BUFFETT PARTNERSHIP. LTD.
610 KIEWIT PLAZA
OMAHA, NEBRASKA 68131
TELEPHONE 042-4110
January 24, 1968
Our Performance in 1967
By most standards, we had a good year in 1967. Our overall performance was plus 35.9% compared to plus 19.0% for the Dow, thus surpassing our previous objective of performance ten points superior to the Dow. Our overall gain was \$19,384,250 which, even under accelerating inflation, will buy a lot of Pepsi. And, due to the sale of some longstanding large positions in marketable securities, we had realized taxable income of \$27,376,667 which has nothing to do with 1967 performance but should give all of you a feeling of vigorous participation in The Great Society on April 15th.
The minor thrills described above are tempered by any close observation of what really took place in the stock market during 1967. Probably a greater percentage of participants in the securities markets did substantially better than the Dow last year than in virtually any year in history. In 1967, for many, it rained gold and it paid to be out playing the bass tuba. I don't have a final tabulation at this time but my guess is that at least 95% of investment companies following a common stock program achieved better results than the Dow - in many cases by very substantial amounts. It was a year when profits achieved were in inverse proportion to age - and I am in the geriatric ward, philosophically.
The following summarizes the year-by-year performance of the Dow, the Partnership before allocation (one quarter of the excess over 6%) to the general partner, and the results for limited partners:
| Year | Overall Results From Dow (1) | Partnership Results (2) | Limited Partners’ Results (3) |
| 1957 | -8.4% | 10.4% | 9.3% |
| 1958 | 38.5% | 40.9% | 32.2% |
| 1959 | 20.0% | 25.9% | 20.9% |
| 1960 | -6.2% | 22.8% | 18.6% |
| 1961 | 22.4% | 45.9% | 35.9% |
| 1962 | -7.6% | 13.9% | 11.9% |
| 1963 | 20.6% | 38.7% | 30.5% |
| 1964 | 18.7% | 27.8% | 22.3% |
| 1965 | 14.2% | 47.2% | 36.9% |
| 1966 | -15.6% | 20.4% | 16.8% |
| 1967 | 19.0% | 35.9% | 28.4% |
(1) Based on yearly changes in the value of the Dow plus dividends that would have been received through ownership of the Dow during that year. The table includes all complete years of partnership activity.
(2) For 1957-61 consists of combined results of all predecessor limited partnerships operating throughout the entire year after all expenses, but before distributions to partners or allocations to the general partner.
(3) For 1957-61 computed on the basis of the preceding column of partnership results allowing for allocation to the general partner based upon the present partnership agreement, but before monthly
withdrawals by limited partners.
On a cumulative or compounded basis, the results are:
| Year | Overall Results From Dow | Partnership Results | Limited Partners’ Results |
| 1957 | -8.4% | 10.4% | 9.3% |
| 1957 – 58 | 26.9% | 55.6% | 44.5% |
| 1957 – 59 | 52.3% | 95.9% | 74.7% |
| 1957 – 60 | 42.9% | 140.6% | 107.2% |
| 1957 – 61 | 74.9% | 251.0% | 181.6% |
| 1957 – 62 | 61.6% | 299.8% | 215.1% |
| 1957 – 63 | 95.1% | 454.5% | 311.2% |
| 1957 – 64 | 131.3% | 608.7% | 402.9% |
| 1957 – 65 | 164.1% | 943.2% | 588.5% |
| 1957 – 66 | 122.9% | 1156.0% | 704.2% |
| 1957 – 67 | 165.3% | 1606.9% | 932.6% |
| Annual Compounded Rate | 9.3% | 29.4% | 23.6% |
Investment Companies
On the following page is the usual tabulation showing the results of what were the two largest mutual funds (they have stood at the top in size since BPL was formed - this year, however, Dreyfus Fund overtook them) that follow a policy of being, typically, 95-100% invested in common stocks, and the two largest diversified closedend investment companies.
| Year | Mass. Inv. Trust (1) | Investors Stock (1) | Lehman (2) | Tri-Cont (2) | Dow | Limited Partners |
| 1957 | -11.4% | -12.4% | -11.4% | -2.4% | -8.4% | 9.3% |
| 1958 | 42.7% | 47.5% | 40.8% | 33.2% | 38.5% | 32.2% |
| 1959 | 9.0% | 10.3% | 8.1% | 8.4% | 20.0% | 20.9% |
| 1960 | -1.0% | -0.6% | 2.5% | 2.8% | -6.2% | 18.6% |
| 1961 | 25.6% | 24.9% | 23.6% | 22.5% | 22.4% | 35.9% |
| 1962 | -9.8% | -13.4% | -14.4% | -10.0% | -7.6% | 11.9% |
| 1963 | 20.0% | 16.5% | 23.7% | 18.3% | 20.6% | 30.5% |
| 1964 | 15.9% | 14.3% | 13.6% | 12.6% | 18.7% | 22.3% |
| 1965 | 10.2% | 9.8% | 19.0% | 10.7% | 14.2% | 36.9% |
| 1966 | -7.7% | -10.0% | -2.6% | -6.9% | -15.6% | 16.8% |
| 1967 | 20.0% | 22.8% | 28.0% | 25.4% | 19.0% | 28.4% |
| Cumulative Results | 162.3% | 147.6% | 206.2% | 181.5% | 165.3% | 932.6% |
| Annual Compounded Rate | 9.2% | 8.6% | 10.7% | 9.9% | 9.3% | 23.6% |
(1) Computed from changes in asset value plus any distributions to holders of record during year.
(2) From 1967 Moody's Bank & Finance Manual for 1957-1966. Estimated for 1967.
Last year I said:
“A few mutual funds and some private investment operations have compiled records vastly superior to the Dow and, in some cases, substantially superior to Buffett Partnership, Ltd. Their investment techniques are usually very dissimilar to ours and not within my capabilities.”
In 1967 this condition intensified. Many investment organizations performed substantially better than BPL, with gains ranging to over 100%. Because of these spectacular results, money, talent and energy are converging in a maximum effort for the achievement of large and quick stock market profits. It looks to me like greatly intensified speculation with concomitant risks -but many of the advocates insist otherwise.
My mentor, Ben Graham, used to say. “Speculation is neither illegal, immoral nor fattening (financially).” During the past year, it was possible to become fiscally flabby through a steady diet of speculative bonbons. We continue to eat oatmeal but if indigestion should set in generally, it is unrealistic to expect that we won’t have some discomfort.
Analysis of 1967 Results
The overall figures given earlier conceal vast differences in profitability by portfolio category during 1967.
We had our worst performance in history in the “Workout” section. In the 1965 letter, this category was defined as,
“...securities with a timetable. They arise from corporate activity -- sell-outs, mergers, reorganizations, spin-offs, etc. In this category, we are not talking about rumors or inside information pertaining to such developments, but to publicly announced activities of this sort. We wait until we can read it in the paper. The risk does not pertain primarily to general market behavior (although that is sometimes tied in. to a degree). but instead to something upsetting the applecart so that the expected corporate development does not materialize.”
The streets were filled with upset applecarts - our applecarts - during 1967. Thus, on an average investment of \$17,246,879, our overall gain was \$153,273. For those of you whose slide rule does not go to such insulting depths, this represents a return of .89 of 1%. While I don't have complete figures. I doubt that we have been below 10% in any past year. As in other categories, we tend to concentrate our investments in the workout category in just a few situations per year. This technique gives more variation in yearly results than would be the case if we used an across-the-board approach. I believe our approach will result in as great (or greater) profitability on a long-term basis, but you can't prove it by 1967.
Our investment in controlled companies was a similar drag on relative performance in 1967, but this is to be expected in strong markets. On an average investment of \$20,192,776 we had an overall gain of \$2,894,571. I am pleased with this sort of performance, even though this category will continue to underperform if the market continues strong during 1968. Through our two controlled companies (Diversified Retailing and Berkshire Hathaway), we acquired two new enterprises in 1967. Associated Cotton Shops and National Indemnity (along with National Fire & Marine, an affiliated company). These acquisitions couldn't be more gratifying. Everything was as advertised or better. The principal selling executives, Ben Rosner and Jack Ringwalt, have continued to do a superb job (the only kind they know), and in every respect have far more than lived up to their end of the bargain.
The satisfying nature of our activity in controlled companies is a minor reason for the moderated investment objectives discussed in the October 9th letter. When I am dealing with people I like, in businesses I find stimulating (what business isn't ?), and achieving worthwhile overall returns on capital employed (say, 10 -12%), it seems foolish to rush from situation to situation to earn a few more percentage points. It also does not seem sensible to me to trade known pleasant personal relationships with high grade people, at a decent rate of return, for possible irritation, aggravation or worse at potentially higher returns. Hence, we will continue to keep a portion of our capital (but not over 40% because of the possible liquidity requirements arising from the nature of our partnership agreement) invested in controlled operating businesses at an expected rate of return below that inherent in an aggressive stock market operation.
With a combined total of \$37,439,655 in workouts and controls producing an overall gain of only \$3,047,844, the more alert members of the class will have already concluded we had a whale of a year in the "Generals - Relatively Undervalued" category. On a net average investment of \$19,487,996, we had an overall gain of \$14,096,593, or 72%. Last year I referred to one investment which substantially outperformed the general market in 1964, 1965 and 1966 and because of its size (the largest proportion we have ever had in anything - we hit our 40% limit) had a very material impact on our overall results and, even more so, this category. This excellent performance continued throughout 1967 and a large portion of total gain was again accounted for by this single security. Our holdings of this security have been very substantially reduced and we have nothing in this group remotely approaching the size or potential which formerly existed in this investment.
The "Generals - Private Owner" section produced good results last year (\$1,297,215 on \$5,141,710 average investment), and we have some mildly interesting possibilities in this area at present.
Miscellaneous
We begin the new year with net assets of \$68,108,088. We had partners with capital of about \$1,600,000 withdraw at yearend, primarily because of the reduced objectives announced in the October 9th letter. This makes good sense for them, since most of them have the ability and motivation to surpass our objectives and I am relieved from pushing for results that I probably can't attain under present conditions.
Some of those who withdrew (and many who didn't) asked me, "What do you really mean?" after receiving the October 9th letter. This sort of a question is a little bruising to any author, but I assured them I meant exactly what I had said. I was also asked whether this was an initial stage in the phasing out of the partnership. The answer to this is, “Definitely, no”. As long as partners want to put up their capital alongside of mine and the business is operationally pleasant (and it couldn't be better), I intend to continue to do business with those who have backed me since tennis shoes.
Gladys Kaiser has joined us and is doing the same sort of top-notch job that we have long received from Donna, Bill and John. The office group, spouses and children have over \$15 million invested in BPL on January 1, 1968, so we have not had a need for NoDoz during business hours.
Within a few days, you will receive:
- A tax letter giving you all BPL information needed for your 1967 federal income tax return. This letter is the only item that counts for tax purposes.
- An audit from Peat, Marwick, Mitchell & Co. (they have again done an excellent job) for 1967, setting forth the operations and financial position of BPL, as well as your own capital account.
- A letter signed by me setting forth the status of your BPL interest on January 1, 1968. This is identical with the figures developed in the audit.
Let me know if anything in this letter or that occurs during the year needs clarifying. My next letter will be about July15th, summarizing the first half of this year.
Cordially,
Warren E. Buffett
BUFFETT PARTNERSHIP. LTD.
610 KIEWIT PLAZA
OMAHA, NEBRASKA 68131
电话 042-4110
1968年1月24日
1967年业绩
按大多数标准衡量，1967年对我们来说都是个好年景。我们的整体业绩是+35.9%，相比之下道指是+19.0%，从而超越了我们之前设定的跑赢道指十个百分点目标。我们的总收益是19,384,250美元，即便在加速通胀的背景下，这笔钱也足够买很多瓶百事可乐。而且，由于出售了一些长期持有的大量可流通证券仓位，我们实现了27,376,667美元的应税收入——这虽然与1967年的业绩无关，但应该能让各位在4月15日（报税截止日）切身体会到积极参与"伟大社会"计划的感受。
上述小小的兴奋点，被任何对1967年股市真实情况的仔细观察所冲淡。去年，证券市场参与者中跑赢道指的比例可能比历史上几乎任何一年都要高。1967年，对很多人来说，简直是天上下金子，出去吹大号（意指躺着赚钱）就有得赚。我目前还没有最终统计，但我猜至少95%遵循普通股投资计划的投资公司取得了比道指更好的业绩——在很多情况下好得多。这是利润与年龄成反比的一年——而我的投资哲学正处在老年病房。
以下汇总了道指、合伙企业业绩（在向普通合伙人分配前，即超过6%部分的四分之一）以及有限合伙人业绩的逐年表现：
| 年份 | 道指整体业绩 (1) | 合伙企业业绩 (2) | 有限合伙人业绩 (3) |
| 1957 | -8.4% | 10.4% | 9.3% |
| 1958 | 38.5% | 40.9% | 32.2% |
| 1959 | 20.0% | 25.9% | 20.9% |
| 1960 | -6.2% | 22.8% | 18.6% |
| 1961 | 22.4% | 45.9% | 35.9% |
| 1962 | -7.6% | 13.9% | 11.9% |
| 1963 | 20.6% | 38.7% | 30.5% |
| 1964 | 18.7% | 27.8% | 22.3% |
| 1965 | 14.2% | 47.2% | 36.9% |
| 1966 | -15.6% | 20.4% | 16.8% |
| 1967 | 19.0% | 35.9% | 28.4% |
(1) 基于道指年度价值变化加上当年持有道指可获得的股息。本表包含合伙企业所有完整经营年度。
(2) 1957-1961年由所有前身有限合伙企业全年运营的综合结果，扣除所有费用后，但在向合伙人分配或向普通合伙人分配前。
(3) 1957-1961年根据前一列合伙企业业绩计算，基于当前合伙协议允许向普通合伙人分配，但在有限合伙人月度提款前。
以累积或复合基准，结果如下：
| 年份 | 道指整体业绩 | 合伙企业业绩 | 有限合伙人业绩 |
| 1957 | -8.4% | 10.4% | 9.3% |
| 1957 – 58 | 26.9% | 55.6% | 44.5% |
| 1957 – 59 | 52.3% | 95.9% | 74.7% |
| 1957 – 60 | 42.9% | 140.6% | 107.2% |
| 1957 – 61 | 74.9% | 251.0% | 181.6% |
| 1957 – 62 | 61.6% | 299.8% | 215.1% |
| 1957 – 63 | 95.1% | 454.5% | 311.2% |
| 1957 – 64 | 131.3% | 608.7% | 402.9% |
| 1957 – 65 | 164.1% | 943.2% | 588.5% |
| 1957 – 66 | 122.9% | 1156.0% | 704.2% |
| 1957 – 67 | 165.3% | 1606.9% | 932.6% |
| 年复合收益率 | 9.3% | 29.4% | 23.6% |
投资公司
以下是常见的表格，列示了最大的两家共同基金（它们自BPL成立以来一直位居规模前列——不过今年，Dreyfus基金超过了它们），它们通常95-100%投资于普通股，以及两家最大的多元化封闭式投资公司。
| 年份 | Mass. Inv. Trust (1) | Investors Stock (1) | Lehman (2) | Tri-Cont (2) | 道指 | 有限合伙人 |
| 1957 | -11.4% | -12.4% | -11.4% | -2.4% | -8.4% | 9.3% |
| 1958 | 42.7% | 47.5% | 40.8% | 33.2% | 38.5% | 32.2% |
| 1959 | 9.0% | 10.3% | 8.1% | 8.4% | 20.0% | 20.9% |
| 1960 | -1.0% | -0.6% | 2.5% | 2.8% | -6.2% | 18.6% |
| 1961 | 25.6% | 24.9% | 23.6% | 22.5% | 22.4% | 35.9% |
| 1962 | -9.8% | -13.4% | -14.4% | -10.0% | -7.6% | 11.9% |
| 1963 | 20.0% | 16.5% | 23.7% | 18.3% | 20.6% | 30.5% |
| 1964 | 15.9% | 14.3% | 13.6% | 12.6% | 18.7% | 22.3% |
| 1965 | 10.2% | 9.8% | 19.0% | 10.7% | 14.2% | 36.9% |
| 1966 | -7.7% | -10.0% | -2.6% | -6.9% | -15.6% | 16.8% |
| 1967 | 20.0% | 22.8% | 28.0% | 25.4% | 19.0% | 28.4% |
| 累积结果 | 162.3% | 147.6% | 206.2% | 181.5% | 165.3% | 932.6% |
| 年复合收益率 | 9.2% | 8.6% | 10.7% | 9.9% | 9.3% | 23.6% |
(1) 根据资产价值变化加上当年记录持有人的任何分配计算。
(2) 1957-1966年来自1967年Moody's Bank & Finance Manual。1967年为估算值。
去年我说过：
"少数共同基金和一些私人投资操作取得了远超道指的业绩，有些甚至大幅超越巴菲特合伙有限公司。它们的投资技术通常与我们的非常不同，且不在我的能力范围内。"
1967年，这种情况愈演愈烈。许多投资机构的业绩大幅超过BPL，收益高达100%以上。由于这些惊人的业绩，资金、人才和精力正汇聚到获取股市快速大额利润的极大努力上。在我看来，这是大幅加剧的投机，伴随相应风险——但许多鼓吹者不这么认为。
我的导师Ben Graham曾经说过："投机既非非法，也非不道德，更不会（在财务上）让人发胖。"在过去一年里，通过稳定地享用投机糖果，人们完全可以在财务上变得臃肿。我们继续吃燕麦片，但如果消化不良普遍蔓延，指望我们毫无不适是不现实的。
1967年业绩分析
前面给出的总体数字掩盖了1967年不同投资组合类别之间巨大的盈利差异。
我们在"套利类"投资上遭遇了史上最差业绩。在1965年的信中，该类别被定义为：
"……有明确时间表的证券。它们源于公司活动——出售、并购、重组、分拆等。在这一类别中，我们谈的不是关于这些发展的谣言或内幕消息，而是这类公开宣布的活动。我们等到能够在报纸上读到它为止。风险主要不关乎总体市场行为（尽管有时在一定程度上与之相关），而是指某些事情打翻了苹果车，使得预期的公司发展未能实现。"
1967年，街上到处是翻倒的苹果车——我们的苹果车。因此，在平均投资17,246,879美元上，我们的总收益为153,273美元。对于你们的计算尺无法精确到如此侮辱性深度的各位，这代表0.89%的回报率。虽然我没有完整数据，但我怀疑过去任何一年我们都未曾低于10%。与其他类别一样，我们在套利类投资中倾向于每年仅集中在几个标的上。这种技术比全面铺开的方法会导致年度结果波动更大。我相信我们的方法长期来看会带来同样大（或更大）的盈利，但1967年证明不了这一点。
我们对控制类公司的投资在1967年也拖累了相对业绩，但这在强势市场中是预料之中的。在平均投资20,192,776美元上，我们的总收益为2,894,571美元。我对这种业绩感到满意，即使这个类别在1968年市场继续强势时会继续落后。通过我们的两家控制类公司（Diversified Retailing和Berkshire Hathaway），我们在1967年收购了两家新企业：Associated Cotton Shops和National Indemnity（连同关联公司National Fire & Marine）。这些收购令人无比欣慰。一切都如宣传所述或更好。主要出售方高管Ben Rosner和Jack Ringwalt继续表现出色（他们唯一知道的那种方式），并且在各方面都远超他们应尽的义务。
我们在控制类公司活动的满意性质，是10月9日信中讨论的降低投资目标的一个次要原因。当我与我喜欢的人打交道，从事我觉得有趣（什么生意不有趣？）的业务，并且在所用资本上实现体面的总体回报（比如10-12%）时，为了多赚几个百分点而从一个标的匆忙跳到另一个，似乎很愚蠢。用已知的与高素质人士的愉悦个人关系换可能更高回报带来的烦恼、恶化或更糟，在我看来也不明智。因此，我们将继续将一部分资本（但不超过40%，因为我们的合伙协议性质可能带来的流动性需求）投资于控制类运营企业，预期回报率低于激进股市操作所固有的水平。
由于套利类和控制类合计37,439,655美元的投资仅产生3,047,844美元的总收益，班里更警觉的同学已经得出结论，我们在"低估类投资——相对低估"类别上大丰收了。在净平均投资19,487,996美元上，我们的总收益为14,096,593美元，即72%。去年我提到一项投资在1964、1965和1966年大幅跑赢市场，由于其规模（我们历来在任何标的上持有的最大比例——我们达到了40%的上限），对我们的总体结果以及该类别产生了非常重大的影响。这一优异表现在1967年全年持续，总收益的很大一部分再次来自这一单一证券。我们已大幅减持该证券，并且该组中目前没有任何东西在规模或潜力上能与先前存在的这项投资相提并论。
"低估类投资——私人所有者"部分去年业绩良好（在平均投资5,141,710美元上实现1,297,215美元），我们目前在这方面有一些略微有趣的的可能性。
杂项
我们以68,108,088美元的净资产开始新的一年。约1,600,000美元的合伙人资本在年底退出，主要原因是10月9日信中宣布的降低目标。这对他们来说是合理的，因为他们中的大多数人都有能力和动力超越我们的目标，而且我也摆脱了在现有条件下可能无法实现的结果的压力。
一些退出者（以及许多未退出者）在收到10月9日信后问我："你真正的意思是什么？"这种问题对任何作者都有点打击，但我向他们保证我说的就是我的意思。他们还问这是否是逐步结束合伙企业的初始阶段。答案是"绝对不是"。只要合伙人愿意把他们的资本与我的资本放在一起，并且业务运营愉快（再好不过了），我打算继续与那些自穿网球鞋以来就一直支持我的人合作。
Gladys Kaiser加入我们，正在做与Donna、Bill和John长期以来提供的同样一流的工作。办公室团队、配偶和子女在1968年1月1日在BPL中拥有超过1500万美元的投资，因此我们在工作时间不需要NoDoz（提神药）。
几天内，您将收到：
- 一封税务信，包含您1967年联邦所得税申报所需的全部BPL信息。这封信是报税的唯一依据。
- 来自Peat, Marwick, Mitchell & Co.（他们再次出色地完成了工作）的1967年审计报告，列明BPL的运营和财务状况，以及您自己的资本账户。
- 一封由我签署的信，说明您1968年1月1日在BPL中的权益状况。这与审计中得出的数字相同。
如果此信或年内发生的任何事情需要澄清，请告知我。我的下一封信将在7月15日左右发出，总结今年上半年。
此致，
Warren E. Buffett