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Last week, “superinvestor” Warren Buffett released his 2015 letter to Berkshire Hathaway shareholders.
It showed a 6.4% gain in Berkshire’s book value. That’s the lowest annual return since the 2008 financial crisis.
But it did beat the S&P 500’s 1.4% 2015 performance.
Regular Daily readers know Buffett’s letters provide more investment wisdom than most MBA programs…
Perhaps the biggest insight in the 2015 letter lies in what Buffett did not say: He made no mention of 2015’s wrenching market volatility… the Federal Reserve’s interest rate hike… China’s collapse… or the onset of negative interest rates.
These are distractions from Buffett’s primary purpose: accumulating shares of the world’s greatest businesses. That’s what’s led to his 19.2% average annual return since 1965.
When the markets correct, he buys more.
These are the types of companies in PBRG’s Legacy Portfolio. They dominate their industries. They gush cash. And they use that growing cash stream to reward their shareholders… through share buybacks and dividend raises.
This lets investors compound their money at 8-12% per year. It’s a safe, extraordinary return in a 0% world.
Bottom line: Buffett’s catching a lot of flack for 2015’s “underperformance.” We still see the wisdom in his approach. Stay long Legacy stocks.