BUFFETT PARTNERSHIP. LTD.
610 KIEWIT PLAZA
OMAHA, NEBRASKA 68131
TELEPHONE 042-4110
July 12, 1967
First Half Performance
Again, this is being ,written in late June prior to the family's trip to California. To maintain the usual chronological symmetry (I try to sublimate my aesthetic urges when it comes to creating symmetry in the profit and loss statement), I will leave a few blanks and trust that the conclusions look appropriate when the figures are entered.
We began 1967 on a traumatic note with January turning out to be one of the worst months we have experienced with a plus 3.3% for BPL versus a plus 8.5% for the Dow. Despite this sour start, we finished the half about plus 21% for an edge of 9.6 percentage points over the Dow. Again, as throughout 1966, the Dow was a relatively easy competitor (it won't be every year, prevailing thinking to the contrary notwithstanding) and a large majority of investment managers outdid this yardstick. The following table summarizes performance to date on the usual basis:
| 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% |
| First half 1967 | 11.4% | 21.0% | 17.3% |
| Cumulative Results | 148.3% | 1419.8% | 843.3% |
| Annual Compounded Rate | 9.1% | 29.6% | 23.8% |
(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.
BPL's performance during the first hall reflects no change in valuation of our controlled companies and was thus achieved solely by the 63.3% of our net assets invested in marketable securities at the beginning of the year.
Any revaluation of Diversified Retailing Company (DRC) and Berkshire Hathaway Inc. (B-H) will be made in December prior to the time the commitment letters become final and will be based upon all relevant criteria (including current operating. market and credit conditions) at that time.
Both DRC and B-H made important acquisitions during the first half. The overall progress of DRC (80% owned) and both of its subsidiaries (Hochschild Kohn and Associated Cotton Shops) is highly satisfactory. However, B-H is experiencing and faces real difficulties in the textile business, while I don't presently foresee any loss in underlying values. I similarly see no prospect of a good return on the assets employed in the textile business. Therefore, this segment of our portfolio will be a substantial drag on our relative performance (as it has been during the first half) if the Dow continues to advance. Such relative performance with controlled companies is expected in a strongly advancing market, but is accentuated when the business is making no progress. As a friend of mine says. “Experience is what you find when you're looking for something else.”
Investment Companies
The usual comparison follows showing the results of the two largest open-end and two largest closed-end investment companies which pursue a policy of 95-100% investment in common stocks.
| 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% |
| First half 1967 | 11.3% | 12.3% | 19.3% | 14.4% | 11.4% | 17.3% |
| Cumulative Results | 143.3% | 126.4% | 185.4% | 156.8% | 148.3% | 843.3% |
| Annual Compounded Rate | 8.9% | 8.1% | 10.5% | 9.4% | 9.1% | 23.8% |
(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 first half of 1967.
The tide continues to be far more important than the swimmers.
Taxes
We entered 1967 with unrealized gains of \$16,361,974. Through June 30 we have realized net capital gains of \$7,084,104 so it appears likely that we will realize in 1967 a fairly substantial portion of the unrealized gain attributable to your interest at the beginning of the year. This amount was reported to you as Item 3 of our February 2, 1967 letter. A copy of that letter, along with a tax letter, will be mailed to you in November giving a rough idea of the tax situation at that time.
As I regularly suggest, the safe course to follow on interim estimates is to pay the same estimated tax for 1967 as your actual tax was for 1966. There can be no penalties if you follow this procedure.
Whatever our final figure, it looks now as if it will be very largely long term capital gain with only minor amounts, if any, of short term gain and ordinary income. (I consider the whole Income-Principal Myth fair game for one of my soft-spoken gently worded critiques. As I told Susie in the early days of our marriage, “Don't worry about the income; just the outcome.”)
Miscellaneous
During the first half, Stan Perimeter resigned from the Dissolution Committee because of his present full-time involvement in investment management. Fred Stanback, Jr., a long time partner and experienced investor, was elected by the remaining members to fill the vacancy.
As in past years, we will have a report out about November 11 along with the Commitment Letter, and the rough estimate of the 1967 tax situation, etc.
However, there will be a special letter (to focus your attention upon it) in October. The subject matter will not relate to change in the Partnership Agreement, but will involve some evolutionary changes in several "Ground Rules" which I want you to have ample time to contemplate before making your plans for 1968. Whereas the Partnership Agreement represents the legal understanding among us, the "Ground Rules" represent the personal understanding and in some ways is the more important document. I consider it essential that any changes be clearly set forth and explained prior to their effect on partnership activity or performance – hence, the October letter.
Cordially,
Warren E. Buffett
WEBeh
BUFFETT PARTNERSHIP. LTD.
610 KIEWIT PLAZA
OMAHA, NEBRASKA 68131
电话 042-4110
1967年7月12日
上半年业绩
这封信又一次是在6月底、全家去加州旅行之前写就的。为了保持惯常的时间对称性（我尽量克制自己在损益表上追求对称的美学冲动），我会留几个空白，等数字填上时，相信结论看起来也合适。
1967年开年便令人揪心——1月成了我们经历的最糟糕的月份之一，BPL涨了3.3%，而道指涨了8.5%。尽管开局不顺，上半年结束时我们大约涨了21%，领先道指9.6个百分点。和1966年全年一样，道指今年上半年相对好对付（别以为每年都这样，尽管主流看法恰恰相反），而且绝大多数投资管理人都跑赢了这根标尺。下表按惯常口径总结了迄今的业绩：
| 年份 | 道指整体结果 (1) | 合伙企业结果 (2) | 有限合伙人结果 (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上半年 | 11.4% | 21.0% | 17.3% |
| 累计结果 | 148.3% | 1419.8% | 843.3% |
| 年复合收益率 | 9.1% | 29.6% | 23.8% |
(1) 基于道指年度变化值加上该年持有道指可获得的股息。本表包含合伙企业运行的全部完整年份。
(2) 1957-1961年，为全年运行的所有前身有限合伙企业在扣除所有费用后、但尚未向合伙人分配或向普通合伙人拨付之前的综合结果。
(3) 1957-1961年，基于前栏合伙企业结果，按照现行合伙协议向普通合伙人拨付后、但有限合伙人每月提款前计算。
BPL上半年的业绩未包含我们对控制类企业的估值调整，因此完全来自年初投资于有价证券的净资产的63.3%。
Diversified Retailing Company（DRC）和Berkshire Hathaway Inc.（B-H）的任何重估将在12月、承诺函定稿之前进行，届时将依据所有相关标准（包括当期的经营、市场和信贷状况）。
DRC和B-H在上半年都做了一些重要的收购。DRC（我们持有80%）及其两家子公司（Hochschild Kohn和Associated Cotton Shops）的整体进展令人非常满意。然而，B-H在纺织业务上正经历且面临实实在在的困难，尽管我目前看不出其底层价值会有任何损失。同样，我看不到纺织业务所用资产能带来良好回报的前景。因此，如果道指继续上涨，我们投资组合中的这块业务将对相对业绩造成沉重拖累（上半年就是如此）。在强劲上涨的市场中，控制类企业的这种相对业绩表现在意料之中，但企业毫无进展时，这种拖累就更加突出。正如我一位朋友所说："经验就是你在寻找别的东西时找到的东西。"
投资公司
下面照例是比较表格，列出两家最大的开放式和两家最大的封闭式投资公司的结果，这些公司均奉行95%-100%投资于普通股的政策。
| 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上半年 | 11.3% | 12.3% | 19.3% | 14.4% | 11.4% | 17.3% |
| 累计结果 | 143.3% | 126.4% | 185.4% | 156.8% | 148.3% | 843.3% |
| 年复合收益率 | 8.9% | 8.1% | 10.5% | 9.4% | 9.1% | 23.8% |
(1) 按资产净值变动加上该年向登记持有人分配的分红计算。
(2) 1957-1966年数据来自1967年穆迪银行与金融手册。1967上半年为估算值。
潮水始终比游泳者重要得多。
税收
我们进入1967年时，未实现收益为16,361,974美元。截至6月30日，我们已实现净资本利得7,084,104美元，因此1967年我们很可能将实现年初归属于您权益的未实现收益中相当大的一部分。该金额已在1967年2月2日的信中作为第3项向您报告。该信的副本以及一封税务说明信将于11月寄给您，届时会给出当时税务状况的大致估算。
正如我经常建议的那样，在中期估算方面最稳妥的做法是：按照您1966年的实际税额缴纳1967年同样的预估税。照此操作不会产生罚金。
无论最终数字如何，现在看来绝大多数将是长期资本利得，短期收益和普通收入即便有，也很少。（我认为整个"收入-本金"神话完全配得上我温和而轻声细语的批评。就像我结婚初期对Susie说的："别担心收入，只管结果。"）
其他事项
上半年，Stan Perimeter因现在全职从事投资管理工作，辞去了解散委员会的职务。长期合伙人及经验丰富的投资者Fred Stanback, Jr.由其余成员选举填补了这个空缺。
和往年一样，我们将在11月11日左右发出一份报告，附上承诺函和1967年税务状况的粗略估算等。
不过，10月份会有一封特别信函（以便引起您的注意）。主题与合伙协议变更无关，但涉及几条"基本规则"的逐步调整——我希望在您制定1968年计划之前，有充足的时间慎重思考这些调整。虽然合伙协议代表我们之间的法律约定，但"基本规则"代表个人约定，在某种程度上是更重要的文件。我认为任何变更都必须在影响合伙企业的活动或业绩之前明确阐述并解释清楚——因此有了10月份的信函。
此致，
Warren E. Buffett
WEBeh