• 2007年致股东信
  • 致伯克希尔·哈撒韦公司股东：
    • • To the Shareholders of Berkshire Hathaway Inc.:
      • 衡量标准
      • Yardsticks
      • 收购
      • Acquisitions
      • 企业——伟大的、好的和糟糕的
      • Businesses — The Great, the Good and the Gruesome
      • 保险
      • Insurance
      • 受监管的公用事业业务
      • Regulated Utility Business
      • 制造、服务和零售业务
      • Manufacturing, Service and Retailing Operations
      • 虚幻数字——上市公司如何美化利润
      • Fanciful Figures — How Public Companies Juice Earnings
      • 年会
      • The Annual Meeting

Title: 2007 Letter

Part 1/2

To the Shareholders of Berkshire Hathaway Inc.:

Our gain in net worth during 2007 was $12.3 billion, which increased the per-share book value of both our Class A and Class B stock by 11%. Over the last 43 years (that is, since present management took over) book value has grown from $19 to $78,008, a rate of 21.1% compounded annually.*

* All per-share figures used in this report apply to Berkshire’s A shares. Figures for the B shares are 1/30th of those shown for the A.

Overall, our 76 operating businesses did well last year. The few that had problems were primarily those linked to housing, among them our brick, carpet and real estate brokerage operations. Their setbacks are minor and temporary. Our competitive position in these businesses remains strong, and we have first-class CEOs who run them right, in good times or bad.

Some major financial institutions have, however, experienced staggering problems because they engaged in the “weakened lending practices” I described in last year’s letter. John Stumpf, CEO of Wells Fargo, aptly dissected the recent behavior of many lenders: “It is interesting that the industry has invented new ways to lose money when the old ways seemed to work just fine.”

You may recall a 2003 Silicon Valley bumper sticker that implored, “Please, God, Just One More Bubble.” Unfortunately, this wish was promptly granted, as just about all Americans came to believe that house prices would forever rise. That conviction made a borrower’s income and cash equity seem unimportant to lenders, who shoveled out money, confident that HPA — house price appreciation — would cure all problems. Today, our country is experiencing widespread pain because of that erroneous belief. As house prices fall, a huge amount of financial folly is being exposed. You only learn who has been swimming naked when the tide goes out — and what we are witnessing at some of our largest financial institutions is an ugly sight.

Turning to happier thoughts, we can report that Berkshire’s newest acquisitions of size, TTI and Iscar, led by their CEOs, Paul Andrews and Jacob Harpaz respectively, performed magnificently in 2007. Iscar is as impressive a manufacturing operation as I’ve seen, a view I reported last year and that was confirmed by a visit I made in the fall to its extraordinary plant in Korea.

Finally, our insurance business — the cornerstone of Berkshire — had an excellent year. Part of the reason is that we have the best collection of insurance managers in the business — more about them later. But we also were very lucky in 2007, the second year in a row free of major insured catastrophes.

That party is over. It’s a certainty that insurance-industry profit margins, including ours, will fall significantly in 2008. Prices are down, and exposures inexorably rise. Even if the U.S. has its third consecutive catastrophe-light year, industry profit margins will probably shrink by four percentage points or so. If the winds roar or the earth trembles, results could be far worse. So be prepared for lower insurance earnings during the next few years.

Yardsticks

Berkshire has two major areas of value. The first is our investments: stocks, bonds and cash equivalents. At yearend these totaled $141 billion (not counting those in our finance or utility operations, which we assign to our second bucket of value).

Insurance float — money we temporarily hold in our insurance operations that does not belong to us — funds $59 billion of our investments. This float is “free” as long as insurance underwriting breaks even, meaning that the premiums we receive equal the losses and expenses we incur. Of course, insurance underwriting is volatile, swinging erratically between profits and losses. Over our entire history, however, we’ve been profitable, and I expect we will average breakeven results or better in the future. If we do that, our investments can be viewed as an unencumbered source of value for Berkshire shareholders.

Berkshire’s second component of value is earnings that come from sources other than investments and insurance. These earnings are delivered by our 66 non-insurance companies, itemized on page 76. In our early years, we focused on the investment side. During the past two decades, however, we have put ever more emphasis on the development of earnings from non-insurance businesses.

The following tables illustrate this shift. In the first we tabulate per-share investments at 14-year intervals. We exclude those applicable to minority interests.

For the entire 42 years, our compounded annual gain in per-share investments was 27.1%. But the trend has been downward as we increasingly used our available funds to buy operating businesses.

Here’s the record on how earnings of our non-insurance businesses have grown, again on a per-share basis and after applicable minority interests.

For the entire period, the compounded annual gain was 17.8%, with gains accelerating as our focus shifted.

Though these tables may help you gain historical perspective and be useful in valuation, they are completely misleading in predicting future possibilities. Berkshire’s past record can’t be duplicated or even approached. Our base of assets and earnings is now far too large for us to make outsized gains in the future.

Charlie Munger, my partner at Berkshire, and I will continue to measure our progress by the two yardsticks I have just described and will regularly update you on the results. Though we can’t come close to duplicating the past, we will do our best to make sure the future is not disappointing.

* * * * * * * * * * * *

In our efforts, we will be aided enormously by the managers who have joined Berkshire. This is an unusual group in several ways. First, most of them have no financial need to work. Many sold us their businesses for large sums and run them because they love doing so, not because they need the money. Naturally they wish to be paid fairly, but money alone is not the reason they work hard and productively.

A second, somewhat related, point about these managers is that they have exactly the job they want for the rest of their working years. At almost any other company, key managers below the top aspire to keep climbing the pyramid. For them, the subsidiary or division they manage today is a way station — or so they hope. Indeed, if they are in their present positions five years from now, they may well feel like failures.

Conversely, our CEOs’ scorecards for success are not whether they obtain my job but instead are the long-term performances of their businesses. Their decisions flow from a here-today, here-forever mindset. I think our rare and hard-to-replicate managerial structure gives Berkshire a real advantage.

Acquisitions

Though our managers may be the best, we will need large and sensible acquisitions to get the growth in operating earnings we wish. Here, we made little progress in 2007 until very late in the year. Then, on Christmas day, Charlie and I finally earned our paychecks by contracting for the largest cash purchase in Berkshire’s history.

The seeds of this transaction were planted in 1954. That fall, only three months into a new job, I was sent by my employers, Ben Graham and Jerry Newman, to a shareholders’ meeting of Rockwood Chocolate in Brooklyn. A young fellow had recently taken control of this company, a manufacturer of assorted cocoa-based items. He had then initiated a one-of-a-kind tender, offering 80 pounds of cocoa beans for each share of Rockwood stock. I described this transaction in a section of the 1988 annual report that explained arbitrage. I also told you that Jay Pritzker — the young fellow mentioned above — was the business genius behind this tax-efficient idea, the possibilities for which had escaped all the other experts who had thought about buying Rockwood, including my bosses, Ben and Jerry.

At the meeting, Jay was friendly and gave me an education on the 1954 tax code. I came away very impressed. Thereafter, I avidly followed Jay’s business dealings, which were many and brilliant. His valued partner was his brother, Bob, who for nearly 50 years ran Marmon Group, the home for most of the Pritzker businesses.

Jay died in 1999, and Bob retired early in 2002. Around then, the Pritzker family decided to gradually sell or reorganize certain of its holdings, including Marmon, a company operating 125 businesses, managed through nine sectors. Marmon’s largest operation is Union Tank Car, which together with a Canadian counterpart owns 94,000 rail cars that are leased to various shippers. The original cost of this fleet is $5.1 billion. All told, Marmon has $7 billion in sales and about 20,000 employees.

We will soon purchase 60% of Marmon and will acquire virtually all of the balance within six years. Our initial outlay will be $4.5 billion, and the price of our later purchases will be based on a formula tied to earnings. Prior to our entry into the picture, the Pritzker family received substantial consideration from Marmon’s distribution of cash, investments and certain businesses.

This deal was done in the way Jay would have liked. We arrived at a price using only Marmon’s financial statements, employing no advisors and engaging in no nit-picking. I knew that the business would be exactly as the Pritzkers represented, and they knew that we would close on the dot, however chaotic financial markets might be. During the past year, many large deals have been renegotiated or killed entirely. With the Pritzkers, as with Berkshire, a deal is a deal.

Marmon’s CEO, Frank Ptak, works closely with a long-time associate, John Nichols. John was formerly the highly successful CEO of Illinois Tool Works (ITW), where he teamed with Frank to run a mix of industrial businesses. Take a look at their ITW record; you’ll be impressed.

Byron Trott of Goldman Sachs — whose praises I sang in the 2003 report — facilitated the Marmon transaction. Byron is the rare investment banker who puts himself in his client’s shoes. Charlie and I trust him completely.

You’ll like the code name that Goldman Sachs assigned the deal. Marmon entered the auto business in 1902 and exited it in 1933. Along the way it manufactured the Wasp, a car that won the first Indianapolis 500 race, held in 1911. So this deal was labeled “Indy 500.”

* * * * * * * * * * * *

In May 2006, I spoke at a lunch at Ben Bridge, our Seattle-based jewelry chain. The audience was a number of its vendors, among them Dennis Ulrich, owner of a company that manufactured gold jewelry.

In January 2007, Dennis called me, suggesting that with Berkshire’s support he could build a large jewelry supplier. We soon made a deal for his business, simultaneously purchasing a supplier of about equal size. The new company, Richline Group, has since made two smaller acquisitions. Even with those, Richline is far below the earnings threshold we normally require for purchases. I’m willing to bet, however, that Dennis — with the help of his partner, Dave Meleski — will build a large operation, earning good returns on capital employed.

Businesses — The Great, the Good and the Gruesome

Let’s take a look at what kind of businesses turn us on. And while we’re at it, let’s also discuss what we wish to avoid.

Charlie and I look for companies that have a) a business we understand; b) favorable long-term economics; c) able and trustworthy management; and d) a sensible price tag. We like to buy the whole business or, if management is our partner, at least 80%. When control-type purchases of quality aren’t available, though, we are also happy to simply buy small portions of great businesses by way of stockmarket purchases. It’s better to have a part interest in the Hope Diamond than to own all of a rhinestone.

A truly great business must have an enduring “moat” that protects excellent returns on invested capital. The dynamics of capitalism guarantee that competitors will repeatedly assault any business “castle” that is earning high returns. Therefore a formidable barrier such as a company’s being the low-cost producer (GEICO, Costco) or possessing a powerful world-wide brand (Coca-Cola, Gillette, American Express) is essential for sustained success. Business history is filled with “Roman Candles,” companies whose moats proved illusory and were soon crossed.

Our criterion of “enduring” causes us to rule out companies in industries prone to rapid and continuous change. Though capitalism’s “creative destruction” is highly beneficial for society, it precludes investment certainty. A moat that must be continuously rebuilt will eventually be no moat at all.

Additionally, this criterion eliminates the business whose success depends on having a great manager. Of course, a terrific CEO is a huge asset for any enterprise, and at Berkshire we have an abundance of these managers. Their abilities have created billions of dollars of value that would never have materialized if typical CEOs had been running their businesses.

But if a business requires a superstar to produce great results, the business itself cannot be deemed great. A medical partnership led by your area’s premier brain surgeon may enjoy outsized and growing earnings, but that tells little about its future. The partnership’s moat will go when the surgeon goes. You can count, though, on the moat of the Mayo Clinic to endure, even though you can’t name its CEO.

Long-term competitive advantage in a stable industry is what we seek in a business. If that comes with rapid organic growth, great. But even without organic growth, such a business is rewarding. We will simply take the lush earnings of the business and use them to buy similar businesses elsewhere. There’s no rule that you have to invest money where you’ve earned it. Indeed, it’s often a mistake to do so: Truly great businesses, earning huge returns on tangible assets, can’t for any extended period reinvest a large portion of their earnings internally at high rates of return.

Let’s look at the prototype of a dream business, our own See’s Candy. The boxed-chocolates industry in which it operates is unexciting: Per-capita consumption in the U.S. is extremely low and doesn’t grow. Many once-important brands have disappeared, and only three companies have earned more than token profits over the last forty years. Indeed, I believe that See’s, though it obtains the bulk of its revenues from only a few states, accounts for nearly half of the entire industry’s earnings.

At See’s, annual sales were 16 million pounds of candy when Blue Chip Stamps purchased the company in 1972. (Charlie and I controlled Blue Chip at the time and later merged it into Berkshire.) Last year See’s sold 31 million pounds, a growth rate of only 2% annually. Yet its durable competitive advantage, built by the See’s family over a 50-year period, and strengthened subsequently by Chuck Huggins and Brad Kinstler, has produced extraordinary results for Berkshire.

We bought See’s for $25 million when its sales were $30 million and pre-tax earnings were less than $5 million. The capital then required to conduct the business was $8 million. (Modest seasonal debt was also needed for a few months each year.) Consequently, the company was earning 60% pre-tax on invested capital. Two factors helped to minimize the funds required for operations. First, the product was sold for cash, and that eliminated accounts receivable. Second, the production and distribution cycle was short, which minimized inventories.

Last year See’s sales were $383 million, and pre-tax profits were $82 million. The capital now required to run the business is $40 million. This means we have had to reinvest only $32 million since 1972 to handle the modest physical growth — and somewhat immodest financial growth — of the business. In the meantime pre-tax earnings have totaled $1.35 billion. All of that, except for the $32 million, has been sent to Berkshire (or, in the early years, to Blue Chip). After paying corporate taxes on the profits, we have used the rest to buy other attractive businesses. Just as Adam and Eve kick-started an activity that led to six billion humans, See’s has given birth to multiple new streams of cash for us. (The biblical command to “be fruitful and multiply” is one we take seriously at Berkshire.)

There aren’t many See’s in Corporate America. Typically, companies that increase their earnings from $5 million to $82 million require, say, $400 million or so of capital investment to finance their growth. That’s because growing businesses have both working capital needs that increase in proportion to sales growth and significant requirements for fixed asset investments.

A company that needs large increases in capital to engender its growth may well prove to be a satisfactory investment. There is, to follow through on our example, nothing shabby about earning $82 million pre-tax on $400 million of net tangible assets. But that equation for the owner is vastly different from the See’s situation. It’s far better to have an ever-increasing stream of earnings with virtually no major capital requirements. Ask Microsoft or Google.

One example of good, but far from sensational, business economics is our own FlightSafety. This company delivers benefits to its customers that are the equal of those delivered by any business that I know of. It also possesses a durable competitive advantage: Going to any other flight-training provider than the best is like taking the low bid on a surgical procedure.

Nevertheless, this business requires a significant reinvestment of earnings if it is to grow. When we purchased FlightSafety in 1996, its pre-tax operating earnings were $111 million, and its net investment in fixed assets was $570 million. Since our purchase, depreciation charges have totaled $923 million. But capital expenditures have totaled $1.635 billion, most of that for simulators to match the new airplane models that are constantly being introduced. (A simulator can cost us more than $12 million, and we have 273 of them.) Our fixed assets, after depreciation, now amount to $1.079 billion. Pre-tax operating earnings in 2007 were $270 million, a gain of $159 million since 1996. That gain gave us a good, but far from See’s-like, return on our incremental investment of $509 million.

Consequently, if measured only by economic returns, FlightSafety is an excellent but not extraordinary business. Its put-up-more-to-earn-more experience is that faced by most corporations. For example, our large investment in regulated utilities falls squarely in this category. We will earn considerably more money in this business ten years from now, but we will invest many billions to make it.

Now let’s move to the gruesome. The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines. Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.

The airline industry’s demand for capital ever since that first flight has been insatiable. Investors have poured money into a bottomless pit, attracted by growth when they should have been repelled by it. And I, to my shame, participated in this foolishness when I had Berkshire buy U.S. Air preferred stock in 1989. As the ink was drying on our check, the company went into a tailspin, and before long our preferred dividend was no longer being paid. But we then got very lucky. In one of the recurrent, but always misguided, bursts of optimism for airlines, we were actually able to sell our shares in 1998 for a hefty gain. In the decade following our sale, the company went bankrupt. Twice.

To sum up, think of three types of “savings accounts.” The great one pays an extraordinarily high interest rate that will rise as the years pass. The good one pays an attractive rate of interest that will be earned also on deposits that are added. Finally, the gruesome account both pays an inadequate interest rate and requires you to keep adding money at those disappointing returns.

* * * * * * * * * * * *

And now it’s confession time. It should be noted that no consultant, board of directors or investment banker pushed me into the mistakes I will describe. In tennis parlance, they were all unforced errors.

To begin with, I almost blew the See’s purchase. The seller was asking $30 million, and I was adamant about not going above $25 million. Fortunately, he caved. Otherwise I would have balked, and that $1.35 billion would have gone to somebody else.

About the time of the See’s purchase, Tom Murphy, then running Capital Cities Broadcasting, called and offered me the Dallas-Fort Worth NBC station for $35 million. The station came with the Fort Worth paper that Capital Cities was buying, and under the “cross-ownership” rules Murph had to divest it. I knew that TV stations were See’s-like businesses that required virtually no capital investment and had excellent prospects for growth. They were simple to run and showered cash on their owners.

Moreover, Murph, then as now, was a close friend, a man I admired as an extraordinary manager and outstanding human being. He knew the television business forward and backward and would not have called me unless he felt a purchase was certain to work. In effect Murph whispered “buy” into my ear. But I didn’t listen.

In 2006, the station earned $73 million pre-tax, bringing its total earnings since I turned down the deal to at least $1 billion — almost all available to its owner for other purposes. Moreover, the property now has a capital value of about $800 million. Why did I say “no”? The only explanation is that my brain had gone on vacation and forgot to notify me. (My behavior resembled that of a politician Molly Ivins once described: “If his I.Q. was any lower, you would have to water him twice a day.”)

Finally, I made an even worse mistake when I said “yes” to Dexter, a shoe business I bought in 1993 for $433 million in Berkshire stock (25,203 shares of A). What I had assessed as durable competitive advantage vanished within a few years. But that’s just the beginning: By using Berkshire stock, I compounded this error hugely. That move made the cost to Berkshire shareholders not $400 million, but rather $3.5 billion. In essence, I gave away 1.6% of a wonderful business — one now valued at $220 billion — to buy a worthless business.

To date, Dexter is the worst deal that I’ve made. But I’ll make more mistakes in the future — you can bet on that. A line from Bobby Bare’s country song explains what too often happens with acquisitions: “I’ve never gone to bed with an ugly woman, but I’ve sure woke up with a few.”

* * * * * * * * * * * *

Now, let’s examine the four major operating sectors of Berkshire. Each sector has vastly different balance sheet and income account characteristics. Therefore, lumping them together impedes analysis. So we’ll present them as four separate businesses, which is how Charlie and I view them.

Insurance

The best anecdote I’ve heard during the current presidential campaign came from Mitt Romney, who asked his wife, Ann, “When we were young, did you ever in your wildest dreams think I might be president?” To which she replied, “Honey, you weren’t in my wildest dreams.”

When we first entered the property/casualty insurance business in 1967, my wildest dreams did not envision our current operation. Here’s how we did in the first five years after purchasing National Indemnity:

To put it charitably, we were a slow starter. But things changed. Here’s the record of the last five years:

This metamorphosis has been accomplished by some extraordinary managers. Let’s look at what each has achieved.

• GEICO possesses the widest moat of any of our insurers, one carefully protected and expanded by Tony Nicely, its CEO. Last year — again — GEICO had the best growth record among major auto insurers, increasing its market share to 7.2%. When Berkshire acquired control in 1995, that share was 2.5%. Not coincidentally, annual ad expenditures by GEICO have increased from $31 million to $751 million during the same period.

  Tony, now 64, joined GEICO at 18. Every day since, he has been passionate about the company — proud of how it could both save money for its customers and provide growth opportunities for its associates. Even now, with sales at $12 billion, Tony feels GEICO is just getting started. So do I.

  Here’s some evidence. In the last three years, GEICO has increased its share of the motorcycle market from 2.1% to 6%. We’ve also recently begun writing policies on ATVs and RVs. And in November we wrote our first commercial auto policy. GEICO and National Indemnity are working together in the commercial field, and early results are very encouraging.

  Even in aggregate, these lines will remain a small fraction of our personal auto volume. Nevertheless, they should deliver a growing stream of underwriting profits and float.

• General Re, our international reinsurer, is by far our largest source of “home-grown” float — $23 billion at yearend. This operation is now a huge asset for Berkshire. Our ownership, however, had a shaky start.

  For decades, General Re was the Tiffany of reinsurers, admired by all for its underwriting skills and discipline. This reputation, unfortunately, outlived its factual underpinnings, a flaw that I completely missed when I made the decision in 1998 to merge with General Re. The General Re of 1998 was not operated as the General Re of 1968 or 1978.

  Now, thanks to Joe Brandon, General Re’s CEO, and his partner, Tad Montross, the luster of the company has been restored. Joe and Tad have been running the business for six years and have been doing first-class business in a first-class way, to use the words of J. P. Morgan. They have restored discipline to underwriting, reserving and the selection of clients.

  Their job was made more difficult by costly and time-consuming legacy problems, both in the

  U.S. and abroad. Despite that diversion, Joe and Tad have delivered excellent underwriting results while skillfully repositioning the company for the future.

• Since joining Berkshire in 1986, Ajit Jain has built a truly great specialty reinsurance operation from scratch. For one-of-a-kind mammoth transactions, the world now turns to him.

  Last year I told you in detail about the Equitas transfer of huge, but capped, liabilities to Berkshire for a single premium of $7.1 billion. At this very early date, our experience has been good. But this doesn’t tell us much because it’s just one straw in a fifty-year-or-more wind. What we know for sure, however, is that the London team who joined us, headed by Scott Moser, is first-rate and has become a valuable asset for our insurance business.

• Finally, we have our smaller operations, which serve specialized segments of the insurance market. In aggregate, these companies have performed extraordinarily well, earning above-average underwriting profits and delivering valuable float for investment.

  Last year BoatU.S., headed by Bill Oakerson, was added to the group. This company manages an association of about 650,000 boat owners, providing them services similar to those offered by AAA auto clubs to drivers. Among the association’s offerings is boat insurance. Learn more about this operation by visiting its display at the annual meeting.

Below we show the record of our four categories of property/casualty insurance.

Regulated Utility Business

Berkshire has an 87.4% (diluted) interest in MidAmerican Energy Holdings, which owns a wide variety of utility operations. The largest of these are (1) Yorkshire Electricity and Northern Electric, whose

3.8 million electric customers make it the third largest distributor of electricity in the U.K.; (2) MidAmerican Energy, which serves 720,000 electric customers, primarily in Iowa; (3) Pacific Power and Rocky Mountain Power, serving about 1.7 million electric customers in six western states; and (4) Kern River and Northern Natural pipelines, which carry about 8% of the natural gas consumed in the U.S.

Our partners in ownership of MidAmerican are Walter Scott, and its two terrific managers, Dave Sokol and Greg Abel. It’s unimportant how many votes each party has; we make major moves only when we are unanimous in thinking them wise. Eight years of working with Dave, Greg and Walter have underscored my original belief: Berkshire couldn’t have better partners.

Somewhat incongruously, MidAmerican also owns the second largest real estate brokerage firm in the U.S., HomeServices of America. This company operates through 20 locally-branded firms with 18,800 agents. Last year was a slow year for residential sales, and 2008 will probably be slower. We will continue, however, to acquire quality brokerage operations when they are available at sensible prices.

Here are some key figures on MidAmerican’s operation:

We agreed to purchase 35,464,337 shares of MidAmerican at $35.05 per share in 1999, a year in which its per-share earnings were $2.59. Why the odd figure of $35.05? I originally decided the business was worth $35.00 per share to Berkshire. Now, I’m a “one-price” guy (remember See’s?) and for several days the investment bankers representing MidAmerican had no luck in getting me to increase Berkshire’s offer. But, finally, they caught me in a moment of weakness, and I caved, telling them I would go to $35.05. With that, I explained, they could tell their client they had wrung the last nickel out of me. At the time, it hurt.

Later on, in 2002, Berkshire purchased 6,700,000 shares at $60 to help finance the acquisition of one of our pipelines. Lastly, in 2006, when MidAmerican bought PacifiCorp, we purchased 23,268,793 shares at $145 per share.

In 2007, MidAmerican earned $15.78 per share. However, 77¢ of that was non-recurring — a reduction in deferred tax at our British utility, resulting from a lowering of the U.K. corporate tax rate. So call normalized earnings $15.01 per share. And yes, I’m glad I wilted and offered the extra nickel.

Manufacturing, Service and Retailing Operations

Our activities in this part of Berkshire cover the waterfront. Let’s look, though, at a summary balance sheet and earnings statement for the entire group.

我们的立法者应当认识到，当前的不平衡是不可持续的，因此应当尽早采取能够大幅减少这些失衡的政策。否则，我们每天向世界其他地区强制输送的20亿美元，可能会引发令人不快的全球性消化不良。（关于贸易逆差不可持续性的其他评论，可参见艾伦·格林斯潘2004年11月19日的讲话、联邦公开市场委员会2004年6月29日的会议纪要，以及本·伯南克2007年9月11日的声明。）

在伯克希尔，我们在2007年只持有一项直接的外币头寸——那就是，屏住呼吸——巴西雷亚尔。不久之前，用美元兑换雷亚尔还是不可想象的事情。毕竟，在过去的一个世纪里，巴西货币的五个版本实际上都变成了废纸。正如许多货币曾周期性地贬值甚至消亡的国家一样，富有的巴西人有时会将大笔资金存放在美国以保值财富。

但任何一位遵循这条看似审慎之道的巴西人，在过去五年里都会损失掉他一半的净资产。以下是自2002年底至2007年底，雷亚尔相对于美元（以指数化表示）逐年表现的记录：100；122；133；152；166；199。每年雷亚尔都在升值，而美元在贬值。此外，在此期间的大部分时间里，巴西政府实际上通过从市场购买美元来压低雷亚尔的价值，并支撑我们的货币。

过去五年里，我们的直接外币头寸带来了23亿美元的税前利润，此外我们还通过持有以其他货币计价的美国公司债券获利。例如，在2001年和2002年，我们以面值的57%购买了3.1亿欧元的亚马逊公司2010年到期的6.875%债券。当时，亚马逊债券被定价为“垃圾”级信用，尽管它们绝非如此。（是的，弗吉尼亚，你偶尔确实能找到荒谬无效的市场——或者至少在除了某些顶尖商学院金融系以外的任何地方都能找到。）

这些亚马逊债券以欧元计价，对我们来说是一个额外且重要的吸引力。2002年我们买入时，欧元兑美元汇率为0.95。因此，我们以美元计价的成本仅为1.69亿美元。现在，这些债券以面值的102%交易，而欧元兑美元汇率为1.47。在2005年和2006年，我们部分债券被赎回，我们因此获得了2.53亿美元。我们剩余的债券在年末价值为1.62亿美元。在我们2.46亿美元的已实现和未实现收益中，约有1.18亿美元归因于美元贬值。货币确实重要。

在伯克希尔，我们将努力进一步增加我们的直接和间接国外收益。然而，即使取得成功，我们的资产和收益仍将主要集中在美国。尽管我们的国家存在许多不完善之处和层出不穷的各种问题，但美国的法治、对市场反应灵敏的经济体系以及对精英管理的信念，几乎肯定会为其公民带来日益增长的繁荣。

正如我之前告诉过你们的，一段时间以来，我们已经为首席执行官继任做好了充分准备，因为我们有三位出色的内部候选人。董事会确切地知道，如果我因去世或能力下降而无法履职，他们会选择谁。而且，那还会给董事会留下两个后备人选。

去年我告诉过你们，我们也会迅速完成伯克希尔投资岗位的继任计划，我们现在确实已经确定了四位候选人，他们可以在管理投资方面接替我的工作。目前，这四个人都管理着可观的资金，并且都表示如果伯克希尔需要，他们非常愿意加入。董事会了解这四位候选人的优势，并希望在需要时聘请其中一位或多位。这些候选人都处于青壮年至中年，经济状况从富裕到富有，并且都希望为伯克希尔工作，其动机超越了薪酬。

（我勉强放弃了在我死后继续管理投资组合的想法——放弃了我希望赋予“跳出框框思考”这个说法新含义的愿望。）

虚幻数字——上市公司如何美化利润

前参议员艾伦·辛普森有句名言：“在华盛顿走正道的人，不必担心交通拥堵。”然而，如果参议员想找真正人迹罕至的道路，他应该看看美国企业的会计处理方式。

关于企业更倾向于哪条道路的一次重要公投发生在1994年。当时，美国CEO们刚刚强行促使美国参议院以88比9的投票结果，命令财务会计准则委员会闭嘴。在那次斥责之前，FASB曾表现出大胆——而且是一致同意——告诉企业领袖，他们获得的股票期权是一种薪酬形式，其价值应记录为一项费用。在参议员们投票后，FASB——现在被参议院那88个隐藏注册会计师们就会计准则“教育”了一番——规定公司可以选择两种报告期权的方法。优先 的处理方式是将其价值确认为费用，但公司也可以选择忽略这项费用，只要他们的期权是按市价发行的。

现在，美国CEO们的关键时刻到了，他们的反应可不好看。在接下来的六年里，标准普尔500家公司中恰好只有两家 选择了优先路径。其余公司的CEO选择了低路，从而忽略了一项巨大而明显的费用，以便报告更高的“利润”。我确信，他们中有些人也认为，如果他们选择费用化，他们的董事会在未来几年批准他们渴望的巨额期权授予之前可能会三思。

结果证明，对许多CEO来说，即使是低路也不够好。根据被削弱的规则，如果期权的行权价低于市场价，仍然会产生盈利影响。没问题。为了避免这个烦人的规则，一些公司秘密地将期权日期倒填，以虚假表明它们是在当前市价授予的，而实际上它们是以远低于市场的价格发放的。

几十年来期权会计处理的胡言乱语现在终于被终结了，但其他会计选择仍然存在——其中重要的是公司在计算养老金费用时使用的投资回报假设。毫不意外，许多公司仍然选择一种能让他们报告不那么扎实的“利润”的假设。在标普500指数中加入养老金计划的363家公司中，2006年这个假设的平均值为8%。让我们看看实现这一假设的可能性。

所有养老基金对债券和现金的平均配置约为28%，对这些资产的预期回报率不会超过5%。当然，可以获得更高的收益率，但它们伴随着相应（或更大）损失的风险。

这意味着，剩余的72%的资产——主要是股票，无论是直接持有还是通过对冲基金或私募股权投资等工具持有——必须获得9.2%的回报，才能使整个基金实现假设的8%的回报。而且，这个回报必须是在扣除所有费用之后实现的，而现在的费用比以往任何时候都高得多。

这个预期有多现实？让我们回顾一下我两年前提到的一些数据：在20世纪，道琼斯指数从66点上升到11,497点。这个涨幅虽然看起来巨大，但按年复合计算只有5.3%。一个在整个世纪持有道琼斯指数的投资者，在大部分时间里还会获得丰厚的股息，但在最后几年只有大约2%左右。那是个美妙的世纪。

现在想想这个 世纪。为了让投资者仅仅达到那5.3%的市值涨幅，道琼斯指数——最近低于13,000点——需要在2099年12月31日收于大约2,000,000 点。我们现在已经进入这个世纪八年了，而市场在本世纪要达到上世纪的5.3%涨幅所需走过的1,988,000点道琼斯指数路程中，我们只走了不到2,000点。

有趣的是，评论员们经常对道琼斯指数突破整数千点大关（如14,000点或15,000点）的前景大惊小怪。如果他们继续那样反应，那么本世纪5.3%的年增长率将意味着他们在接下来的92年里至少经历1,986次发作。虽然一切皆有可能，但真的有人认为这是最有可能的结果吗？

股息持续保持在2%左右。即使股票平均实现1900年代5.3%的年升值率，计划资产的股票部分——扣除0.5%的费用后——也只能产生大约7%的回报。而考虑到存在多层顾问和高价经理（“帮手”），0.5%很可能低估了成本。

当然，每个人都期望自己高于平均水平。而那些帮手——上天保佑他们——肯定会鼓励他们的客户相信这一点。但是，作为一个群体，得到帮手协助的群体必定是低于 平均水平的。原因很简单：1）总体而言，投资者必然获得平均回报，减去他们承担的成本；2）被动投资者和指数投资者，通过他们极低的交易活动，将获得平均回报减去非常低的成本；3）因为该群体获得了平均回报，所以剩下的群体——主动投资者——也必须如此。但这个群体将承担高昂的交易、管理和咨询成本。因此，主动投资者的回报将比他们的被动同胞减少得更厉害。这意味着被动群体——那些“一无所知者”——必然会赢。

我应该提到，那些期望本世纪从股票中获得10%年回报率的人——设想其中2%来自股息，8%来自价格升值——是在含蓄地预测道琼斯指数在2100年将达到约24,000,000 点。如果你的顾问跟你谈论股票能有两位数的回报率，请向他解释这个算术——尽管这对他不起作用。许多帮手显然是爱丽丝梦游仙境中那个王后的直系后裔，她说：“哎呀，有时我在早餐前就相信多达六件不可能的事情。”要当心那些油嘴滑舌的帮手，他们用幻想填满你的脑袋，同时用费用填满自己的口袋。

一些公司在欧洲和美国都有养老金计划，在他们的会计处理中，几乎所有公司都假设美国计划将比非美国计划获得更高的收益。这种差异令人费解：为什么这些公司不让他们的美国经理负责非美国养老金资产，并让这些资产也施展他们的魔法呢？我从未见过对这个谜团的解释。但是，负责审查回报假设的审计师和精算师似乎对此没有异议。

没有谜团的是，为什么CEO选择高投资假设：这让他们报告更高的利润。而且，如果他们错了——正如我认为他们确实错了——那么这些恶果要等到他们退休很久之后才会显现。

在几十年来不断挑战底线——或者更糟——试图为当前利润报告尽可能高的数字之后，美国企业界应该放松一下了。它应该听听我的搭档查理的建议：“如果你已经向左打了三个球出界，那么下一次挥杆时瞄准右一点。”

无论未来股东们会面临怎样的养老金成本意外，这些冲击都将被纳税人将经历的冲击多次超越。公共养老金承诺是巨大的，而且在许多情况下，资金严重不足。由于这颗定时炸弹的引信很长，政客们不愿施加税收痛苦，因为问题只有在这些官员离任很久之后才会显现。涉及非常早退休的承诺——有时是给四十岁出头的人——以及慷慨的生活成本调整，对这些官员来说是很容易做出的。在一个人们寿命更长且通货膨胀确定的世界上，这些承诺绝非易履行。

在指出了美国会计中“信誉体系”的失败之后，我需要指出，在伯克希尔，这正是我们用于一个真正巨大的资产负债表项目的体系。在我们向你们提交的每一份报告中，我们都必须估算我们保险单位的损失准备金。如果我们的估算有误，那就意味着我们的资产负债表和利润表都将出错。因此，我们自然会尽最大努力使这些猜测准确。尽管如此，在每一份报告中，我们的估算肯定是错误的。

在2007年底，我们列示了560亿美元的保险负债，这代表我们对所有在年底前发生的损失事件最终将支付金额的猜测（除了大约30亿美元已折现至现值的准备金）。我们了解了成千上万起事件，并为每一事件设定了一个美元价值，反映了我们认为将支付的金额，包括我们在支付过程中将产生的相关成本（如律师费）。在某些情况下，例如涉及工人赔偿的某些严重伤害索赔，支付将持续50年或更长时间。

我们还为在年底前发生但我们尚未听说的大额损失预留了巨额准备金。有时，被保险人自己也不知道已经发生了损失。（想象一下一起多年未被发现的贪污案。）有时，我们会听到涉及我们几十年前承保的保单的损失。

我几年前给你们讲的一个故事说明了我们在准确估算损失负债方面的问题：一个人正在欧洲参加一个重要的商务旅行，这时他姐姐打电话告诉他父亲去世了。哥哥解释说无法回来，但让姐姐在葬礼上不要省钱，费用由他承担。当他回来时，姐姐告诉他葬礼办得很漂亮，并给了他总计8000美元的账单。他付了钱，但一个月后收到殡仪馆一张10美元的账单。他也付了——并且一个月后又收到了另一个10美元的收费。当第三张10美元的账单在第二个月寄给他时，困惑的男人打电话给姐姐问是怎么回事。“哦，”她回答说，“我忘了告诉你。我们把爸爸穿着租来的西服下葬了。”

在我们的保险公司里，世界各地埋藏着未知，但肯定数量庞大的“租来的西服”。我们试图准确估算它们的账单。十年或二十年后，我们甚至能够很好地猜测目前猜测的不准确程度。但即使是那个猜测 也会受到意外的影响。我个人认为我们披露的准备金是充足的，但我过去也错了几次。

年会

我们的年会今年将于5月3日星期六举行。和往常一样，Qwest中心的大门将于早上7点打开，新的伯克希尔电影将于8点30分放映。9点30分，我们将直接进入问答环节，该环节（中午在Qwest中心的看台休息用餐）将持续到下午3点。然后，经过短暂休息，查理和我会在下午3点15分召开年度会议。如果你决定在当天的问答环节离开，请在查理 讲话时离开。

当然，离开的最好理由是去购物。我们将通过用伯克希尔子公司的产品填满毗邻会议区的194,300平方英尺的大厅来帮助你们这样做。去年，前来参加会议的27,000人尽了他们的力，几乎每个展位都创下了销售记录。但你们可以做得更好。（如有必要，我会锁门。）

今年，我们将再次展示一套克莱顿房屋（采用Acme砖、Shaw地毯、Johns Manville保温材料、MiTek紧固件、Carefree遮阳篷和NFM家具）。你会发现这套1,550平方英尺、售价69,500美元的房屋提供了非凡的价值。在你购买房子之后，考虑也购买附近展示的Forest River房车和浮筒船。

GEICO将设有一个展位，由来自全国各地的多位顶级顾问组成，他们随时准备为您提供汽车保险报价。在大多数情况下，GEICO能够为您提供特别的股东折扣（通常为8%）。这个特别优惠在我们运营的50个司法管辖区中的45个是允许的。（一个补充说明：如果您符合其他折扣条件，例如给予特定群体的折扣，则此折扣不可叠加。）请携带您现有保险的详细信息，并查看我们能否为您省钱。我相信，对于你们中至少50%的人，我们可以做到。

周六，在奥马哈机场，NetJets将照例展出其一系列飞机供您参观。请前往Qwest中心的NetJets展位了解如何参观这些飞机。坐巴士来奥马哈，开走您的新飞机。并且，您可以将所有您想要的发胶和剪刀带上飞机。

接下来，如果你还有钱，请光顾Bookworm书店，那里你会找到大约25本书和DVD，全部打折——再次以*《穷查理宝典》* 领衔。没有任何广告或书店陈列，查理的书现在惊人地售出了近50,000册。对于那些无法参加年会的人，请访问poorcharliesalmanack.com订购一本。

随本报告附上的委托材料的附件说明了您如何获得参加年会和其他活动所需的凭证。至于飞机、酒店和汽车预订，我们再次签约美国运通公司（800-799-6634）为您提供特别帮助。负责这些事务的Carol Pedersen每年都为我们做得很出色，我在此感谢她。酒店房间可能很难找，但和Carol合作，您一定能订到。

在位于道奇街和太平洋街之间的72街、占地77英亩的内布拉斯加家具城，我们将再次举办“伯克希尔周末”折扣活动。我们11年前在NFM发起了这项特殊活动，“周末”期间的销售额从1997年的530万美元增长到2007年的3090万美元。这超过了大多数家具店一年内的销量。

要获得伯克希尔折扣，您必须在5月1日星期四至5月5日星期一（含首尾两天）期间购物，并出示您的年会凭证。这期间的特别定价甚至适用于几家知名制造商的产品，这些制造商通常有禁止打折的铁律，但本着我们股东周末的精神，他们为您破了例。我们感谢他们的合作。NFM的营业时间为周一至周六上午10点至晚上9点，周日上午10点至下午6点。今年周六下午5点30分至晚上8点，NFM将举办一个以牛肉和鸡肉玉米饼为特色的下加利福尼亚海滩派对。

在博希姆珠宝，我们将再次举办仅限股东参加的两场活动。第一场是5月2日星期五下午6点至晚上10点的鸡尾酒招待会。第二场，也是主要的盛会，将于5月4日星期日上午9点至下午4点举行。周六，我们将营业至下午6点。

整个周末，博希姆珠宝将人潮涌动。因此，为方便您购物，股东价格将从4月28日星期一至5月10日星期六期间有效。在此期间，请出示您的年会凭证或显示您是伯克希尔持股人的经纪账户对账单，以表明您的股东身份。

周日，在博希姆珠宝外的帐篷里，双眼被蒙住的帕特里克·沃尔夫（两次美国国际象棋冠军）将迎战所有挑战者——他们双眼圆睁——以六人一组的形式。附近，来自达拉斯的杰出魔术师诺曼·贝克将迷惑旁观者。此外，我们将有两位世界顶级桥牌专家鲍勃·哈曼和莎伦·奥斯伯格在周日下午与我们的股东一起打桥牌。

Gorat’s牛排馆将于5月4日星期日再次专门为伯克希尔股东开放，供应时间为下午4点至晚上10点。去年，只有240个座位的Gorat’s在股东星期天供应了915份晚餐。三天总数为2,487份，其中包括656份丁骨牛排，这是行家们偏爱的菜肴。请记住，要那天去Gorat’s，您必须预订。预订请于4月1日（但不要提前）致电402-551-3733。

我们将在周六下午4点为来自北美以外的股东再次举办招待会。每年我们的会议都会吸引来自全球各地的许多人，我和查理希望确保我们亲自问候这些远道而来的人。去年，我们很高兴见到了来自几十个国家的400多位股东。任何来自美国或加拿大以外地区的股东都将获得一张特别的凭证和参加本次活动的说明。

在我84岁、查理77岁的时候，我们仍然感到幸运得超乎梦想。我们生在美国；拥有出色的父母，他们确保我们接受了良好的教育；享受着美好的家庭和健康的身体；并且天生具备一种“商业”基因，使我们能够以与许多为我们的社会福祉做出同等或更多贡献的人相比极不相称的方式致富。此外，我们长期从事着热爱的工作，在无数方面得到才华横溢、愉快共事的伙伴们的帮助。每一天对我们来说都是激动人心的；难怪我们跳着踢踏舞去上班。但对我们来说，没有什么比在伯克希尔年会上与我们的股东合伙人相聚更令人愉快的事了。所以，请于5月3日加入我们在Qwest中心举行的年度“资本家伍德斯托克音乐节”。我们到时见。

2008年2月

沃伦·E·巴菲特
董事会主席