$589B lost, biggest one-day loss in U.S. market history | Yahoo NVDA; Bloomberg, https://www.bloomberg.com/news/articles/2025-01-27/asml-sinks-as-china-ai-startup-triggers-panic-in-tech-stocks (headline); Tom's Hardware, https://www.tomshardware.com/tech-industry/artificial-intelligence/nvidia-loses-usd589-billion-in-market-cap-broad-stock-plunge-triggered-by-deepseek-ai-release |
| SOX low 3,562.94 on 8 Apr 2025; tariff selloff (S&P 500 closed 4,982.77 on 8 Apr 2025) | Yahoo ^SOX; Reuters via https://www.investing.com/news/economy-news/futures-rise-after-heavy-losses-on-hopes-of-talks-over-tariffs-3972893 |
| Nvidia–OpenAI letter of intent, 22 Sep 2025, up to $100B "progressively as each gigawatt is deployed" | https://nvidianews.nvidia.com/news/openai-and-nvidia-announce-strategic-partnership-to-deploy-10gw-of-nvidia-systems |
| AMD–OpenAI, 6 Oct 2025, warrant for up to 160M AMD shares vesting with deployment | https://ir.amd.com/news-events/press-releases/detail/1260/amd-and-openai-announce-strategic-partnership-to-deploy-6-gigawatts-of-amd-gpus |
| Alphabet $80B share sale filed 1 Jun 2026, much for AI computing; Berkshire $10B private placement | Alphabet FWP, https://www.sec.gov/Archives/edgar/data/1652044/000119312526251733/d160205dfwp.htm ; https://finance.yahoo.com/markets/stocks/articles/alphabet-announces-80b-fund-raise-221301965.html |
| SOX record 14,634.72 on 22 Jun 2026 (×4.11 the Apr 2025 low); 10,731.98 on 22 Oct 2026 (−26.7% from record); −18.8% from 13,217.82 on 6 Oct | Yahoo ^SOX (derived) |
| Chip-chain moves on 22 Oct 2026 at 3:32 pm ET: MSFT −2.2, GOOGL −3.5, AMZN −4.9, NVDA −4.33, ASML −6.43, AMAT −7.57, LRCX −11.57 | Finviz heatmap screenshot taken by Sid (HEATMAP in notes/v1/factsheet.md); intraday, labelled as such |
| Owner earnings defined in 1986 letter (paraphrased) | Letters 1986 |
| "Ask Microsoft or Google." | Letters 2007 |
| Meta Q3 2026: revenue $64.60B (+26%); operating cash $32.786B; capex incl. finance-lease principal $34.91B; FCF −$2.12B; Q3 2025 FCF $10.625B; cash & securities $82.45B; 2026 capex $135–145B; non-voting Class C shares effective Jan 2027 | https://investor.atmeta.com/investor-news/press-release-details/2026/Meta-Reports-Third-Quarter-2026-Results/default.aspx |
| "first cash outflow in more than a decade" (Reuters); "investing aggressively" next year | RTR-CLOSE (gvwire URL above); META-PR |
| Class C shares for raising capital, employee pay, acquisitions | stocktitan summary of META-PR (factsheet); wording kept soft ("which Meta said could be used") |
| Great / good / gruesome savings accounts; See's; quote card "The worst sort of business…Think airlines." | Letters 2007 |
| Meta depreciates most servers/network gear over 5.5 years (FY2025 10-K) | https://www.sec.gov/Archives/edgar/data/1326801/000162828026003942/meta-20251231.htm (search summary of filing text, per factsheet) |
| Burry: top chips outdated in 2–3 years; CoreWeave counter-argument | https://www.fool.com/investing/2025/11/22/understand-michael-burry-bet-against-ai-means/ ; https://www.sherwood.news/markets/michael-burry-has-some-concerns-about-ai-accounting (search summaries, per factsheet) |
| 2000-era vendor financing (no number) | background, see Chapter 27 sources |
| Top 10 = 39.03% of S&P 500 on 10 Oct 2026; earlier decades ~18–21% | Slickcharts via CryptoDaily (above); J.P. Morgan via https://landmarkwealthmgmt.com/articles/the-evolution-of-sp-500-top-10-companies-how-tech-giants-captured-nearly-40-of-the-index-by-2026/ |
| NYSE advancers nearly equal to decliners on 22 Oct (decliners 1.05-to-1) | RTR-CLOSE |
| Quote card "Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund." (trustee for his wife) | Letters 2013 |
| FactSet: S&P 500 forward P/E 19.0 vs 10-yr avg 19.1; CY2026 earnings growth 32.8% ("about a third") | https://insight.factset.com/sp-500-earnings-season-update-october-16-2026 |
Buffett indicator (nonfinancial corporate equity / GDP) 255.0% in Q2 2026, highest since 1950; 1950–2026 average 87% (87.2); Q1 2000 peak 162.6%; 255/87 ≈ 2.9× (prose and ch31-yardsticks chart) |
Federal Reserve Z.1 via FRED NCBEILQ027S ÷ GDP, author's calculation (build/charts/data/ch22-mcap-gdp.json; same as sources/ch22.md row 26) |
| REMOVED 2026-10-30: book standardised on the Z.1 series | |
| 2001 Fortune: indicator "probably the best single measure", "playing with fire" near 200% | Paraphrased only, no quote marks: Fortune 10 Dec 2001 page could not be opened in full text; wording known from https://en.wikipedia.org/wiki/Buffett_indicator |
| "act on financial valuations the way gravity acts on matter" | Fortune 22 Nov 1999 (matched in page HTML) |
| 10-year Treasury "a little over 5 percent" (5.13% on 21 Oct 2026) | https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202610 |
| Earnings yield ≈5.3% | derived, 1/19.0 |
| Cisco most valuable company March 2000; peak close $80.06 on 27 Mar 2000; first close above it 10 Dec 2025 ($80.25); >100× earnings | Yahoo CSCO; https://itweb.co.za/article/cisco-briefly-tops-microsoft-as-most-valuable-firm/kLgB1MeJLByq59N4 ; https://creativeplanning.com/insights/investment/cisco-nvidia-lessons-from-past/ |
| Global Crossing and WorldCom bankrupt | https://en.wikipedia.org/wiki/Global_Crossing ; https://en.wikipedia.org/wiki/MCI_Inc. |
| Abel CEO from 1 Jan 2026, Buffett chairman | https://www.nbcsandiego.com/news/business/money-report/warren-buffett-to-remain-berkshire-hathaway-chairman-greg-abel-to-become-ceo-at-year-end-board-votes/3818328/ |
| Abel letter: "a fortress-like balance sheet"; "a retreat from investing"; "It does not." | Letters 2025 (Abel's letter dated 28 Feb 2026), Financial Strength and Capital Discipline sections |
| Berkshire $324.9B T-bills at 30 Jun 2026 | Berkshire 10-Q, https://www.sec.gov/Archives/edgar/data/0001067983/000119312526341032/brka-20260630.htm |
| >$10B interest a year | derived: $325B × ~4.25% 3-month bill yield (Treasury, 21 Oct 2026) ≈ $13.8B |
| Q2 2026 net buyer ~$20B after 14 straight quarters of net selling | https://finance.yahoo.com/markets/stocks/articles/berkshire-hathaway-q2-2026-earnings-114458694.html |
| 4 May 2024 annual meeting: "I don't know anything about AI"; genie comparison; "scares the hell out of me" | Fox Business, 4 May 2024, https://www.foxbusiness.com/technology/warren-buffett-compares-ai-nuclear-weapons-warns-scamming-potential ; Axios, https://www.axios.com/2024/05/04/warren-buffett-berkshire-meeting-ai (headline) |
| Quote card Cinderella passage (two sentences joined by an ellipsis) | Letters 2000 |
| "speculation is most dangerous when it looks easiest." | Letters 2000 |
| Chip index still up about half for 2026 after the selloff (+52.2% YTD) | RTR-CLOSE (Yahoo: +51.5% from 7,083.13 at end-2025) |
| Munger: invert | https://fs.blog/inversion/ |
| Berkshire has owned Coca-Cola since 1988 | Letters 1988 (holdings table lists 14,172,500 Coca-Cola shares) |
Dropped or softened
- Fortune 2001 Buffett-indicator lines kept as paraphrase only (primary page not readable).
- Combined hyperscaler capex totals: not used (definitions conflict).
- Abel quote cards not used as cards because the quote-card art is cartoon Buffett; Abel is quoted inline.
Added by the lead, 30 Oct 2026 (Alphabet Q3 2026)
| Claim | Source |
|---|---|
| 28 Oct 2026: Google Cloud revenue $30.7B in Q3, up 103% (prose: "roughly doubled") | Fortune, 28 Oct 2026: https://fortune.com/2026/10/28/alphabet-google-stock-drops-cloud-revenue-doubles-free-cash-flow-negative/ ; Motley Fool, 29 Oct 2026: https://www.fool.com/investing/2026/10/29/alphabet-s-cloud-business-just-doubled-the-stock-fell-12-is-it-a-buy/ |
| Q3 capex $51.4B vs $24B a year earlier; free cash flow −$9.1B | Fortune, 28 Oct 2026 (same URL) |
| GOOGL closed −12.6% on 29 Oct 2026 (324.89 → 283.82); timeline says "about 13%" | Yahoo Finance daily closes (.cache/prices/GOOGL.csv); Motley Fool (12.6%) |
| Not used: "worst day as a public company" (secondary reports only), 2027 capex figures (Fortune and CNBC headlines disagree) | — |
Consistency edit, 2026-10-30
2007 "worst sort of business" quote card converted to an inline quote; the card lives in ch23. Buffett indicator now cites the Z.1 series (see row above).
Chapter 32 The Index Fund Option: Buffett's Million-Dollar Bet
Chapter 32 · The Index Fund Option: Buffett's Million-Dollar Bet · sources
Checked 2026-10-30. "Letters" = Berkshire letters in .cache/letters/, verified with
build/tools/check-quotes.py. "Yahoo" = Yahoo Finance daily closes in .cache/prices/.
In order of appearance
| Claim | Source |
|---|---|
| Girls Inc. of Omaha received $2,222,279 "last month" (letter dated Feb 2018 → January 2018); planned prize $1M | Letters 2017 |
| Bet made 19 Dec 2007; ten years 1 Jan 2008 – 31 Dec 2017; Vanguard S&P 500 fund; Ted Seides, co-manager of Protégé Partners; five funds-of-funds, names undisclosed; >200 hedge funds (2017 letter; 2016 letter says >100) | Letters 2016, 2017 |
| One investment decision in ten years (paraphrase) | Letters 2017 |
| Numbers tiles: 8.5% (index, 2008–2017), 2.2% (funds-of-funds, 2008–2016), ~60% of gains to managers (estimate), $2.22M | Letters 2017; 2016 |
| 2005 report argument about "helpers"; public offer to wager $500,000 on at least five hedge funds over ten years | Letters 2016 (recounting 2005); Letters 2005 (Gotrocks / Helpers section) |
| Each side bought $500,000 face of zero-coupon Treasuries for $318,250 | Letters 2017 |
| Hedge fund "2 and 20" definition | Letters 2016 |
| 2008: index fund −37.0%; funds −16.5% to −30.1%; many hold short positions; "the funds-of-funds as a whole trailed the index fund" in each of the next nine years | Letters 2016 (table), 2017 |
| Nov 2012: bonds at 95.7% of face, yield 0.88%; switched into 11,200 Berkshire B shares | Letters 2017 |
| Nine-year score 7.1% vs 2.2% (2016 letter, Feb 2017) | Letters 2016 |
| Final table: index 8.5%/yr, +125.8%; funds A 2.0, B 3.6, C 6.5 (+87.7%), D 0.3 (+2.8%, liquidated 2017), E 2.4 | Letters 2017 |
| $1M → ~$2.26M (index), ~$1.88M (fund C) | Derived from the 2017 table |
| Experts' guesses would have averaged close to 8.5% (paraphrase); quote card "Performance comes, performance goes. Fees never falter." | Letters 2017 |
| Sharpe, "The Arithmetic of Active Management", Financial Analysts Journal 47(1), Jan/Feb 1991, pp. 7–9; quoted line "the return on the average actively managed dollar will be less than the return on the average passively managed dollar" | https://web.stanford.edu/~wfsharpe/art/active/active.htm |
| Sharpe Nobel Prize in Economic Sciences (1990) | Sharpe home page, https://web.stanford.edu/~wfsharpe/ |
| Long Bets statement (passive vs active, costs); "whichever group has the lower costs will win."; ~ten professionals identified early; hundreds or thousands more | Letters 2016 |
| ~60% of gains to managers; 2% + 20% at hedge funds; ~1% at funds-of-funds | Letters 2016 |
| Fixed fees "averaging a staggering 2½% of assets or so" | Letters 2017 |
| 2025 asset-weighted expense ratios: active equity mutual funds 0.64%, index equity mutual funds 0.05% | ICI 2026 Investment Company Fact Book, ch. 6, Figure 6.4, https://www.icifactbook.org/pdf/2026-factbook-ch6.pdf |
| Thought experiment / Figure 32.2: $100,000 at 6.95% → $750,626; at 5% → $432,194; gap $318,432; after 10 yrs $195,798 vs $162,889 | Author's arithmetic (example) |
| SPIVA: % of all large-cap funds trailing S&P 500 to 30 Jun 2025: 1y 72.61, 3y 64.87, 5y 86.91, 10y 85.98, 15y 88.29, 20y 91.03; 46% outperformed YTD 2025; survivorship-bias correction | S&P DJI, SPIVA U.S. Scorecard Mid-Year 2025, https://d1e00ek4ebabms.cloudfront.net/production/uploaded-files/spiva-us-mid-year-2025-bc7a7f61-4b27-48b0-b20a-856cc87521d0.pdf |
| Three reasons success breeds failure; "what is easy with millions, struggles with billions."; 1,000 managers / "1,000 monkeys…" | Letters 2016 |
| Quote card "When trillions of dollars are managed…" | Letters 2016 |
| Quote card "By periodically investing in an index fund…"; own many equities and space out purchases | Letters 1993 |
| First index fund 31 Aug 1976 (First Index Investment Trust, now Vanguard 500); hoped $50–150M, raised a little more than $11M; "an abject failure"; "Bogle's Folly" | Vanguard, "50 years. 50 facts. Indexing since 1976", https://www.vanguard.ca/en/insights/50-years-50-facts-indexing-since-1976 |
| Figure 32.4 DCA: $500 at each 2022 month-end ^GSPC close, fund priced at index/100; Sep 13.94 shares vs Mar 11.04 (+26%); average cost $40.59 vs average price $40.78 | Yahoo ^GSPC month-end closes 2022; author's arithmetic (example) |
| Lump sum beat 12-month DCA about two-thirds of the time (U.S. 1926–2011, U.K., Australia; rolling 10-year periods) | Vanguard, "Dollar-cost averaging just means taking risk later", July 2012 (PDF copy: https://militarymoneymanual.com/wp-content/uploads/2021/08/Dollar-Cost-Averaging-Just-Means-Taking-Risk-Later-Vanguard.pdf) |
| 90/10 instruction "Put 10% of the cash… (I suggest Vanguard's.)"; expects results superior to most high-fee investors | Letters 2013 |
| Quote card Jack Bogle statue | Letters 2016 |
| "know-something investor", five to ten sensibly priced companies, diversification "makes no sense" | Letters 1993 |
| Berkshire portfolio "unusually concentrated in relatively few companies" | Berkshire Hathaway 2023 and 2024 annual reports (Form 10-K, Item 1), https://www.berkshirehathaway.com/2024ar/2024ar.pdf |
| Index funds' portfolios change infrequently, low turnover | ICI 2026 Fact Book, ch. 6 (same URL) |
| Top ten = 39.03% of S&P 500 on 10 Oct 2026; Nvidia 7.78%; earlier decades ~18–21% | As in sources/ch31.md: Slickcharts via https://cryptodaily.co.uk/2026/10/top-10-sp-500-stocks-index-weight-2026 ; J.P. Morgan data cited by Landmark Wealth Management |
Dropped
- Ted Seides's public concession in May 2017 and his stated reasons (Bloomberg/CNBC pages blocked; not verified).
- Description of Girls Inc. of Omaha's programmes (not checked).
Consistency edit, 2026-10-30
Top-10 concentration figures moved to ch31 (see row above).
Chapter 33 Circle of Competence and Concentration
Chapter 33 · Circle of Competence and Concentration · sources
Checked 2026-10-30. "Letters" = Berkshire letters in .cache/letters/ (the 2025 letter is Greg Abel's),
verified with build/tools/check-quotes.py. "Yahoo" = Yahoo Finance closes in .cache/prices/.
13F holdings were summed from the information tables filed on EDGAR (CIK 0001067983).
In order of appearance
| Claim | Source |
|---|---|
| 31 Dec 2023: 905,560,000 Apple shares worth $174.3B | Berkshire 2023 annual report, Note 4 ($174.3B); Form 13F for 31 Dec 2023, https://www.sec.gov/Archives/edgar/data/1067983/000095012324002518/ |
| Apple ≈ 49% of portfolio (174.3 / 353.842) | Berkshire 2023 annual report, Note 4 (total equity securities $353,842M), https://www.berkshirehathaway.com/2023ar/2023ar.pdf |
| Five largest holdings = 79% at end 2023 (and 71% at end 2024) | Berkshire 2024 annual report, Note 4, https://www.berkshirehathaway.com/2024ar/2024ar.pdf |
| Japan: cost $15,382M, market value $35,368M at 31 Dec 2025; per-company figures; 2025 dividends $862M; yen borrowing at average 1.2% | Letters 2025 (table of Japanese holdings) |
| Quote card "You don't have to be an expert on every company…"; passage addressed to those building their own portfolio | Letters 1996 |
| "simply far beyond our perimeter", "just stick with what we understand", "not because we got restless and substituted hope for rationality." | Letters 1999 |
| "nothing to the table" on patents, manufacturing processes, geological prospects | Letters 1999 |
| Quote card "We believe that a policy of portfolio concentration may well decrease risk…"; risk defined as "the possibility of loss or injury" (paraphrased) | Letters 1993 |
| "know-something investor", five to ten sensibly priced companies, "makes no sense for you", 20th favourite business, Mae West "Too much of a good thing can be wonderful." | Letters 1993 |
| Concept box "What one bad pick costs you" (10%/20% vs 2%/4%) | Author's arithmetic (example) |
| Munger, USC Business School 1994: Buffett told business-school classes "I could improve your ultimate financial welfare by giving you a ticket with only 20 slots in it"; one punch per investment | Charlie Munger, "A Lesson on Elementary Worldly Wisdom", transcript, https://fs.blog/great-talks/a-lesson-on-worldly-wisdom/ |
| Apple bought from late 2016; purchases finished mid-2018 at 5.2% for $36B; 2020 sale of ~$11B; ownership 5.4% | Letters 2020 |
| Tim Cook "regards users of Apple products as his first love"; 5.55% ownership; $785M dividends vs $5.6B share of earnings (2021) | Letters 2021 |
| Apple / portfolio at year-ends: 2016 7,093/122,032; 2017 28,213/170,540; 2018 40,271/172,757; 2019 73,667/248,027; 2020 120,424/281,170; 2021 161,155/350,719 ($M) | Letters 2016–2021 (holdings tables) |
| 2022: Apple $119.0B of $308.8B | Berkshire 2023 annual report, Note 4 (2022 column) |
| 2024: 300,000,000 Apple shares, $75,126M; total equity securities $271,588M | Form 13F for 31 Dec 2024, https://www.sec.gov/Archives/edgar/data/1067983/000095012325002701/ ; 2024 annual report Note 4 |
| 2025: 227,917,808 Apple shares, $61,962M, 1.6% of Apple, cost $6,255M; portfolio $297.8B; core holdings $194B "nearly two-thirds"; "a small number of American companies such as Apple…" | Letters 2025; Form 13F for 31 Dec 2025, https://www.sec.gov/Archives/edgar/data/1067983/000119312526054580/ |
| Apple 6% of portfolio at end 2016 (5.8%) | Derived from 2016 letter table |
| 2024 letter mentions Apple only in passing (no explanation of the sale) | Letters 2024 |
| AAPL closes $250.42 (31 Dec 2024), $348.91 (29 Oct 2026) | Yahoo AAPL |
| Japanese purchases began 4 July 2019 | Letters 2023 |
| Five companies operate "in a highly-diversified manner somewhat similar to the way Berkshire itself is run" | Letters 2023 |
| "a vast array of businesses, many based in Japan but others that operate throughout the world."; quote card "Berkshire made its first purchases… amazed at the low prices of their stocks."; dividends expected 2025 ~$812M vs ~$135M interest on yen debt; ceiling relaxed | Letters 2024 |
| Announcement 31 Aug 2020 (JST; evening of 30 Aug in the U.S.): slightly more than 5% of each; bought over about twelve months on the Tokyo Stock Exchange; 9.9% cap without board approval | Berkshire news release, https://www.berkshirehathaway.com/news/aug3020.pdf |
| Financed most of the Japanese position with ¥1.3 trillion of bonds; currency-neutral aim | Letters 2023; Letters 2024 |
| Japan ≈ 12% of portfolio (35.4 / 297.8); ~10% of each company | Letters 2025 (derived) |
| 2025 dividends $862M ≈ 5.6% of $15,382M cost | Letters 2025 (derived) |
| Nebraska farm 1986, $280,000, son's yield and cost estimates, ~10% normal return | Letters 2013 |
| Quote card "No one has the ability to evaluate every investment possibility…"; "just forget it and move on."; stay "well inside" the circle, "we will make some mistakes" | Letters 2013 |
| Numbers tiles end 2025: 65% (194 / 297.8), 21% Apple (62.0 / 297.8), 12% Japan | Letters 2025 (derived) |
Dropped
- Munger's "too hard" pile as a quote (not found in the USC transcript or the letters; the idea is now presented in my words, with the 1999 letter passage that describes it).
- The 20-punch-card wording attributed to Buffett directly (only Munger's 1994 retelling is cited).
- The 30 Aug 2020 announcement as "Buffett's 90th birthday" (birthday not checked against a source).
Chapter 34 Mistakes Worth Studying
Letters are cited by subject year; full text from https://www.berkshirehathaway.com/letters/, cached in .cache/letters/ and checked with build/tools/check-quotes.py (all five quote cards pass). Berkshire quarterly reports: https://www.berkshirehathaway.com/qtrly/ (opened 2026-10-30). Prices: Yahoo Finance chart API via build/tools/fetch-prices.sh (BRK-A, KHC), fetched 2026-10-30.
| # | Claim (as written) | Source |
|---|---|---|
| 1 | Nov 1993 Dexter bought with 25,203 class A shares, about $433 million | 2007 letter ("$433 million in Berkshire stock (25,203 shares of A)"); 1993 letter (25,203 shares; merger date November 7th). 2016 letter says $434 million; we use $433M throughout |
| 2 | Shares worth about $20.6 billion on 29 Oct 2026, close to 48× | BRK-A close $817,500 (29 Oct 2026) × 25,203 = $20.60B; $433M/25,203 = $17,180 a share → 47.6× |
| 3 | Dexter "promptly went to zero" | 2016 letter ("Dexter's value promptly went to zero"); 2014 letter |
| 4 | Story told in 2000, 2001, 2007, 2014, 2016 letters; "worst deal that I've made" (2007) | those letters (quotes checked) |
| 5 | "Mistakes of the First Twenty-five Years (A Condensed Version)"; review past mistakes before committing new ones | 1989 letter |
| 6 | post-mortems "prove useful for hospitals and football teams" | 1991 letter |
| 7 | Munger "has always emphasized the study of mistakes rather than successes"; ample material | 1985 letter |
| 8 | "mistake" or "error" 16 times in 2019–23 letters | 2024 letter |
| 9 | Concept-box $50/$20/$500 figures | labelled example |
| 10 | Quote: "Typically, our most egregious mistakes fall in the omission…" (2 sentences); "that Charlie and I can understand and that seem clearly attractive"; Xerox/Apple/Wal-Mart exclusion | 1991 letter (checked) |
| 11 | "It's no sin to miss a great opportunity outside one's area of competence." | 1989 letter (checked) |
| 12 | Ledger figure entries | 2007 (Dexter $3.5B; TV station $35M, ≥$1B by 2006), 2016 (Gen Re 272,200 shares, 21.8%, "far more than they received"), 2008 (ConocoPhillips "several billion dollars"; Irish banks $244M → $27M, 89%), 2014 (Tesco $444M after-tax; Munger: Walmart, "at least $50 billion"), 2018 ($3.0B Kraft Heinz impairment), 2020 (PCC |
| 13 | Harold Alfond, 25 cents an hour at 20, founded Dexter 1956 with $10,000; nephew Peter Lunder joined 1958; >7.5M pairs a year, mostly Maine; "one of the best-managed companies"; "There's No Business Like Shoe Business" | 1993 letter |
| 14 | "and I was wrong" (Dexter could cope with foreign competition) | 2001 letter |
| 15 | "In essence, I gave away 1.6% of a wonderful business – one now valued at $220 billion – to buy a worthless business."; $3.5 billion | 2007 letter (checked) |
| 16 | ~$5.7 billion; "a spot in the Guinness Book of World Records" | 2014 letter (checked) |
| 17 | More than $6 billion at year-end 2016 | 2016 letter |
| 18 | Chart 34.2 data | build/charts/data/ch34-dexter-shares.json (BRK-A month-end close × 25,203); checks: Dec 2007 $3.57B, Dec 2014 $5.70B, Dec 2016 $6.15B match the letters |
| 19 | Quote: "The intrinsic value of the shares you give in an acquisition must not be greater than the intrinsic value of the business you receive." | 2014 letter (checked) |
| 20 | General Re late 1998, 272,200 shares, +21.8%; "a terrible mistake on my part"; "to give far more than they received" | 2016 letter (checked) |
| 21 | "with the errors sometimes occurring while I was serving as a director" | 2014 letter (checked) |
| 22 | Three Dexter decisions; "procrastinating when the need for changes in its operations was obvious" | 2001 letter (checked) |
| 23 | Goodwill written off by 2000; "I clearly made a mistake in paying what I did for Dexter in 1993." | 2000 letter (checked) |
| 24 | 1994 expectation: shoe sales > $550M, pre-tax ~ $85M | 1993 letter |
| 25 | 2001 shoe operations lost $46.2M pre-tax | 2001 letter |
| 26 | Dexter folding cost 1,600 jobs in a small Maine town; Berkshire lost its entire investment | 2015 letter |
| 27 | Thought experiment $1 million, 50× | labelled example |
| 28 | Precision Castparts bought 2016; ~$11B write-down; "the best in its business"; quote "No one misled me in any way – I was simply too optimistic about PCC's normalized profit potential."; aerospace downturn | 2020 letter (checked) |
| 29 | 2013 Heinz bought with 3G Capital | 2013 letter |
| 30 | 2015 Kraft merger; 325.4M shares, ~27%, cost $9.8B; Oscar Mayer from the Kraft side; partners "root out inefficiencies" | 2015 letter |
| 31 | KHC high close $96.65 on 17 Feb 2017; $48.18 (21 Feb 2019) → $34.95 (22 Feb 2019) = −27.5%; $23.90 on 29 Oct 2026 | Yahoo Finance KHC closes; build/charts/data/ch34-khc-2015-2026.json |
| 32 | 21 Feb 2019: $15.4B write-down of Kraft and Oscar Mayer brands, dividend cut 36%, SEC subpoena on procurement | AP via Fox Business, 22 Feb 2019, https://www.foxbusiness.com/markets/at-kraft-heinz-a-fed-investigation-and-a-15-4b-write-down |
| 33 | CNBC 25 Feb 2019: "We overpaid for Kraft."; "wrong in a couple of ways"; "go toe to toe with Walmart or Costco", weaker brands "tend to lose out"; Berkshire's $3B write-down; 27.5% fall | Reuters via The Star, 26 Feb 2019, https://www.thestar.com.my/business/business-news/2019/02/26/warren-buffett-says-berkshire-overpaid-for-kraft-heinz/ (verified by hand) |
| 34 | $3.0B impairment for 2018 | 2018 letter |
| 35 | Berkshire's board representatives stepped down 19 May 2025; Q2 2025 pre-tax impairment ~$5.0B | Berkshire 10-Q, second quarter 2025, Note 5 (https://www.berkshirehathaway.com/qtrly/2ndqtr25.pdf) |
| 36 | Abel: "has been disappointing"; "well short of adequate" | 2025 letter (checked) |
| 37 | 325,442,152 shares × $23.90 = $7.78B vs $9.8B cost | 2017–2020 letters (share count); Yahoo KHC close 29 Oct 2026 |
| 38 | Thumb-sucking: 1989, 2005, 2008, 2014 letters; quote "The cardinal sin is delaying the correction of mistakes or what Charlie Munger called "thumb-sucking."" | 2024 letter (checked) |
| 39 | Tom Murphy offered Dallas–Fort Worth NBC station for $35M about the time of See's; ≥$1B earned by 2006; "had gone on vacation and forgot to notify me"; See's seller asked $30M, Buffett capped at $25M | 2007 letter; See's purchase in 1972: 2007 letter ("company in 1972") and 2014 letter |
| 40 | Munger: errors in not purchasing, "including not purchasing Walmart stock…"; at least $50B | 2014 letter, Vice Chairman's Thoughts (checked) |
| 41 | 2017 meeting: GEICO paid "$10 or $11" a click; "I knew the guys… but I blew it"; Munger: worst mistake in the tech field | Fortune, 6 May 2017, https://fortune.com/2017/05/06/warren-buffett-berkshire-hathaway-apple-google-stock/; CNNMoney via KSL, 7 May 2017 (verified by hand) |
| 42 | Berkshire added about $10B of Alphabet in Q2 2026 | Reuters via The Globe and Mail / Stockwatch, 11 Aug 2026, https://www.stockwatch.com/News/Item/Z-C!BRK-3850374/C/BRK |
| 43 | Tesco: 415M shares end 2012, cost $2.3B; sold 114M in 2013; "My leisurely pace in making sales would prove expensive."; "considering what my delay cost us, he is being kind"; $444M after-tax loss; cockroach line | 2014 letter (checked) |
| 44 | ConocoPhillips: "at least one major mistake of commission"; near peak; several billion; Irish banks $244M → $27M, 89%; "unforced errors" | 2008 letter (checked) |
| 45 | Hochschild Kohn: discount to book, "How could I miss?", sold three years later for about cost; quote "Time is the friend of the wonderful business, the enemy of the mediocre."; "understood this early; I was a slow learner"; "one-foot hurdles that we could step over" | 1989 letter (checked) |
| 46 | Opener art: a generic shoe factory in a wooded valley at dusk (not Dexter's actual plant) | build/art/diagrams/ch34-diagrams.py |
Consistency edit, 2026-10-30
1989 "Time is the friend of the wonderful business" card converted to inline; the card lives in ch24.
Chapter 35 Temperament: Patience, Taxes and Doing Nothing
Letters are cited by subject year, cached in .cache/letters/ and checked with build/tools/check-quotes.py (all four quote cards pass). Berkshire balance sheets from the annual reports (https://www.berkshirehathaway.com/2020ar/2020ar.pdf, 2022ar, 2024ar, 2025ar) and 10-Q reports (https://www.berkshirehathaway.com/qtrly/3rdqtr25.pdf, 1stqtr26.pdf, 2ndqtr26.pdf), opened 2026-10-30.
| # | Claim (as written) | Source |
|---|---|---|
| 1 | 2023: no AmEx or Coke shares bought or sold; "our own Rip Van Winkle slumber that has now lasted well over two decades" | 2023 letter (checked) |
| 2 | AmEx: cost $1,287M, market value $56,088M, 22.1% owned, 2025 dividends $479M (31 Dec 2025); 43.6× cost | 2025 letter, equity table |
| 3 | Coke: cost $1,299M, value $27,964M, 2025 dividends $816M | 2025 letter, equity table |
| 4 | Coke purchase completed Aug 1994 ($1.3B, seven years, so from 1988); AmEx essentially completed 1995, $1.3B | 2022 letter |
| 5 | "doing nothing the most difficult task of all"; "a policy of masterly inactivity" (English statesman) | 1984 letter (the letter itself puts "masterly inactivity" in quote marks; verified by hand, the checker misses it on the curly-quote encoding) |
| 6 | Quote: "Lethargy bordering on sloth remains the cornerstone of our investment style: This year we neither bought nor sold a share of five of our six major holdings."; exception Wells Fargo (bought) | 1990 letter (checked) |
| 7 | "Inactivity strikes us as intelligent behavior"; discount-rate / pundit argument; "We continue to make more money when snoring than when active." | 1996 letter (checked) |
| 8 | Ted Williams, "happy zone" | 1994 letter |
| 9 | Williams divided the strike zone into 77 segments; "determining preferred pitches, waiting for them, then swinging decisively" | 2025 letter (Greg Abel) (checked) |
| 10 | Quote: "When you find a truly wonderful business, stick with it."; "one wonderful business can offset the many mediocre decisions" | 2023 letter (checked) |
| 11 | Berkshire sold $143.4B of equities and bought $9.2B in 2024; 2023: $40.6B sold, $16.5B bought; 2025: $30.7B sold, $16.9B bought | 2024 and 2025 annual reports, consolidated cash-flow statements |
| 12 | 1989 tax example: $1, doubles yearly, 20 years, 34% tax; ~$25,250 vs $1,048,576 → ~$692,000; taxes $13,000 vs $356,500; "exactly the same 27:1 ratio"; didn't adopt the strategy because of the math; could perhaps earn more moving often | 1989 letter (checked) |
| 13 | "an interest-free loan from the U.S. Treasury that comes due only at our election" | 1989 letter (checked) |
| 14 | Concept box $10,000/$30,000/15% | labelled example |
| 15 | Chart 35.2: $100,000 at 10% for 30 years → $1,744,940 (no tax); $1,415,952 (20% once); $1,006,266 (20% yearly); $719,677 (32% yearly); "about 30 percent less" = 1 − 1.006/1.416 | calculations by the author, labelled example |
| 16 | U.S. gains on assets held a year or less taxed at ordinary income rates | IRS Topic 409, https://www.irs.gov/taxtopics/tc409 |
| 17 | "the resulting frictional costs can be huge and, for investors in aggregate, devoid of benefit"; "and invest in stocks as you would in a farm" | 2013 letter (checked) |
| 18 | 2024 federal income tax $26.8B, about 5% of corporate America | 2024 letter |
| 19 | "sensibly estimate an earnings range for five years out, or more"; "a reasonable price in relation to the bottom boundary"; usually can't; 54 years; macro/political views never come up | 2013 letter (checked) |
| 20 | Quote (Munger): "All I want to know is where I'm going to die, so I'll never go there."; Jacobi, "Invert, always invert" | 2009 letter (checked) |
| 21 | What we don't do: avoid businesses whose futures can't be evaluated; "the kindness of strangers"; liquidity | 2009 letter |
| 22 | "If we can't tolerate a possible consequence, remote though it may be, we steer clear of planting its seeds."; no big borrowing | 1996 letter (checked) |
| 23 | Higher leverage would have produced better returns | 1989 letter (Mistakes section) |
| 24 | Forecasts "may tell you a great deal about the forecaster; they tell you nothing about the future" | 1980 letter (checked) |
| 25 | Quote: "We will continue to ignore political and economic forecasts, which are an expensive distraction for many investors and businessmen."; list of unforeseen events; "the slightest dent" | 1994 letter (checked) |
| 26 | Berkshire's four major dips (59.1%, 37.1%, 48.9%, 50.7%); "the light can at any time go from green to red without pausing at yellow"; "will not make good decisions"; against borrowing | 2017 letter (checked) |
| 27 | Cash + T-bills, all segments (insurance & other cash + T-bills + railroad/utilities/energy cash), $M: 2019 127,997; 2020 138,290; 2021 146,719; 2022 128,585; 2023 167,641; 2024 334,201; Sep 2025 381,673; 2025 373,311; Jun 2026 365,514. Unsettled T-bill purchases included: $167M (2025), $23.2B (Sep 2025), $771M (Jun 2026) | annual reports 2020, 2022, 2024 and 10-Qs Q3 2025, Q1 2026, Q2 2026, balance sheets; sums by the author (Reuters reported $381.7B for Sep 2025 and $364.7B, net of unsettled purchases, for Jun 2026) |
| 28 | $30 billion floor below which Berkshire won't repurchase | 10-Q Q2 2026, common stock repurchase program note and Part II Item 2 |
| 29 | "Our cash and U.S. Treasury holdings now exceed $370 billion"; "dry powder"; "will always aim for ownership of productive businesses over U.S. Treasuries." | 2025 letter (checked) |
| 30 | "far in excess of what conventional wisdom deems necessary"; insurance on a fireproof building | 2023 letter (checked) |
| 31 | H1 2026: equity purchases $39,405M, sales $27,780M; Q2 2026 share repurchases $4,527M | 10-Q Q2 2026, cash-flow statement and statement of changes in equity |
| 32 | AmEx earnings share in 2023 exceeded the $1.3B cost | 2023 letter |
| 33 | Munger died 28 Nov 2023, 33 days before 100; 1965 advice "forget about ever buying another company like Berkshire", "wonderful businesses purchased at fair prices"; "repeatedly, jerked me back to sanity when my old habits surfaced"; "never – never –reminded me of my mistake" | 2023 letter (checked) |
| 34 | "too often become frenetic" | 2013 letter |
| 35 | Opener art: generic oak and bench at dusk | build/art/diagrams/ch35-diagrams.py |
Chapter 36 Your Investing Rulebook
Letters are cited by subject year, cached in .cache/letters/ and checked with build/tools/check-quotes.py (all four quote cards pass). Owner's Manual: https://www.berkshirehathaway.com/owners.html (cached as owners-manual.txt, January 1999 printing, © 1996).
| # | Claim (as written) | Source |
|---|---|---|
| 1 | 13 owner-related business principles set down at the Blue Chip merger in 1983; booklet "An Owner's Manual" (© 1996), with commentary; still on Berkshire's website | Owner's Manual, introduction |
| 2 | Principle: issue shares only "when we receive as much in business value as we give" | Owner's Manual (verified by hand) |
| 3 | "all 13 remain alive and well" (1999 printing) | Owner's Manual (verified by hand) |
| 4 | Concept-box examples (20%, 15%/10%, Nvidia) | labelled examples |
| 5 | 90/10 instructions for his wife's bequest | 2013 letter |
| 6 | Quote: "The goal of the non-professional should not be to pick winners – neither he nor his "helpers" can do that – but should rather be to own a cross-section of businesses that in aggregate are bound to do well." | 2013 letter (checked) |
| 7 | "the know-nothing investor can actually out-perform most investment professionals"; know-something investor, five to ten companies, 20th favorite | 1993 letter (checked) |
| 8 | Quote: "Paradoxically, when "dumb" money acknowledges its limitations, it ceases to be dumb." | 1993 letter (checked) |
| 9 | Earnings range five years out; "in relation to the bottom boundary" | 2013 letter (checked) |
| 10 | Accumulate "over a long period" and "never to sell when the news is bad and stocks are well off their highs" | 2013 letter (checked) |
| 11 | Quote: "Our goal is more modest: we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." | 1986 letter (checked) |
| 12 | Selling rules: sell when market values a business above the facts; sell fairly valued holdings "because we require funds for a still more undervalued investment or one we believe we understand better"; don't sell "just because they have appreciated or because we have held them for a long time"; "You can't go broke taking a profit" the most foolish maxim | 1987 letter (checked) |
| 13 | Quote: "In fact, when we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever."; Peter Lynch, "cutting the flowers and watering the weeds" | 1988 letter (checked) |
| 14 | "a large portion" of the portfolio in Apple, American Express, Coca-Cola, Moody's | 2025 letter (checked) |
| 15 | Four declines of 37–59%; "the strongest argument I can muster against ever using borrowed money to own stocks"; Kipling "If"; "they offer extraordinary opportunities to those who are not handicapped by debt"; "wait and not be tired by waiting" | 2017 letter (checked) |
| 16 | Chart 36.2: S&P 500 peak → trough → recovery (price): 11 Jan 1973 120.24 → 3 Oct 1974 62.28 (−48.2%) → 17 Jul 1980 (90.1 months); 25 Aug 1987 336.77 → 4 Dec 1987 223.92 (−33.5%) → 26 Jul 1989 (23.0 mo); 24 Mar 2000 1,527.46 → 9 Oct 2002 776.76 (−49.1%) → 30 May 2007 (86.2 mo); 9 Oct 2007 1,565.15 → 9 Mar 2009 676.53 (−56.8%) → 28 Mar 2013 (65.6 mo); 19 Feb 2020 3,386.15 → 23 Mar 2020 2,237.40 (−33.9%) → 18 Aug 2020 (5.9 mo); 3 Jan 2022 4,796.56 → 12 Oct 2022 3,577.03 (−25.4%) → 19 Jan 2024 (24.5 mo) | Yahoo Finance ^GSPC daily closes (.cache/prices/GSPC.csv); calculations by the author |
| 17 | Chart 36.3: Berkshire declines 59.1% (Mar 1973–Jan 1975), 37.1% (Oct 1987), 48.9% (Jun 1998–Mar 2000), 50.7% (Sep 2008–Mar 2009) | 2017 letter table |
| 18 | "poured $15.5 billion into a business world that could otherwise look only to the federal government for help" | 2009 letter (checked) |
| 19 | "pessimism is your friend, euphoria the enemy"; three large investments on terms unavailable in normal markets | 2008 letter (checked) |
| 20 | Three investor rulebooks (percentages, rules) | labelled examples, not recommendations |
| 21 | Abel: "We will assess value carefully, act patiently, and hold for the long term – preferably forever." (Capital Discipline section) | 2025 letter (checked) |
| 22 | Closing figure: Bucky and cartoon Buffett from build/art/characters/ |
build/art/diagrams/ch36-diagrams.py |
| 23 | Opener art: generic desk, lamp and rulebook page at night | build/art/diagrams/ch36-diagrams.py |
Consistency edit, 2026-10-30
Cards converted to inline: 1986 fearful/greedy (card in ch3), 1988 "holding period is forever" (card in ch15), 1993 "dumb money" (card in ch32).