The Oracle of Omaha paid a poignant tribute to Charlie Munger, his long-time partner, who passed away on November 28 at the age of 99. Buffett pointed out that although Munger spent most of his life outside Omaha, that's where they met in 1959. Munger, who went into fund management in 1962, quickly influenced Buffett's investment strategy, advising him in 1965 to concentrate on acquiring excellent companies at reasonable prices (quality investing) rather than looking for good deals at bargain prices (value investing), a deviation from the teachings of Benjamin Graham. Buffett describes Munger as the architect of Berkshire Hathaway, while he himself acted as the master builder, implementing Munger's vision on a daily basis. He points out that Munger, who became his partner in running Berkshire, often brought him to his senses and played a crucial role in the success they achieved, far beyond their wildest dreams. Buffett expresses his gratitude to Munger, who acted like an older brother or a loving father, never seeking to take credit for his contributions, nor reminding Buffett of his mistakes.

In the rest of his commentary, Buffett highlights the strength and diversity of Berkshire's business, while addressing the challenges and opportunities facing the company.

Buffett begins by stressing the importance of transparent communication with shareholders, a practice he has maintained throughout his career with his long-time partner, Charlie Munger. He stresses the need to provide clear, honest information, without resorting to excessive optimistic language or communication consultants. He then presents his sister, Bertie, as a model for the ideal Berkshire Hathaway investor: intelligent, sensible and wary of the market's haphazard predictions. Buffett uses this image to illustrate the type of shareholder Berkshire seeks to attract: long-term, cautious and well-informed investors.

Buffet emphasized the significant volatility in reported net earnings. According to the annual report, Berkshire Hathaway posted a net profit of $90 billion in 2021, a loss of $23 billion in 2022, and a profit of $96 billion in 2023. These figures are legally correct, but Buffett considers them unhelpful. Buffett prefers to focus on "operating profits", which he considers more representative of the company's real performance. These operating profits amount to $27.6 billion in 2021, $30.9 billion in 2022 and $37.4 billion in 2023. Here, we can see a steady progression in relation to net profits.

The main difference between these figures and those officially reported lies in the exclusion of unrealized capital gains or losses, which can vary by more than $5 billion a day. Buffett criticizes the adoption in 2018 of an accounting rule that includes these unrealized capital gains and losses in net profits, a practice he does not consider an improvement. He reminds us that imposed mandates should not be taken lightly, alluding to Galileo's experience with the authorities of his day. Despite current standards, Buffett and his team at Berkshire Hathaway maintain their approach of providing financial metrics they feel are more useful in assessing the health and performance of their business.

He recalled that, since his very first stock purchase on March 11, 1942, he has always invested the majority of his personal fortune in stocks, mainly American. Despite a difficult start, he stuck to his strategy and witnessed spectacular growth, with the Dow Jones index rising from less than 100 to around 38,000. Buffett insists that America was fertile ground for investors, who simply had to be patient and ignore outside advice. However, he cautionned against assessing Berkshire's investment value on the basis of earnings that take into account daily or annual fluctuations in the stock market. He recalled a lesson from his mentor, Benjamin Graham: "In the short term, the market is like a voting machine, but in the long term, it becomes a scale that measures real value".

Warren Buffett emphasized the importance of owning solid, sustainable businesses, capable of reinvesting capital at high returns. He warned of the difficulty of distinguishing promising companies from potential failures, and criticized those who claim to be able to do so with certainty. He stressed the importance of managerial confidence and competence, while acknowledging that even Berkshire has had its disappointments. Buffett recalled a historical lesson about the risks of dealing with unscrupulous individuals, underlining the complexity of judging people's sincerity. Berkshire has reached such a size that it has become difficult to find acquisitions likely to have a significant impact on its performance. Despite this, Buffett finds Berkshire's management fun and interesting, and believes that the company has slightly better prospects than the average large US company. He concluded by stating that Berkshire's objective is to slightly outperform the average US company, while minimizing the risk of capital loss. Buffett reaffirmed his commitment to shareholders and the country, stressing that investors' money, though mixed with his own, does not belong to him.

Buffett criticizes the increasingly speculative behavior of the markets, likened to that of casinos, and points out that Wall Street favors frenetic activity, sometimes to the detriment of financial morality. He said that, in these periods of madness, dubious financial products are actively marketed. Berkshire Hathaway's golden rule remains unchanged: avoid permanent loss of capital at all costs. Buffett is confident in his company's ability to weather unprecedented financial disasters, positioning itself as an asset to the country in the event of an economic crisis. Berkshire Hathaway stands out for its financial strength, with diversified revenues and a comfortable position in cash and U.S. Treasuries, well beyond conventional requirements.

He also shared his approach to investing in companies he doesn't directly control, emphasizing patience and recognition of the intrinsic quality of the businesses. He sees Coca-Cola and American Express as examples of long-term partial holdings for Berkshire, each representing around 4-5% of the company's net book value. Both companies, founded in 1850 and 1886 respectively, have undergone periods of expansion outside their core areas, often without much success, and have even been poorly managed in the past. However, they triumphed in their core businesses and their products became world-renowned. Buffett emphasizes the importance of beverage consumption and financial confidence, timeless needs on a global scale. In 2023, Berkshire Hathaway neither bought nor sold shares in Coca-Cola or American Express, continuing a period of inaction that has lasted more than twenty years. This strategy has paid off, with both companies increasing their profits and dividends. Berkshire's share of American Express profits even exceeded the initial $1.3 billion cost of their acquisition. Buffett expects dividends from both companies to rise in 2024, notably by 16% for American Express, and he intends to retain these holdings unchanged. Buffett also addressed the issue of share buybacks, explaining that Berkshire shareholders have indirectly increased their stakes in Coca-Cola and American Express through Berkshire's share buybacks. He points out that these buybacks are beneficial to shareholders because they increase their stake in all the assets held by Berkshire, but he warns against buying back shares at a price higher than the company's real value. Buffett's lesson from his experience with Coca-Cola and American Express is clear: when you discover an exceptional business, you have to stick with it. Patience is rewarded, and a single outstanding company can compensate for many mediocre decisions.

He discusses his recent investments, such as Occidental Petroleum and some Japanese stocks.

Berkshire holds 27.8% of Occidental Petroleum 's common stock and has options to significantly increase its stake at a fixed price. Buffett particularly appreciates the company's vast oil and gas reserves in the USA and its carbon capture initiatives, although the economic viability of the latter remains to be demonstrated. He also emphasized the strategic importance of domestic energy production, recalling that the US used to be heavily dependent on foreign oil. Thanks to the shale revolution in 2011, this dependence has ended, with domestic production now exceeding 13 million barrels per day, reducing OPEC's influence.

In addition, the company has increased its stake in five major diversified Japanese businesses (Sumitomo, Mitsubishi, Itochu, Marubeni and Mitsui), owning around 9% of each. These investments, which began in 2019, generated an unrealized gain of 61%, or $8 billion, despite a devalued yen. Buffett spoke of the possibility of future partnerships with these well-managed companies, while highlighting their shareholder-friendly policies, particularly with regard to share buybacks and executive compensation.

As a reminder, Berkshire Hathaway 's market share performance has been 19.80% p.a. since 1965, compared with 10.2% for the S&P 500, making it one of the longest track records on the stock market, with a performance well ahead of the market.