From Greg Wilson, chief analyst, the Legacy Portfolio: “Superinvestor” Warren Buffett’s holding company, Berkshire Hathaway, released its annual report last month. Serious investors are always excited to read the Chairman’s letter. That’s because Buffett passes on invaluable insight into his investment style in each letter.

Some have said you’ll learn more about business from Buffett’s Berkshire letters than in a full MBA program. We agree.

2014 marked the 50th anniversary of Berkshire Hathaway. And in this year’s letter, both Buffett and his business partner, Charlie Munger, comment on the past five decades at Berkshire. They also share their expectations for the next 50 years. Here are some notable highlights:

  • From 1965-2014, the compounded annual gain of Berkshire Hathaway stock is 21.6% versus 9.9% for the S&P 500. That’s an overall gain of 1,826,163% for Berkshire shareholders.

  • Berkshire’s portion of the “Big Four’s”—American Express, Coca-Cola, IBM, and Wells Fargo—2014 earnings amounted to $4.7 billion (up from $3.3 billion three years ago). Dividends from the “Big Four” totaled $1.6 billion in 2014.

But perhaps the most important insight comes through Buffett’s understanding of stock investing overall:

The unconventional, but inescapable, conclusion to be drawn from the past 50 years is that it has been far safer to invest in a diversified collection of American businesses than to invest in securities—Treasuries, for example—whose values have been tied to American currency.

Stock prices will always be far more volatile than cash-equivalent holdings. Over the long term, however, currency-denominated instruments are riskier investments—far riskier investments—than widely diversified stock portfolios that are bought over time and that are owned in a manner invoking only token fees and commissions.

Reeves’ Note: Regular Daily readers know Buffett’s letters are required reading around the PBRG offices. Don’t even think about stock investing without learning to understand the beauty, simplicity, and sheer power of Buffett’s approach.

You can read Warren Buffett’s full 2014 letter to Berkshire shareholders, for free, here. If you’re short on time, you can read Greg’s handy “Cliff’s Notes” version, for free, right here.