Berkshire's Corporate Performance vs. the S&P 500

Year	Annual Percentage Change		Relative Results (1)-(2)
	in Per-Share Book Value of Berkshire (1)	in S&P 500 with Dividends Included (2)
1965	23.8	10.0	13.8
1966	20.3	(11.7)	32.0
1967	11.0	30.9	(19.9)
1968	19.0	11.0	8.0
1969	16.2	(8.4)	24.6
1970	12.0	3.9	8.1
1971	16.4	14.6	1.8
1972	21.7	18.9	2.8
1973	4.7	(14.8)	19.5
1974	5.5	(26.4)	31.9
1975	21.9	37.2	(15.3)
1976	59.3	23.6	35.7
1977	31.9	(7.4)	39.3
1978	24.0	6.4	17.6
1979	35.7	18.2	17.5
1980	19.3	32.3	(13.0)
1981	31.4	(5.0)	36.4
1982	40.0	21.4	18.6
1983	32.3	22.4	9.9
1984	13.6	6.1	7.5
1985	48.2	31.6	16.6
1986	26.1	18.6	7.5
1987	19.5	5.1	14.4
1988	20.1	16.6	3.5
1989	44.4	31.7	12.7
1990	7.4	(3.1)	10.5
1991	39.6	30.5	9.1
1992	20.3	7.6	12.7
1993	14.3	10.1	4.2
1994	13.9	1.3	12.6
1995	43.1	37.6	5.5
1996	31.8	23.0	8.8
1997	34.1	33.4	0.7
1998	48.3	28.6	19.7
1999	0.5	21.0	(20.5)
2000	6.5	(9.1)	15.6
2001	(6.2)	(11.9)	5.7
2002	10.0	(22.1)	32.1
2003	21.0	28.7	(7.7)
2004	10.5	10.9	(0.4)
2005	6.4	4.9	1.5
2006	18.4	15.8	2.6
2007	11.0	5.5	5.5
2008	(9.6)	(37.0)	27.4
2009	19.8	26.5	(6.7)
2010	13.0	15.1	(2.1)
2011	4.6	2.1	2.5
2012	14.4	16.0	(1.6)
2013	18.2	32.4	(14.2)
Compounded Annual Gain – 1965-2013	19.7%	9.8%	9.9
Overall Gain – 1964-2013	693,518%	9,841%

Notes: Data are for calendar years with these exceptions: 1965 and 1966, year ended 9/30; 1967, 15 months ended 12/31. Starting in 1979, accounting rules required insurance companies to value the equity securities they hold at market rather than at the lower of cost or market, which was previously the requirement. In this table, Berkshire's results through 1978 have been restated to conform to the changed rules. In all other respects, the results are calculated using the numbers originally reported. The S&P 500 numbers are pre-tax whereas the Berkshire numbers are after-tax. If a corporation such as Berkshire were simply to have owned the S&P 500 and accrued the appropriate taxes, its results would have lagged the S&P 500 in years when that index showed a positive return, but would have exceeded the S&P 500 in years when the index showed a negative return. Over the years, the tax costs would have caused the aggregate lag to be substantial.

BERKSHIRE HATHAWAY INC.

To the Shareholders of Berkshire Hathaway Inc.:

Berkshire’s gain in net worth during 2013 was \$34.2 billion. That gain was after our deducting \$1.8 billion of charges – meaningless economically, as I will explain later – that arose from our purchase of the minority interests in Marmon and Iscar. After those charges, the per-share book value of both our Class A and Class B stock increased by 18.2%. Over the last 49 years (that is, since present management took over), book value has grown from \$19 to \$134,973, a rate of 19.7% compounded annually.*

On the facing page, we show our long-standing performance measurement: The yearly change in Berkshire's per-share book value versus the market performance of the S&P 500. What counts, of course, is per-share intrinsic value. But that's a subjective figure, and book value is useful as a rough tracking indicator. (An extended discussion of intrinsic value is included in our Owner-Related Business Principles on pages 103 - 108. Those principles have been included in our reports for 30 years, and we urge new and prospective shareholders to read them.)

As I’ve long told you, Berkshire’s intrinsic value far exceeds its book value. Moreover, the difference has widened considerably in recent years. That’s why our 2012 decision to authorize the repurchase of shares at 120% of book value made sense. Purchases at that level benefit continuing shareholders because per-share intrinsic value exceeds that percentage of book value by a meaningful amount. We did not purchase shares during 2013, however, because the stock price did not descend to the 120% level. If it does, we will be aggressive.

Charlie Munger, Berkshire's vice chairman and my partner, and I believe both Berkshire's book value and intrinsic value will outperform the S&P in years when the market is down or moderately up. We expect to fall short, though, in years when the market is strong – as we did in 2013. We have underperformed in ten of our 49 years, with all but one of our shortfalls occurring when the S&P gain exceeded $15\%$ .

Over the stock market cycle between yearends 2007 and 2013, we overperformed the S&P. Through full cycles in future years, we expect to do that again. If we fail to do so, we will not have earned our pay. After all, you could always own an index fund and be assured of S&P results.

The Year at Berkshire

On the operating front, just about everything turned out well for us last year – in certain cases very well. Let me count the ways:

- We completed two large acquisitions, spending almost \$18 billion to purchase all of NV Energy and a major interest in H. J. Heinz. Both companies fit us well and will be prospering a century from now.

With the Heinz purchase, moreover, we created a partnership template that may be used by Berkshire in future acquisitions of size. Here, we teamed up with investors at 3G Capital, a firm led by my friend, Jorge Paulo Lemann. His talented associates – Bernardo Hees, Heinz’s new CEO, and Alex Behring, its Chairman – are responsible for operations.

Berkshire is the financing partner. In that role, we purchased \$8 billion of Heinz preferred stock that carries a 9% coupon but also possesses other features that should increase the preferred's annual return to 12% or so. Berkshire and 3G each purchased half of the Heinz common stock for \$4.25 billion.

Though the Heinz acquisition has some similarities to a “private equity” transaction, there is a crucial difference: Berkshire never intends to sell a share of the company. What we would like, rather, is to buy more, and that could happen: Certain 3G investors may sell some or all of their shares in the future, and we might increase our ownership at such times. Berkshire and 3G could also decide at some point that it would be mutually beneficial if we were to exchange some of our preferred for common shares (at an equity valuation appropriate to the time).

Our partnership took control of Heinz in June, and operating results so far are encouraging. Only minor earnings from Heinz, however, are reflected in those we report for Berkshire this year: One-time charges incurred in the purchase and subsequent restructuring of operations totaled \$1.3 billion. Earnings in 2014 will be substantial.

With Heinz, Berkshire now owns 8 $\frac{1}{2}$ companies that, were they stand-alone businesses, would be in the Fortune 500. Only 491 $\frac{1}{2}$ to go.

NV Energy, purchased for \$5.6 billion by MidAmerican Energy, our utility subsidiary, supplies electricity to about 88% of Nevada’s population. This acquisition fits nicely into our existing electric-utility operation and offers many possibilities for large investments in renewable energy. NV Energy will not be MidAmerican’s last major acquisition.

- MidAmerican is one of our “Powerhouse Five” – a collection of large non-insurance businesses that, in aggregate, had a record \$10.8 billion of pre-tax earnings in 2013, up \$758 million from 2012. The other companies in this sainted group are BNSF, Iscar, Lubrizol and Marmon.

Of the five, only MidAmerican, then earning \$393 million pre-tax, was owned by Berkshire nine years ago. Subsequently, we purchased another three of the five on an all-cash basis. In acquiring the fifth, BNSF, we paid about 70% of the cost in cash, and, for the remainder, issued shares that increased the number outstanding by 6.1%. In other words, the \$10.4 billion gain in annual earnings delivered Berkshire by the five companies over the nine-year span has been accompanied by only minor dilution. That satisfies our goal of not simply growing, but rather increasing per-share results.

If the U.S. economy continues to improve in 2014, we can expect earnings of our Powerhouse Five to improve also – perhaps by \$1 billion or so pre-tax.

- Our many dozens of smaller non-insurance businesses earned \$4.7 billion pre-tax last year, up from \$3.9 billion in 2012. Here, too, we expect further gains in 2014.

- Berkshire's extensive insurance operation again operated at an underwriting profit in 2013 – that makes 11 years in a row – and increased its float. During that 11-year stretch, our float – money that doesn't belong to us but that we can invest for Berkshire's benefit – has grown from \$41 billion to \$77 billion. Concurrently, our underwriting profit has aggregated \$22 billion pre-tax, including \$3 billion realized in 2013. And all of this all began with our 1967 purchase of National Indemnity for \$8.6 million.

We now own a wide variety of exceptional insurance operations. Best known is GEICO, the car insurer Berkshire acquired in full at yearend 1995 (having for many years prior owned a partial interest). GEICO in 1996 ranked number seven among U.S. auto insurers. Now, GEICO is number two, having recently passed Allstate. The reasons for this amazing growth are simple: low prices and reliable service. You can do yourself a favor by calling 1-800-847-7536 or checking Geico.com to see if you, too, can cut your insurance costs. Buy some of Berkshire's other products with the savings.

- While Charlie and I search for elephants, our many subsidiaries are regularly making bolt-on acquisitions. Last year, we contracted for 25 of these, scheduled to cost \$3.1 billion in aggregate. These transactions ranged from \$1.9 million to \$1.1 billion in size.

Charlie and I encourage these deals. They deploy capital in activities that fit with our existing businesses and that will be managed by our corps of expert managers. The result is no more work for us and more earnings for you. Many more of these bolt-on deals will be made in future years. In aggregate, they will be meaningful.

- Last year we invested \$3.5 billion in the surest sort of bolt-on: the purchase of additional shares in two wonderful businesses that we already controlled. In one case – Marmon – our purchases brought us to the 100% ownership we had signed up for in 2008. In the other instance – Iscar – the Wertheimer family elected to exercise a put option it held, selling us the 20% of the business it retained when we bought control in 2006.

These purchases added about \$300 million pre-tax to our current earning power and also delivered us \$800 million of cash. Meanwhile, the same nonsensical accounting rule that I described in last year's letter required that we enter these purchases on our books at \$1.8 billion less than we paid, a process that reduced Berkshire's book value. (The charge was made to "capital in excess of par value"; figure that one out.) This weird accounting, you should understand, instantly increased Berkshire's excess of intrinsic value over book value by the same \$1.8 billion.

- Our subsidiaries spent a record \$11 billion on plant and equipment during 2013, roughly twice our depreciation charge. About 89% of that money was spent in the United States. Though we invest abroad as well, the mother lode of opportunity resides in America.

- In a year in which most equity managers found it impossible to outperform the S&P 500, both Todd Combs and Ted Weschler handily did so. Each now runs a portfolio exceeding \$7 billion. They've earned it.

I must again confess that their investments outperformed mine. (Charlie says I should add “by a lot.”) If such humiliating comparisons continue, I’ll have no choice but to cease talking about them.

Todd and Ted have also created significant value for you in several matters unrelated to their portfolio activities. Their contributions are just beginning: Both men have Berkshire blood in their veins.

- Berkshire's yearend employment – counting Heinz – totaled a record 330,745, up 42,283 from last year. The increase, I must admit, included one person at our Omaha home office. (Don't panic: The headquarters gang still fits comfortably on one floor.)

- Berkshire increased its ownership interest last year in each of its “Big Four” investments – American Express, Coca-Cola, IBM and Wells Fargo. We purchased additional shares of Wells Fargo (increasing our ownership to 9.2% versus 8.7% at yearend 2012) and IBM (6.3% versus 6.0%). Meanwhile, stock repurchases at Coca-Cola and American Express raised our percentage ownership. Our equity in Coca-Cola grew from 8.9% to 9.1% and our interest in American Express from 13.7% to 14.2%. And, if you think tenths of a percent aren’t important, ponder this math: For the four companies in aggregate, each increase of one-tenth of a percent in our share of their equity raises Berkshire’s share of their annual earnings by \$50 million.

The four companies possess excellent businesses and are run by managers who are both talented and shareholder-oriented. At Berkshire, we much prefer owning a non-controlling but substantial portion of a wonderful company to owning $100\%$ of a so-so business; it's better to have a partial interest in the Hope diamond than to own all of a rhinestone.

Going by our yearend holdings, our portion of the “Big Four’s” 2013 earnings amounted to \$4.4 billion. In the earnings we report to you, however, we include only the dividends we receive – about \$1.4 billion last year. But make no mistake: The \$3 billion of their earnings we don’t report is every bit as valuable to us as the portion Berkshire records.

The earnings that these four companies retain are often used for repurchases of their own stock – a move that enhances our share of future earnings – as well as for funding business opportunities that usually turn out to be advantageous. All that leads us to expect that the per-share earnings of these four investees will grow substantially over time. If they do, dividends to Berkshire will increase and, even more important, our unrealized capital gains will, too. (For the four, unrealized gains already totaled \$39 billion at yearend.)

Our flexibility in capital allocation – our willingness to invest large sums passively in non-controlled businesses – gives us a significant advantage over companies that limit themselves to acquisitions they can operate. Woody Allen stated the general idea when he said: “The advantage of being bi-sexual is that it doubles your chances for a date on Saturday night.” Similarly, our appetite for either operating businesses or passive investments doubles our chances of finding sensible uses for our endless gusher of cash.

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

Late in 2009, amidst the gloom of the Great Recession, we agreed to buy BNSF, the largest purchase in Berkshire's history. At the time, I called the transaction an “all-in wager on the economic future of the United States.”

That kind of commitment was nothing new for us: We’ve been making similar wagers ever since Buffett Partnership Ltd. acquired control of Berkshire in 1965. For good reason, too. Charlie and I have always considered a “bet” on ever-rising U.S. prosperity to be very close to a sure thing.

Indeed, who has ever benefited during the past 237 years by betting against America? If you compare our country's present condition to that existing in 1776, you have to rub your eyes in wonder. And the dynamism embedded in our market economy will continue to work its magic. America's best days lie ahead.

With this tailwind working for us, Charlie and I hope to build Berkshire's per-share intrinsic value by (1) constantly improving the basic earning power of our many subsidiaries; (2) further increasing their earnings through bolt-on acquisitions; (3) benefiting from the growth of our investees; (4) repurchasing Berkshire shares when they are available at a meaningful discount from intrinsic value; and (5) making an occasional large acquisition. We will also try to maximize results for you by rarely, if ever, issuing Berkshire shares.

Those building blocks rest on a rock-solid foundation. A century hence, BNSF and MidAmerican Energy will still be playing major roles in our economy. Insurance will concomitantly be essential for both businesses and individuals – and no company brings greater human and financial resources to that business than Berkshire.

Moreover, we will always maintain supreme financial strength, operating with at least \$20 billion of cash equivalents and never incurring material amounts of short-term obligations. As we view these and other strengths, Charlie and I like your company's prospects. We feel fortunate to be entrusted with its management.

Intrinsic Business Value

As much as Charlie and I talk about intrinsic business value, we cannot tell you precisely what that number is for Berkshire shares (nor, in fact, for any other stock). In our 2010 annual report, however, we laid out the three elements – one of them qualitative – that we believe are the keys to a sensible estimate of Berkshire's intrinsic value. That discussion is reproduced in full on pages 109 - 110.

Here is an update of the two quantitative factors: In 2013 our per-share investments increased 13.6% to \$129,253 and our pre-tax earnings from businesses other than insurance and investments increased 12.8% to \$9,116 per share.

Since 1970, our per-share investments have increased at a rate of 19.3% compounded annually, and our earnings figure has grown at a 20.6% clip. It is no coincidence that the price of Berkshire stock over the 43-year period has increased at a rate very similar to that of our two measures of value. Charlie and I like to see gains in both sectors, but we will most strongly focus on building operating earnings.

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

Now, let's examine the four major sectors of our operations. Each has vastly different balance sheet and income characteristics from the others. So we'll present them as four separate businesses, which is how Charlie and I view them (though there are important and enduring advantages to having them all under one roof). Our goal is to provide you with the information we would wish to have if our positions were reversed, with you being the reporting manager and we the absentee shareholders. (But don't get any ideas!)

Insurance

"Our investment in the insurance companies reflects a first major step in our efforts to achieve a more diversified base of earning power."

— 1967 Annual Report

Let's look first at insurance, Berkshire's core operation and the engine that has consistently propelled our expansion since that 1967 report was published.

Property-casualty (“P/C”) insurers receive premiums upfront and pay claims later. In extreme cases, such as those arising from certain workers’ compensation accidents, payments can stretch over decades. This collect-now, pay-later model leaves P/C companies holding large sums – money we call “float” – that will eventually go to others. Meanwhile, insurers get to invest this float for their benefit. Though individual policies and claims come and go, the amount of float an insurer holds usually remains fairly stable in relation to premium volume. Consequently, as our business grows, so does our float. And how we have grown, as the following table shows:

Year	Float (in $ millions)
1970	$ 39
1980	237
1990	1,632
2000	27,871
2010	65,832
2013	77,240

Further gains in float will be tough to achieve. On the plus side, GEICO's float will almost certainly grow. In National Indemnity's reinsurance division, however, we have a number of run-off contracts whose float drifts downward. If we do experience a decline in float at some future time, it will be very gradual – at the outside no more than 3% in any year. The nature of our insurance contracts is such that we can never be subject to immediate demands for sums that are large compared to our cash resources. (In this respect, property-casualty insurance differs in an important way from certain forms of life insurance.)

If our premiums exceed the total of our expenses and eventual losses, we register an underwriting profit that adds to the investment income our float produces. When such a profit is earned, we enjoy the use of free money – and, better yet, get paid for holding it.

Unfortunately, the wish of all insurers to achieve this happy result creates intense competition, so vigorous in most years that it causes the P/C industry as a whole to operate at a significant underwriting loss. This loss, in effect, is what the industry pays to hold its float. For example, State Farm, by far the country's largest insurer and a well-managed company besides, incurred an underwriting loss in nine of the twelve years ending in 2012 (the latest year for which their financials are available, as I write this). Competitive dynamics almost guarantee that the insurance industry – despite the float income all companies enjoy – will continue its dismal record of earning subnormal returns as compared to other businesses.

As noted in the first section of this report, we have now operated at an underwriting profit for eleven consecutive years, our pre-tax gain for the period having totaled \$22 billion. Looking ahead, I believe we will continue to underwrite profitably in most years. Doing so is the daily focus of all of our insurance managers who know that while float is valuable, it can be drowned by poor underwriting results.

So how does our float affect intrinsic value? When Berkshire's book value is calculated, the full amount of our float is deducted as a liability, just as if we had to pay it out tomorrow and could not replenish it. But to think of float as strictly a liability is incorrect; it should instead be viewed as a revolving fund. Daily, we pay old claims – some \$17 billion to more than five million claimants in 2013 – and that reduces float. Just as surely, we each day write new business and thereby generate new claims that add to float. If our revolving float is both costless and long-enduring, which I believe it will be, the true value of this liability is dramatically less than the accounting liability.

A counterpart to this overstated liability is \$15.5 billion of “goodwill” that is attributable to our insurance companies and included in book value as an asset. In very large part, this goodwill represents the price we paid for the float-generating capabilities of our insurance operations. The cost of the goodwill, however, has no bearing on its true value. For example, if an insurance business sustains large and prolonged underwriting losses, any goodwill asset carried on the books should be deemed valueless, whatever its original cost.

Fortunately, that does not describe Berkshire. Charlie and I believe the true economic value of our insurance goodwill – what we would happily pay to purchase an insurance operation possessing float of similar quality to that we have – to be far in excess of its historic carrying value. The value of our float is one reason – a huge reason – why we believe Berkshire’s intrinsic business value substantially exceeds its book value.

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

Berkshire's attractive insurance economics exist only because we have some terrific managers running disciplined operations that possess strong, hard-to-replicate business models. Let me tell you about the major units.

First by float size is the Berkshire Hathaway Reinsurance Group, managed by Ajit Jain. Ajit insures risks that no one else has the desire or the capital to take on. His operation combines capacity, speed, decisiveness and, most important, brains in a manner unique in the insurance business. Yet he never exposes Berkshire to risks that are inappropriate in relation to our resources. Indeed, we are far more conservative in avoiding risk than most large insurers. For example, if the insurance industry should experience a \$250 billion loss from some megacatastrophe – a loss about triple anything it has ever experienced – Berkshire as a whole would likely record a significant profit for the year because of its many streams of earnings. And we would remain awash in cash, looking for large opportunities if the catastrophe caused markets to go into shock. All other major insurers and reinsurers would meanwhile be far in the red, with some facing insolvency.

From a standing start in 1985, Ajit has created an insurance business with float of \$37 billion and a large cumulative underwriting profit, a feat no other insurance CEO has come close to matching. Ajit's mind is an idea factory that is always looking for more lines of business he can add to his current assortment.

One venture materialized last June when he formed Berkshire Hathaway Specialty Insurance (“BHSI”). This initiative took us into commercial insurance, where we were instantly accepted by both major insurance brokers and corporate risk managers throughout America. These professionals recognize that no other insurer can match the financial strength of Berkshire, which guarantees that legitimate claims arising many years in the future will be paid promptly and fully.

BHSI is led by Peter Eastwood, an experienced underwriter who is widely respected in the insurance world. Peter has assembled a spectacular team that is already writing a substantial amount of business with many Fortune 500 companies and with smaller operations as well. BHSI will be a major asset for Berkshire, one that will generate volume in the billions within a few years. Give Peter a Berkshire greeting when you see him at the annual meeting.

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

We have another reinsurance powerhouse in General Re, managed by Tad Montross.

At bottom, a sound insurance operation needs to adhere to four disciplines. It must (1) understand all exposures that might cause a policy to incur losses; (2) conservatively assess the likelihood of any exposure actually causing a loss and the probable cost if it does; (3) set a premium that, on average, will deliver a profit after both prospective loss costs and operating expenses are covered; and (4) be willing to walk away if the appropriate premium can't be obtained.

Many insurers pass the first three tests and flunk the fourth. They simply can't turn their back on business that is being eagerly written by their competitors. That old line, “The other guy is doing it, so we must as well,” spells trouble in any business, but in none more so than insurance.

Tad has observed all four of the insurance commandments, and it shows in his results. General Re's huge float has been better than cost-free under his leadership, and we expect that, on average, to continue. We are particularly enthusiastic about General Re's international life reinsurance business, which has grown consistently and profitably since we acquired the company in 1998.

It can be remembered that soon after we purchased General Re, the company was beset by problems that caused commentators – and me as well, briefly – to believe I had made a huge mistake. That day is long gone. General Re is now a gem.

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

Finally, there is GEICO, the insurer on which I cut my teeth 63 years ago. GEICO is managed by Tony Nicely, who joined the company at 18 and completed 52 years of service in 2013. Tony became CEO in 1993, and since then the company has been flying.

When I was first introduced to GEICO in January 1951, I was blown away by the huge cost advantage the company enjoyed compared to the expenses borne by the giants of the industry. That operational efficiency continues today and is an all-important asset. No one likes to buy auto insurance. But almost everyone likes to drive. The insurance needed is a major expenditure for most families. Savings matter to them – and only a low-cost operation can deliver these.

GEICO's cost advantage is the factor that has enabled the company to gobble up market share year after year. Its low costs create a moat – an enduring one – that competitors are unable to cross. Meanwhile, our little gecko continues to tell Americans how GEICO can save them important money. With our latest reduction in operating costs, his story has become even more compelling.

In 1995, we purchased the half of GEICO that we didn't already own, paying \$1.4 billion more than the net tangible assets we acquired. That's "goodwill," and it will forever remain unchanged on our books. As GEICO's business grows, however, so does its true economic goodwill. I believe that figure to be approaching \$20 billion.

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

In addition to our three major insurance operations, we own a group of smaller companies, most of them plying their trade in odd corners of the insurance world. In aggregate, these companies are a growing operation that consistently delivers an underwriting profit. Moreover, as the table below shows, they also provide us with substantial float. Charlie and I treasure these companies and their managers.

	Underwriting Profit		Yearend Float
	(in millions)
Insurance Operations	2013	2012	2013	2012
BH Reinsurance	$1,294	$304	$37,231	$34,821
General Re	283	355	20,013	20,128
GEICO	1,127	680	12,566	11,578
Other Primary	385	286	7,430	6,598
	$3,089	$1,625	$77,240	$73,125

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

Simply put, insurance is the sale of promises. The “customer” pays money now; the insurer promises to pay money in the future if certain events occur.

Sometimes, the promise will not be tested for decades. (Think of life insurance bought by those in their 20s.) Therefore, both the ability and willingness of the insurer to pay – even if economic chaos prevails when payment time arrives – is all-important.

Berkshire's promises have no equal, a fact affirmed in recent years by the actions of the world's largest and most sophisticated insurers, some of which have wanted to shed themselves of huge and exceptionally long-lived liabilities, particularly those involving asbestos claims. That is, these insurers wished to “cede” their liabilities to a reinsurer. Choosing the wrong reinsurer, however – one that down the road proved to be financially strapped or a bad actor – would put the original insurer in danger of getting the liabilities right back in its lap.

Almost without exception, the largest insurers seeking aid came to Berkshire. Indeed, in the largest such transaction ever recorded, Lloyd's in 2007 turned over to us both many thousands of known claims arising from policies written before 1993 and an unknown but huge number of claims from that same period sure to materialize in the future. (Yes, we will be receiving claims decades from now that apply to events taking place prior to 1993.)

Berkshire’s ultimate payments arising from the Lloyd’s transaction are today unknowable. What is certain, however, is that Berkshire will pay all valid claims up to the \$15 billion limit of our policy. No other insurer’s promise would have given Lloyd’s the comfort provided by its agreement with Berkshire. The CEO of the entity then handling Lloyd’s claims said it best: “Names [the original insurers at Lloyd’s] wanted to sleep easy at night, and we think we’ve just bought them the world’s best mattress.”

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

Berkshire's great managers, premier financial strength and a variety of business models possessing wide moats form something unique in the insurance world. The combination is a huge asset for Berkshire shareholders that will only get more valuable with time.

Regulated, Capital-Intensive Businesses

“Though there are many regulatory restraints in the utility industry, it’s possible that we will make additional commitments in the field. If we do, the amounts involved could be large.”

— 1999 Annual Report

We have two major operations, BNSF and MidAmerican Energy, that share important characteristics distinguishing them from our other businesses. Consequently, we assign them their own section in this letter and split out their combined financial statistics in our GAAP balance sheet and income statement.

A key characteristic of both companies is their huge investment in very long-lived, regulated assets, with these partially funded by large amounts of long-term debt that is not guaranteed by Berkshire. Our credit is in fact not needed because each company has earning power that even under terrible economic conditions will far exceed its interest requirements. Last year, for example, BNSF's interest coverage was 9:1. (Our definition of coverage is pre-tax earnings/interest, not EBITDA/interest, a commonly-used measure we view as seriously flawed.)

At MidAmerican, meanwhile, two factors ensure the company's ability to service its debt under all circumstances. The first is common to all utilities: recession-resistant earnings, which result from these companies exclusively offering an essential service. The second is enjoyed by few other utilities: a great diversity of earnings streams, which shield us from being seriously harmed by any single regulatory body. Now, with the acquisition of NV Energy, MidAmerican's earnings base has further broadened. This particular strength, supplemented by Berkshire's ownership, has enabled MidAmerican and its utility subsidiaries to significantly lower their cost of debt. This advantage benefits both us and our customers.

Every day, our two subsidiaries power the American economy in major ways:

- BNSF carries about $15\%$ (measured by ton-miles) of all inter-city freight, whether it is transported by truck, rail, water, air, or pipeline. Indeed, we move more ton-miles of goods than anyone else, a fact establishing BNSF as the most important artery in our economy's circulatory system. Its hold on the number-one position strengthened in 2013.

BNSF, like all railroads, also moves its cargo in an extraordinarily fuel-efficient and environmentally friendly way, carrying a ton of freight about 500 miles on a single gallon of diesel fuel. Trucks taking on the same job guzzle about four times as much fuel.

- MidAmerican's utilities serve regulated retail customers in eleven states. No utility company stretches further. In addition, we are the leader in renewables: From a standing start nine years ago, MidAmerican now accounts for 7% of the country's wind generation capacity, with more on the way. Our share in solar – most of which is still in construction – is even larger.

MidAmerican can make these investments because it retains all of its earnings. Here's a little known fact: Last year MidAmerican retained more dollars of earnings – by far – than any other American electric utility. We and our regulators see this as an important advantage – one almost certain to exist five, ten and twenty years from now.

When our current projects are completed, MidAmerican's renewables portfolio will have cost \$15 billion. We relish making such commitments as long as they promise reasonable returns. And, on that front, we put a large amount of trust in future regulation.

Our confidence is justified both by our past experience and by the knowledge that society will forever need massive investments in both transportation and energy. It is in the self-interest of governments to treat capital providers in a manner that will ensure the continued flow of funds to essential projects. It is meanwhile in our self-interest to conduct our operations in a way that earns the approval of our regulators and the people they represent.

Tangible proof of our dedication to that duty was delivered last year in a poll of customer satisfaction covering 52 holding companies and their 101 operating electric utilities. Our MidAmerican group ranked number one, with 95.3% of respondents giving us a “very satisfied” vote and not a single customer rating us “dissatisfied.” The bottom score in the survey, incidentally, was a dismal 34.5%.

All three of our companies were ranked far lower by this measure before they were acquired by MidAmerican. The extraordinary customer satisfaction we have achieved is of great importance as we expand: Regulators in states we hope to enter are glad to see us, knowing we will be responsible operators.

Our railroad has been diligent as well in anticipating the needs of its customers. Whatever you may have heard about our country's crumbling infrastructure in no way applies to BNSF or railroads generally. America's rail system has never been in better shape, a consequence of huge investments by the industry. We are not, however, resting: BNSF spent \$4 billion on the railroad in 2013, double its depreciation charge and a single-year record for any railroad. And, we will spend considerably more in 2014. Like Noah, who foresaw early on the need for dependable transportation, we know it's our job to plan ahead.

Leading our two capital-intensive companies are Greg Abel, at MidAmerican, and the team of Matt Rose and Carl Ice at BNSF. The three are extraordinary managers who have my gratitude and deserve yours as well. Here are the key figures for their businesses:

MidAmerican (89.8% owned)	Earnings (in millions)
	2013	2012	2011
U.K. utilities	$362	$429	$469
Iowa utility	230	236	279
Western utilities	982	737	771
Pipelines	385	383	388
HomeServices	139	82	39
Other (net)	4	91	36
Operating earnings before corporate interest and taxes	2,102	1,958	1,982
Interest	296	314	336
Income taxes	170	172	315
Net earnings	$1,636	$1,472	$1,331
Earnings applicable to Berkshire	$1,470	$1,323	$1,204
BNSF	Earnings (in millions)
	2013	2012	2011
Revenues	$22,014	$20,835	$19,548
Operating expenses	15,357	14,835	14,247
Operating earnings before interest and taxes	6,657	6,000	5,301
Interest (net)	729	623	560
Income taxes	2,135	2,005	1,769
Net earnings	$3,793	$3,372	$2,972

Ron Peltier continues to build HomeServices, MidAmerican's real estate brokerage subsidiary. Last year his operation made four acquisitions, the most significant being Fox & Roach, a Philadelphia-based company that is the largest single-market realtor in the country.

HomeServices now has 22,114 agents (listed by geography on page 112), up 38% from 2012. HomeServices also owns 67% of the Prudential and Real Living franchise operations, which are in the process of rebranding their franchisees as Berkshire Hathaway HomeServices. If you haven’t yet, many of you will soon be seeing our name on “for sale” signs.

Manufacturing, Service and Retailing Operations

“See that store,” Warren says, pointing at Nebraska Furniture Mart. “That’s a really good business.”

“Why don’t you buy it?” I said.

“It’s privately held,” Warren said.

“Oh,” I said.

“I might buy it anyway,” Warren said. “Someday.”

— Supermoney by Adam Smith (1972)

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.

Balance Sheet 12/31/13 (in millions)

Assets		Liabilities and Equity
Cash and equivalents	$6,625	Notes payable	$1,615
Accounts and notes receivable	7,749	Other current liabilities	8,965
Inventory	9,945	Total current liabilities	10,580
Other current assets	716
Total current assets	25,035
		Deferred taxes	5,184
Goodwill and other intangibles	25,617	Term debt and other liabilities	4,405
Fixed assets	19,389	Non-controlling interests	456
Other assets	4,274	Berkshire equity	53,690
	$74,315		$74,315

Earnings Statement (in millions)

	2013	2012	2011
Revenues	$95,291	$83,255	$72,406
Operating expenses	88,414	76,978	67,239
Interest expense	135	146	130
Pre-tax earnings	6,742	6,131	5,037
Income taxes and non-controlling interests	2,512	2,432	1,998
Net earnings	$4,230	$3,699	$3,039

Our income and expense data conforming to Generally Accepted Accounting Principles (“GAAP”) is on page 29. In contrast, the operating expense figures above are non-GAAP and exclude some purchase-accounting items (primarily the amortization of certain intangible assets). We present the data in this manner because Charlie and I believe the adjusted numbers more accurately reflect the true economic expenses and profits of the businesses aggregated in the table than do GAAP figures.

I won't explain all of the adjustments – some are tiny and arcane – but serious investors should understand the disparate nature of intangible assets: Some truly deplete over time while others in no way lose value. With software, for example, amortization charges are very real expenses. Charges against other intangibles such as the amortization of customer relationships, however, arise through purchase-accounting rules and are clearly not real costs. GAAP accounting draws no distinction between the two types of charges. Both, that is, are recorded as expenses when earnings are calculated – even though from an investor's viewpoint they could not be more different.

In the GAAP-compliant figures we show on page 29, amortization charges of \$648 million for the companies included in this section are deducted as expenses. We would call about 20% of these “real,” the rest not. This difference has become significant because of the many acquisitions we have made. It will almost certainly rise further as we acquire more companies.

Eventually, of course, the non-real charges disappear when the assets to which they're related become fully amortized. But this usually takes 15 years and – alas – it will be my successor whose reported earnings get the benefit of their expiration.

Every dime of depreciation expense we report, however, is a real cost. And that's true at almost all other companies as well. When Wall Streeters tout EBITDA as a valuation guide, button your wallet.

Our public reports of earnings will, of course, continue to conform to GAAP. To embrace reality, however, remember to add back most of the amortization charges we report.

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

The crowd of companies in this section sells products ranging from lollipops to jet airplanes. Some of these businesses, measured by earnings on unleveraged net tangible assets, enjoy terrific economics, producing profits that run from 25% after-tax to far more than 100%. Others generate good returns in the area of 12% to 20%. A few, however, have very poor returns, a result of some serious mistakes I made in my job of capital allocation. I was not misled: I simply was wrong in my evaluation of the economic dynamics of the company or the industry in which it operated.

Fortunately, my blunders usually involved relatively small acquisitions. Our large buys have generally worked out well and, in a few cases, more than well. I have not, however, made my last mistake in purchasing either businesses or stocks. Not everything works out as planned.

Viewed as a single entity, the companies in this group are an excellent business. They employed an average of \$25 billion of net tangible assets during 2013 and, with large quantities of excess cash and little leverage, earned 16.7% after-tax on that capital.

Of course, a business with terrific economics can be a bad investment if the purchase price is excessive. We have paid substantial premiums to net tangible assets for most of our businesses, a cost that is reflected in the large figure we show for goodwill. Overall, however, we are getting a decent return on the capital we have deployed in this sector. Furthermore, the intrinsic value of these businesses, in aggregate, exceeds their carrying value by a good margin. Even so, the difference between intrinsic value and carrying value in the insurance and regulated-industry segments is far greater. It is there that the truly big winners reside.

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

We have far too many companies in this group to comment on them individually. Moreover, both current and potential competitors read this report. In a few of our businesses we might be disadvantaged if they knew our numbers. So, in some of our operations that are not of a size material to an evaluation of Berkshire, we only disclose what is required. You can find a good bit of detail about many of our operations, however, on pages 80-84.

I can't resist, however, giving you an update on Nebraska Furniture Mart's expansion into Texas. I'm not covering this event because of its economic importance to Berkshire – it takes more than a new store to move the needle on Berkshire's \$225 billion equity base. But I've now worked 30 years with the marvelous Blumkin family, and I'm excited about the remarkable store – truly Texas-sized – it is building at The Colony, in the northern part of the Dallas metropolitan area.

When the store is completed next year, NFM will have – under one roof, and on a 433-acre site – 1.8 million square feet of retail and supporting warehouse space. View the project’s progress at www.nfm.com/texas. NFM already owns the two highest-volume home furnishings stores in the country (in Omaha and Kansas City, Kansas), each doing about \$450 million annually. I predict the Texas store will blow these records away. If you live anywhere near Dallas, come check us out.

I think back to August 30, 1983 – my birthday – when I went to see Mrs. B (Rose Blumkin), carrying a 1 $^{1/4}$ -page purchase proposal for NFM that I had drafted. (It’s reproduced on pages 114 - 115.) Mrs. B accepted my offer without changing a word, and we completed the deal without the involvement of investment bankers or lawyers (an experience that can only be described as heavenly). Though the company’s financial statements were unaudited, I had no worries. Mrs. B simply told me what was what, and her word was good enough for me.

Mrs. B was 89 at the time and worked until 103 – definitely my kind of woman. Take a look at NFM’s financial statements from 1946 on pages 116 - 117. Everything NFM now owns comes from (a) that \$72,264 of net worth and \$50 – no zeros omitted – of cash the company then possessed, and (b) the incredible talents of Mrs. B, her son, Louie, and his sons Ron and Irv.

The punch line to this story is that Mrs. B never spent a day in school. Moreover, she emigrated from Russia to America knowing not a word of English. But she loved her adopted country: At Mrs. B's request, the family always sang God Bless America at its gatherings.

Aspiring business managers should look hard at the plain, but rare, attributes that produced Mrs. B's incredible success. Students from 40 universities visit me every year, and I have them start the day with a visit to NFM. If they absorb Mrs. B's lessons, they need none from me.

Finance and Financial Products

“Clayton’s loan portfolio will likely grow to at least \$5 billion in not too many years and, with sensible credit standards in place, should deliver significant earnings.”

— 2003 Annual Report

This sector, our smallest, includes two rental companies, XTRA (trailers) and CORT (furniture), as well as Clayton Homes, the country's leading producer and financer of manufactured homes. Aside from these $100\%$ -owned subsidiaries, we also include in this category a collection of financial assets and our $50\%$ interest in Berkadia Commercial Mortgage.

Clayton is placed in this section because it owns and services 326,569 mortgages, totaling \$13.6 billion. In recent years, as manufactured home sales plummeted, a high percentage of Clayton's earnings came from this mortgage business.

In 2013, however, the sale of new homes began to pick up and earnings from both manufacturing and retailing are again becoming significant. Clayton remains America's number one homebuilder: Its 2013 output of 29,547 homes accounted for about $4.7\%$ of all single-family residences built in the country. Kevin Clayton, Clayton's CEO, has done a magnificent job of guiding the company through the severe housing depression. Now, his job – definitely more fun these days – includes the prospect of another earnings gain in 2014.

CORT and XTRA are leaders in their industries as well. And Jeff Pederson and Bill Franz will keep them on top. We are backing their plans through purchases of equipment that enlarge their rental potential.

Here's the pre-tax earnings recap for this sector:

	2013	2012	2011
		(in millions)
Berkadia	$ 80	$ 35	$ 25
Clayton	416	255	154
CORT	40	42	29
XTRA	125	106	126
Net financial income*	324	410	440
	$985	$848	$ 774

* Excludes capital gains or losses

Investments

"Our stock portfolio . . . was worth approximately \$17 million less than its carrying value [cost] . . . it is our belief that, over a period of years, the overall portfolio will prove to be worth more than its cost."

— 1974 Annual Report

Below we list our fifteen common stock investments that at yearend had the largest market value.

Shares**	Company	Percentage of Company Owned	12/31/13
			Cost*	Market
			(in millions)
151,610,700	American Express Company	14.2	$ 1,287	$ 13,756
400,000,000	The Coca-Cola Company	9.1	1,299	16,524
22,238,900	DIRECTV	4.2	1,017	1,536
41,129,643	Exxon Mobil Corp.	0.9	3,737	4,162
13,062,594	The Goldman Sachs Group, Inc.	2.8	750	2,315
68,121,984	International Business Machines Corp.	6.3	11,681	12,778
24,669,778	Moody’s Corporation	11.5	248	1,936
20,060,390	Munich Re	11.2	2,990	4,415
20,668,118	Phillips 66	3.4	660	1,594
52,477,678	The Procter & Gamble Company	1.9	336	4,272
22,169,930	Sanofi	1.7	1,747	2,354
301,046,076	Tesco plc	3.7	1,699	1,666
96,117,069	U.S. Bancorp	5.3	3,002	3,883
56,805,984	Wal-Mart Stores, Inc.	1.8	2,976	4,470
483,470,853	Wells Fargo & Company	9.2	11,871	21,950
	Others		11,281	19,894
	Total Common Stocks Carried at Market		$56,581	$117,505

*This is our actual purchase price and also our tax basis; GAAP “cost” differs in a few cases because of write-ups or write-downs that have been required under its rules.
**Excludes shares held by Berkshire subsidiary pension funds.

Berkshire has one major equity position that is not included in the table: We can buy 700 million shares of Bank of America at any time prior to September 2021 for \$5 billion. At yearend these shares were worth \$10.9 billion. We are likely to purchase the shares just before expiration of our option. In the meantime, it is important for you to realize that Bank of America is, in effect, our fifth largest equity investment and one we value highly.

In addition to our equity holdings, we also invest substantial sums in bonds. Usually, we've done well in these. But not always.

Most of you have never heard of Energy Future Holdings. Consider yourselves lucky; I certainly wish I hadn't. The company was formed in 2007 to effect a giant leveraged buyout of electric utility assets in Texas. The equity owners put up \$8 billion and borrowed a massive amount in addition. About \$2 billion of the debt was purchased by Berkshire, pursuant to a decision I made without consulting with Charlie. That was a big mistake.

Unless natural gas prices soar, EFH will almost certainly file for bankruptcy in 2014. Last year, we sold our holdings for \$259 million. While owning the bonds, we received \$837 million in cash interest. Overall, therefore, we suffered a pre-tax loss of \$873 million. Next time I'll call Charlie.

A few of our subsidiaries – primarily electric and gas utilities – use derivatives in their operations. Otherwise, we have not entered into any derivative contracts for some years, and our existing positions continue to run off. The contracts that have expired have delivered large profits as well as several billion dollars of medium-term float. Though there are no guarantees, we expect a similar result from those remaining on our books.

Some Thoughts About Investing

Investment is most intelligent when it is most businesslike.

— The Intelligent Investor by Benjamin Graham

It is fitting to have a Ben Graham quote open this discussion because I owe so much of what I know about investing to him. I will talk more about Ben a bit later, and I will even sooner talk about common stocks. But let me first tell you about two small non-stock investments that I made long ago. Though neither changed my net worth by much, they are instructive.

This tale begins in Nebraska. From 1973 to 1981, the Midwest experienced an explosion in farm prices, caused by a widespread belief that runaway inflation was coming and fueled by the lending policies of small rural banks. Then the bubble burst, bringing price declines of $50\%$ or more that devastated both leveraged farmers and their lenders. Five times as many Iowa and Nebraska banks failed in that bubble's aftermath than in our recent Great Recession.

In 1986, I purchased a 400-acre farm, located 50 miles north of Omaha, from the FDIC. It cost me \$280,000, considerably less than what a failed bank had lent against the farm a few years earlier. I knew nothing about operating a farm. But I have a son who loves farming and I learned from him both how many bushels of corn and soybeans the farm would produce and what the operating expenses would be. From these estimates, I calculated the normalized return from the farm to then be about 10%. I also thought it was likely that productivity would improve over time and that crop prices would move higher as well. Both expectations proved out.

I needed no unusual knowledge or intelligence to conclude that the investment had no downside and potentially had substantial upside. There would, of course, be the occasional bad crop and prices would sometimes disappoint. But so what? There would be some unusually good years as well, and I would never be under any pressure to sell the property. Now, 28 years later, the farm has tripled its earnings and is worth five times or more what I paid. I still know nothing about farming and recently made just my second visit to the farm.

In 1993, I made another small investment. Larry Silverstein, Salomon's landlord when I was the company's CEO, told me about a New York retail property adjacent to NYU that the Resolution Trust Corp. was selling. Again, a bubble had popped – this one involving commercial real estate – and the RTC had been created to dispose of the assets of failed savings institutions whose optimistic lending practices had fueled the folly.

Here, too, the analysis was simple. As had been the case with the farm, the unleveraged current yield from the property was about 10%. But the property had been undermanaged by the RTC, and its income would increase when several vacant stores were leased. Even more important, the largest tenant – who occupied around 20% of the project’s space – was paying rent of about \$5 per foot, whereas other tenants averaged \$70. The expiration of this bargain lease in nine years was certain to provide a major boost to earnings. The property’s location was also superb: NYU wasn’t going anywhere.

I joined a small group, including Larry and my friend Fred Rose, that purchased the parcel. Fred was an experienced, high-grade real estate investor who, with his family, would manage the property. And manage it they did. As old leases expired, earnings tripled. Annual distributions now exceed 35% of our original equity investment. Moreover, our original mortgage was refinanced in 1996 and again in 1999, moves that allowed several special distributions totaling more than 150% of what we had invested. I’ve yet to view the property.

Income from both the farm and the NYU real estate will probably increase in the decades to come. Though the gains won't be dramatic, the two investments will be solid and satisfactory holdings for my lifetime and, subsequently, for my children and grandchildren.

I tell these tales to illustrate certain fundamentals of investing:

• You don’t need to be an expert in order to achieve satisfactory investment returns. But if you aren’t, you must recognize your limitations and follow a course certain to work reasonably well. Keep things simple and don’t swing for the fences. When promised quick profits, respond with a quick “no.”
• Focus on the future productivity of the asset you are considering. If you don't feel comfortable making a rough estimate of the asset's future earnings, just forget it and move on. No one has the ability to evaluate every investment possibility. But omniscience isn't necessary; you only need to understand the actions you undertake.
• If you instead focus on the prospective price change of a contemplated purchase, you are speculating. There is nothing improper about that. I know, however, that I am unable to speculate successfully, and I am skeptical of those who claim sustained success at doing so. Half of all coin-flippers will win their first toss; none of those winners has an expectation of profit if he continues to play the game. And the fact that a given asset has appreciated in the recent past is never a reason to buy it.
• With my two small investments, I thought only of what the properties would produce and cared not at all about their daily valuations. Games are won by players who focus on the playing field – not by those whose eyes are glued to the scoreboard. If you can enjoy Saturdays and Sundays without looking at stock prices, give it a try on weekdays.
• Forming macro opinions or listening to the macro or market predictions of others is a waste of time. Indeed, it is dangerous because it may blur your vision of the facts that are truly important. (When I hear TV commentators glibly opine on what the market will do next, I am reminded of Mickey Mantle's scathing comment: “You don’t know how easy this game is until you get into that broadcasting booth.”)

- My two purchases were made in 1986 and 1993. What the economy, interest rates, or the stock market might do in the years immediately following – 1987 and 1994 – was of no importance to me in making those investments. I can’t remember what the headlines or pundits were saying at the time. Whatever the chatter, corn would keep growing in Nebraska and students would flock to NYU.

There is one major difference between my two small investments and an investment in stocks. Stocks provide you minute-to-minute valuations for your holdings whereas I have yet to see a quotation for either my farm or the New York real estate.

It should be an enormous advantage for investors in stocks to have those wildly fluctuating valuations placed on their holdings – and for some investors, it is. After all, if a moody fellow with a farm bordering my property yelled out a price every day to me at which he would either buy my farm or sell me his – and those prices varied widely over short periods of time depending on his mental state – how in the world could I be other than benefited by his erratic behavior? If his daily shout-out was ridiculously low, and I had some spare cash, I would buy his farm. If the number he yelled was absurdly high, I could either sell to him or just go on farming.

Owners of stocks, however, too often let the capricious and often irrational behavior of their fellow owners cause them to behave irrationally as well. Because there is so much chatter about markets, the economy, interest rates, price behavior of stocks, etc., some investors believe it is important to listen to pundits – and, worse yet, important to consider acting upon their comments.

Those people who can sit quietly for decades when they own a farm or apartment house too often become frenetic when they are exposed to a stream of stock quotations and accompanying commentators delivering an implied message of “Don’t just sit there, do something.” For these investors, liquidity is transformed from the unqualified benefit it should be to a curse.

A “flash crash” or some other extreme market fluctuation can’t hurt an investor any more than an erratic and mouthy neighbor can hurt my farm investment. Indeed, tumbling markets can be helpful to the true investor if he has cash available when prices get far out of line with values. A climate of fear is your friend when investing; a euphoric world is your enemy.

During the extraordinary financial panic that occurred late in 2008, I never gave a thought to selling my farm or New York real estate, even though a severe recession was clearly brewing. And, if I had owned 100% of a solid business with good long-term prospects, it would have been foolish for me to even consider dumping it. So why would I have sold my stocks that were small participations in wonderful businesses? True, any one of them might eventually disappoint, but as a group they were certain to do well. Could anyone really believe the earth was going to swallow up the incredible productive assets and unlimited human ingenuity existing in America?

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

When Charlie and I buy stocks – which we think of as small portions of businesses – our analysis is very similar to that which we use in buying entire businesses. We first have to decide whether we can sensibly estimate an earnings range for five years out, or more. If the answer is yes, we will buy the stock (or business) if it sells at a reasonable price in relation to the bottom boundary of our estimate. If, however, we lack the ability to estimate future earnings – which is usually the case – we simply move on to other prospects. In the 54 years we have worked together, we have never foregone an attractive purchase because of the macro or political environment, or the views of other people. In fact, these subjects never come up when we make decisions.

It's vital, however, that we recognize the perimeter of our “circle of competence” and stay well inside of it. Even then, we will make some mistakes, both with stocks and businesses. But they will not be the disasters that occur, for example, when a long-rising market induces purchases that are based on anticipated price behavior and a desire to be where the action is.

Most investors, of course, have not made the study of business prospects a priority in their lives. If wise, they will conclude that they do not know enough about specific businesses to predict their future earning power.

I have good news for these non-professionals: The typical investor doesn't need this skill. In aggregate, American business has done wonderfully over time and will continue to do so (though, most assuredly, in unpredictable fits and starts). In the $20^{\text{th}}$ Century, the Dow Jones Industrials index advanced from 66 to 11,497, paying a rising stream of dividends to boot. The $21^{\text{st}}$ Century will witness further gains, almost certain to be substantial. The goal of the non-professional should not be to pick winners – neither he nor his “helpers” can do that – but should rather be to own a cross-section of businesses that in aggregate are bound to do well. A low-cost S&P 500 index fund will achieve this goal.

That's the “what” of investing for the non-professional. The “when” is also important. The main danger is that the timid or beginning investor will enter the market at a time of extreme exuberance and then become disillusioned when paper losses occur. (Remember the late Barton Biggs’ observation: “A bull market is like sex. It feels best just before it ends.”) The antidote to that kind of mistiming is for an investor to accumulate shares over a long period and never to sell when the news is bad and stocks are well off their highs. Following those rules, the “know-nothing” investor who both diversifies and keeps his costs minimal is virtually certain to get satisfactory results. Indeed, the unsophisticated investor who is realistic about his shortcomings is likely to obtain better long-term results than the knowledgeable professional who is blind to even a single weakness.

If “investors” frenetically bought and sold farmland to each other, neither the yields nor prices of their crops would be increased. The only consequence of such behavior would be decreases in the overall earnings realized by the farm-owning population because of the substantial costs it would incur as it sought advice and switched properties.

Nevertheless, both individuals and institutions will constantly be urged to be active by those who profit from giving advice or effecting transactions. The resulting frictional costs can be huge and, for investors in aggregate, devoid of benefit. So ignore the chatter, keep your costs minimal, and invest in stocks as you would in a farm.

My money, I should add, is where my mouth is: What I advise here is essentially identical to certain instructions I’ve laid out in my will. One bequest provides that cash will be delivered to a trustee for my wife’s benefit. (I have to use cash for individual bequests, because all of my Berkshire shares will be fully distributed to certain philanthropic organizations over the ten years following the closing of my estate.) My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors – whether pension funds, institutions or individuals – who employ high-fee managers.

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

And now back to Ben Graham. I learned most of the thoughts in this investment discussion from Ben's book The Intelligent Investor, which I bought in 1949. My financial life changed with that purchase.

Before reading Ben's book, I had wandered around the investing landscape, devouring everything written on the subject. Much of what I read fascinated me: I tried my hand at charting and at using market indicia to predict stock movements. I sat in brokerage offices watching the tape roll by, and I listened to commentators. All of this was fun, but I couldn't shake the feeling that I wasn't getting anywhere.

In contrast, Ben's ideas were explained logically in elegant, easy-to-understand prose (without Greek letters or complicated formulas). For me, the key points were laid out in what later editions labeled Chapters 8 and 20. (The original 1949 edition numbered its chapters differently.) These points guide my investing decisions today.

A couple of interesting sidelights about the book: Later editions included a postscript describing an unnamed investment that was a bonanza for Ben. Ben made the purchase in 1948 when he was writing the first edition and – brace yourself – the mystery company was GEICO. If Ben had not recognized the special qualities of GEICO when it was still in its infancy, my future and Berkshire’s would have been far different.

The 1949 edition of the book also recommended a railroad stock that was then selling for \$17 and earning about \$10 per share. (One of the reasons I admired Ben was that he had the guts to use current examples, leaving himself open to sneers if he stumbled.) In part, that low valuation resulted from an accounting rule of the time that required the railroad to exclude from its reported earnings the substantial retained earnings of affiliates.

The recommended stock was Northern Pacific, and its most important affiliate was Chicago, Burlington and Quincy. These railroads are now important parts of BNSF (Burlington Northern Santa Fe), which is today fully owned by Berkshire. When I read the book, Northern Pacific had a market value of about \$40 million. Now its successor (having added a great many properties, to be sure) earns that amount every four days.

I can't remember what I paid for that first copy of The Intelligent Investor. Whatever the cost, it would underscore the truth of Ben's adage: Price is what you pay, value is what you get. Of all the investments I ever made, buying Ben's book was the best (except for my purchase of two marriage licenses).

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

Local and state financial problems are accelerating, in large part because public entities promised pensions they couldn't afford. Citizens and public officials typically under-appreciated the gigantic financial tapeworm that was born when promises were made that conflicted with a willingness to fund them. Unfortunately, pension mathematics today remain a mystery to most Americans.

Investment policies, as well, play an important role in these problems. In 1975, I wrote a memo to Katharine Graham, then chairman of The Washington Post Company, about the pitfalls of pension promises and the importance of investment policy. That memo is reproduced on pages 118 - 136.

During the next decade, you will read a lot of news – bad news – about public pension plans. I hope my memo is helpful to you in understanding the necessity for prompt remedial action where problems exist.

The Annual Meeting

The annual meeting will be held on Saturday, May 3 $^{rd}$ at the CenturyLink Center. Carrie Sova, our talented ringmaster, will be in charge, and all of our headquarters group will pitch in to help her. Our gang both does a better job than professional event planners would and – yes – saves us money.

CenturyLink's doors will open at 7 a.m., and at 7:30 we will have our third International Newspaper Tossing Challenge. Our target will be a Clayton Home porch, precisely 35 feet from the throwing line. I tossed about 500,000 papers when I was a teenager, so I think I'm pretty good. Challenge me: I'll buy a Dilly Bar for anyone who lands his or her throw closer to the doorstep than I do. The papers will be 36 to 42 pages, and you must fold them yourself (no rubber bands allowed).

At 8:30, a new Berkshire movie will be shown. An hour later, we will start the question-and-answer period, which (with a break for lunch at CenturyLink's stands) will last until 3:30. After a short recess, Charlie and I will convene the annual meeting at 3:45. If you decide to leave during the day's question periods, please do so while Charlie is talking.

The best reason to exit, of course, is to shop. We'll assist you by filling the 194,300-square-foot hall that adjoins the meeting area with products from dozens of Berkshire subsidiaries. Last year, you did your part, and most locations racked up record sales. In a nine-hour period, we sold 1,062 pairs of Justin boots (that's a pair every 32 seconds), 12,792 pounds of See's candy, 11,162 Quikut knives (21 knives per minute) and 6,344 pairs of Wells Lamont gloves, always a hot item. This year, Charlie and I will have competing ketchup bottles for sale. Naturally, the one with Charlie's picture will be heavily discounted. But, if you help, my bottle will outsell his. This is important, so don't let me down.

Brooks, our running-shoe company, will again have a special commemorative shoe to offer at the meeting. After you purchase a pair, wear them the next day at our second annual “Berkshire 5K,” an 8 a.m. race starting at the CenturyLink. Full details for participating will be included in the Visitor’s Guide that you will receive with your tickets for the meeting. Entrants will find themselves running alongside many of Berkshire’s managers, directors and associates.

GEICO will have a booth in the shopping area, staffed by a number of its top counselors from around the country. Stop by for a quote. In most cases, GEICO will be able to give you a shareholder discount (usually 8%). This special offer is permitted by 44 of the 51 jurisdictions in which we operate. (One supplemental point: The discount is not additive if you qualify for another, such as that given certain groups.) Bring the details of your existing insurance and check out whether we can save you money. For at least half of you, I believe we can.

Be sure to visit the Bookworm. It will carry about 35 books and DVDs, among them a couple of new titles. One is Max Olson's compilation of Berkshire letters going back to 1965. The book includes an index that I find particularly useful, specifying page numbers for individuals, companies and subject matter. I also recommend Forty Chances by my son, Howard. You'll enjoy it.

If you are a big spender – or aspire to become one – visit Signature Flight Support on the east side of the Omaha airport between noon and 5 p.m. on Saturday. There, we will have a fleet of NetJets aircraft sure to set your pulse racing. Come by bus; leave by private jet. Live a little.

An attachment to the proxy material that is enclosed with this report explains how you can obtain the credential you will need for admission to the meeting and other events. Airlines have sometimes jacked up prices for the Berkshire weekend. If you are coming from far away, compare the cost of flying to Kansas City versus Omaha. The drive between the two cities is about $2\frac{1}{2}$ hours, and it may be that Kansas City can save you significant money, particularly if you had planned to rent a car in Omaha. Spend the savings with us.

At Nebraska Furniture Mart, located on a 77-acre site on 72 $^{nd}$ Street between Dodge and Pacific, we will again be having “Berkshire Weekend” discount pricing. Last year in the week surrounding the meeting, the store did \$40.2 million of business, breaking its previous record by 12%. It also set a single day record of \$8.2 million on Saturday, selling nearly \$1 million of mattresses alone.

To obtain the Berkshire discount at NFM, you must make your purchases between Tuesday, April $29^{\text{th}}$ and Monday, May $5^{\text{th}}$ inclusive, and also present your meeting credential. The period's special pricing will even apply to the products of several prestigious manufacturers that normally have ironclad rules against discounting but which, in the spirit of our shareholder weekend, have made an exception for you. We appreciate their cooperation. NFM is open from 10 a.m. to 9 p.m. Monday through Saturday, and 10 a.m. to 6 p.m. on Sunday. On Saturday this year, from 5:30 p.m. to 8 p.m., NFM is having a picnic to which you are all invited.

At Borsheims, we will again have two shareholder-only events. The first will be a cocktail reception from 6 p.m. to 9 p.m. on Friday, May $2^{\text{nd}}$ . The second, the main gala, will be held on Sunday, May $4^{\text{th}}$ , from 9 a.m. to 4 p.m. On Saturday, we will be open until 6 p.m. In recent years, our three-day volume has far exceeded sales in all of December, normally a jeweler's best month.

About 1:15 p.m. on Sunday, I will begin clerking at Borsheims. Ask for my “Crazy Warren” quote on the item of your choice. As I get older, my pricing gets ever more ridiculous. Come take advantage of me.

We will have huge crowds at Borsheims throughout the weekend. For your convenience, therefore, shareholder prices will be available from Monday, April 28 $^{th}$ through Saturday, May 10 $^{th}$ . During that period, please identify yourself as a shareholder by presenting your meeting credentials or a brokerage statement that shows you are a Berkshire holder.

On Sunday, in the mall outside of Borsheims, a blindfolded Patrick Wolff, twice U.S. chess champion, will take on all comers – who will have their eyes wide open – in groups of six. Nearby, Norman Beck, a remarkable magician from Dallas, will bewilder onlookers. Additionally, we will have Bob Hamman and Sharon Osberg, two of the world’s top bridge experts, available to play bridge with our shareholders on Sunday afternoon. Don’t play them for money.

My friend, Ariel Hsing, will be in the mall as well on Sunday, taking on challengers at table tennis. Last year, she made Americans – and especially me – proud with her performance at the Olympics.

I met Ariel when she was nine and even then I was unable to score a point against her. Now, she's a freshman at Princeton and the U.S. Women's Champion. If you don't mind embarrassing yourself, test your skills against her, beginning at 1 p.m. Bill Gates and I will lead off and try to soften her up.

Gorat's and Piccolo's will again be open exclusively for Berkshire shareholders on Sunday, May $4^{\text{th}}$ . Both will be serving until 10 p.m., with Gorat's opening at 1 p.m. and Piccolo's opening at 4 p.m. These restaurants are my favorites, and I will eat at both of them on Sunday evening. Remember: To make a reservation at Gorat's, call 402-551-3733 on April $1^{\text{st}}$ (but not before) and for Piccolo's call 402-342-9038. At Piccolo's order a giant root beer float for dessert. Only sissies get the small one.

We will again have the same three financial journalists lead the question-and-answer period at the meeting, asking Charlie and me questions that shareholders have submitted to them by e-mail. The journalists and their e-mail addresses are: Carol Loomis, of Fortune, who may be e-mailed at cloomis@fortunemail.com; Becky Quick, of CNBC, at BerkshireQuestions@cnbc.com; and Andrew Ross Sorkin, of The New York Times, at arsorkin@nytimes.com.

From the questions submitted, each journalist will choose the six he or she decides are the most interesting and important. The journalists have told me your question has the best chance of being selected if you keep it concise, avoid sending it in at the last moment, make it Berkshire-related and include no more than two questions in any e-mail you send them. (In your e-mail, let the journalist know if you would like your name mentioned if your question is selected.)

We will also have a panel of three analysts who follow Berkshire. This year the insurance specialist will be Jay Gelb of Barclays. Questions that deal with our non-insurance operations will come from Jonathan Brandt of Ruane, Cunniff & Goldfarb.

And we will again have a credentialed bear on Berkshire. We would like to hear from applicants who are short Berkshire (please include evidence of your position). The three analysts will bring their own Berkshire-specific questions and alternate with the journalists and the audience in asking them.

Charlie and I believe that all shareholders should have access to new Berkshire information simultaneously and should also have adequate time to analyze it. That's why we try to issue financial information late on Fridays or early on Saturdays and why our annual meeting is held on Saturdays. We do not talk one-on-one to large institutional investors or analysts, but rather treat all shareholders the same. Our hope is that the journalists and analysts will ask questions that further educate our owners about their investment.

Neither Charlie nor I will get so much as a clue about the questions to be asked. We know the journalists and analysts will come up with some tough ones, and that's the way we like it. All told, we expect at least 54 questions, which will allow for six from each analyst and journalist and 18 from the audience. If there is some extra time, we will take more from the audience. Audience questioners will be determined by drawings that will take place at 8:15 a.m. at each of the 15 microphones located in the arena and main overflow room.

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

For good reason, I regularly extol the accomplishments of our operating managers. They are truly All-Stars, who run their businesses as if they were the only asset owned by their families. I believe the mindset of our managers to be as shareholder-oriented as can be found in the universe of large publicly-owned companies. Most have no financial need to work; the joy of hitting business “home runs” means as much to them as their paycheck.

Equally important, however, are the 24 men and women who work with me at our corporate office. This group efficiently deals with a multitude of SEC and other regulatory requirements, files a 23,000-page Federal income tax return as well as state and foreign returns, responds to countless shareholder and media inquiries, gets out the annual report, prepares for the country's largest annual meeting, coordinates the Board's activities – and the list goes on and on.

They handle all of these business tasks cheerfully and with unbelievable efficiency, making my life easy and pleasant. Their efforts go beyond activities strictly related to Berkshire: Last year they dealt with the 40 universities (selected from 200 applicants) who sent students to Omaha for a Q&A day with me. They also handle all kinds of requests that I receive, arrange my travel, and even get me hamburgers and French fries (smothered in ketchup, of course) for lunch. No CEO has it better; I truly do feel like tap dancing to work every day.

In closing, I think it's become appropriate to ignore our “no pictures” policy and let you view our remarkable home-office crew. Below is a photo from our Christmas lunch. Two people couldn't make it; otherwise you are looking at all of those who staff Berkshire's headquarters. They are truly miracle-workers.

Next year's letter will review our 50 years at Berkshire and speculate a bit about the next 50. In the meantime, come to Omaha on May $3^{\text{rd}}$ and enjoy our Woodstock for Capitalists.

February 28, 2014

Warren E. Buffett

Chairman of the Board

natural_image

Group photo of formally dressed individuals seated at a banquet table in a decorated hall (no visible text or signage)

A power lunch, Berkshire-style

伯克希尔公司业绩 vs. 标普500

年份	年度百分比变化		相对业绩 (1)-(2)
	伯克希尔每股账面价值 (1)	标普500指数（含股息） (2)
1965	23.8	10.0	13.8
1966	20.3	-11.7	32.0
1967	11.0	30.9	-19.9
1968	19.0	11.0	8.0
1969	16.2	-8.4	24.6
1970	12.0	3.9	8.1
1971	16.4	14.6	1.8
1972	21.7	18.9	2.8
1973	4.7	-14.8	19.5
1974	5.5	-26.4	31.9
1975	21.9	37.2	-15.3
1976	59.3	23.6	35.7
1977	31.9	-7.4	39.3
1978	24.0	6.4	17.6
1979	35.7	18.2	17.5
1980	19.3	32.3	-13.0
1981	31.4	-5.0	36.4
1982	40.0	21.4	18.6
1983	32.3	22.4	9.9
1984	13.6	6.1	7.5
1985	48.2	31.6	16.6
1986	26.1	18.6	7.5
1987	19.5	5.1	14.4
1988	20.1	16.6	3.5
1989	44.4	31.7	12.7
1990	7.4	-3.1	10.5
1991	39.6	30.5	9.1
1992	20.3	7.6	12.7
1993	14.3	10.1	4.2
1994	13.9	1.3	12.6
1995	43.1	37.6	5.5
1996	31.8	23.0	8.8
1997	34.1	33.4	0.7
1998	48.3	28.6	19.7
1999	0.5	21.0	-20.5
2000	6.5	-9.1	15.6
2001	-6.2	-11.9	5.7
2002	10.0	-22.1	32.1
2003	21.0	28.7	-7.7
2004	10.5	10.9	-0.4
2005	6.4	4.9	1.5
2006	18.4	15.8	2.6
2007	11.0	5.5	5.5
2008	-9.6	-37.0	27.4
2009	19.8	26.5	-6.7
2010	13.0	15.1	-2.1
2011	4.6	2.1	2.5
2012	14.4	16.0	-1.6
2013	18.2	32.4	-14.2
1965-2013年复合年增长	19.7%	9.8%	9.9
1964-2013年整体增长	693,518%	9,841%

注释：数据按自然年计算，但以下年份例外：1965和1966年，年末为9月30日；1967年，15个月，年末为12月31日。从1979年起，会计准则要求保险公司按市价而非成本与市价孰低法（此前的规定）计量所持权益证券。本表中，伯克希尔1978年以前的业绩已按新规则重述。在其他方面，业绩均按最初报告的数字计算。标普500指数数据为税前，而伯克希尔数据为税后。如果像伯克希尔这样的公司仅持有标普500指数并计提相应税费，则在指数显示正收益的年份，其业绩将落后于标普500；在指数显示负收益的年份，其业绩将超过标普500。多年下来，税费成本会导致累计落后幅度相当大。

伯克希尔·哈撒韦公司

致伯克希尔·哈撒韦公司股东：

2013年，伯克希尔的净资产增加了342亿美元。这一增长是在扣除18亿美元费用之后得出的——这些费用在经济上毫无意义，我稍后会解释——它们源自我们收购马蒙和伊斯卡的少数股权。扣除这些费用后，我们的A类股和B类股的每股账面价值均增长了18.2%。过去49年（即现任管理层接手以来），账面价值从19美元增长至134,973美元，年化复合增长率为19.7%。*

对面一页，我们列出了长期采用的业绩衡量标准：伯克希尔每股账面价值的年度变化，与标普500指数的市场表现对比。当然，真正重要的是每股内在价值。但这是一个主观数字，账面价值作为粗略的追踪指标是有用的。（关于内在价值的详细讨论，见第103-108页的《所有者相关业务原则》。这些原则已纳入我们的报告30年，我们敦促新股东和潜在股东阅读。）

正如我长期以来告诉你们的，伯克希尔的内在价值远超其账面价值。而且，这一差距近年来显著扩大。这就是为什么2012年我们决定授权以120%的账面价值回购股份是合理的。在此水平上回购将使持续股东受益，因为每股内在价值远超该比例账面价值。不过，2013年我们并未回购股份，因为股价并未跌至120%的水平。如果触及，我们会积极行动。

查理·芒格，伯克希尔副董事长兼我的合伙人，和我相信，在市场下跌或小幅上涨的年份，伯克希尔的账面价值和内在价值将跑赢标普500。但在市场强劲的年份，我们预计会落后——正如2013年那样。49年中我们有10年表现不佳，其中除一次外，其余落后均发生在标普500涨幅超过15%的年份。

在2007年末至2013年末的整个股市周期中，我们跑赢了标普500。在未来的完整周期中，我们预计会再次做到这一点。如果我们做不到，那我们就没挣到我们的报酬。毕竟，你总是可以持有指数基金，并获得标普500的收益。

伯克希尔年度回顾

在经营方面，去年几乎所有事情对我们来说都进展顺利——某些事甚至非常顺利。让我列举一下：

• 我们完成了两笔大型收购，花费近180亿美元收购了NV能源的全部股权以及HJ亨氏的多数股权。这两家公司与我们非常契合，并且一个世纪后仍将繁荣发展。
  随着收购亨氏，我们还创建了一个合伙模板，伯克希尔未来进行大规模收购时可能会用到。我们与3G Capital（3G资本）的投资者联手，这家公司由我的朋友Jorge Paulo Lemann领导。他那些才华横溢的同事——亨氏新任CEO Bernardo Hees和董事长Alex Behring——负责运营。

伯克希尔是融资合伙人。作为这一角色，我们购买了80亿美元的亨氏优先股，其票面利率为9%，但其他特性将使得优先股的年化回报率提升至12%左右。伯克希尔和3G资本各出资42.5亿美元，购买了亨氏普通股的一半。

尽管收购亨氏与“私募股权”交易有些相似，但存在一个关键区别：伯克希尔从未打算出售公司的一股股份。相反，我们希望买更多，而这有可能发生：某些3G资本投资者未来可能会出售部分或全部股份，届时我们可能会增加持股。伯克希尔和3G资本也可能在某个时点决定，如果我们用一部分优先股交换普通股（按照当时合适的股权估值），将对双方都有利。

我们的合伙企业在6月取得了亨氏的控制权，到目前为止的运营结果令人鼓舞。然而，今年伯克希尔的报告中仅反映了亨氏的一小部分收益：收购及后续业务重组产生的一次性费用总计13亿美元。2014年的收益将会可观。

随着亨氏的加入，伯克希尔现在拥有8.5家如果作为独立公司能入选《财富》500强的企业。只剩下491.5家了。

NV Energy由我们的公用事业子公司MidAmerican Energy（中美能源）以56亿美元收购，为内华达州约88%的人口提供电力。这次收购与我们现有的电力公用事业业务完美契合，并为可再生能源领域的大规模投资提供了许多机会。NV Energy不会是MidAmerican的最后一次重大收购。

• MidAmerican是我们“五巨头”之一——这是由大型非保险业务组成的集合，2013年总计实现了创纪录的108亿美元税前利润，比2012年增加了7.58亿美元。这个神圣集团中的其他公司是BNSF、Iscar（伊斯卡）、Lubrizol（路博润）和Marmon（玛蒙）。

在这五家公司中，只有MidAmerican在九年前为伯克希尔所有，当时其税前利润为3.93亿美元。随后，我们以全现金收购了另外三家。在收购第五家BNSF时，我们支付了约70%的现金，剩余部分发行了股份，使流通股增加了6.1%。换句话说，这九年间五家公司为伯克希尔带来的104亿美元年度收益增长，仅伴随着轻微的稀释。这符合我们的目标：不仅仅是增长，而是要提升每股业绩。

如果美国经济在2014年持续改善，我们可以预期五巨头的盈利也将增长——或许税前增加10亿美元左右。

• 我们的数十家小型非保险业务去年实现了47亿美元的税前利润，高于2012年的39亿美元。在这里，我们也预计2014年将进一步增长。

• 伯克希尔庞大的保险业务在2013年再次实现了承销利润——这已经是连续第11年——并增加了浮存金。在这11年间，我们的浮存金——不属于我们但我们可以为伯克希尔的利益进行投资的资金——从410亿美元增长到770亿美元。与此同时，我们的承销利润累计达到220亿美元税前，其中包括2013年实现的30亿美元。而这一切都始于1967年我们以860万美元收购National Indemnity（国民赔偿公司）。
  我们现在拥有了一系列卓越的保险业务。其中最知名的是GEICO（政府雇员保险公司），这家车险公司在1995年底被伯克希尔完全收购（此前多年我们已持有部分股权）。1996年，GEICO在美国车险公司中排名第七。如今，在近期超越Allstate（好事达）后，GEICO已升至第二。这一惊人增长的缘由很简单：低价与可靠服务。你可以拨打1-800-847-7536或访问Geico.com，看看自己是否也能降低保险成本——打个电话帮自己省点钱，再用省下的钱买些伯克希尔的其他产品。

– 在查理和我搜寻大象时，我们的许多子公司也在定期进行补强型收购（bolt-on acquisitions）。去年，我们签订了25项此类收购协议，预计总耗资31亿美元。这些交易的规模从190万美元到11亿美元不等。

查理和我鼓励这些交易。它们将资金投入到与我们现有业务契合、且将由我们专家管理团队运营的领域。结果是：我们无需多费精力，你们却得到更多盈利。未来数年，还会有许多此类补强型收购。累积起来，它们将意义重大。

– 去年，我们向最稳妥的补强型收购投入了35亿美元：增持我们已控股的两家优秀企业的股份。其中之一是Marmon，我们的购买使其达到了100%持股——这是我们在2008年就约定好的。另一家是Iscar（伊斯卡），Wertheimer家族选择行使他们持有的看跌期权（put option），将他们在2006年我们取得控制权时保留的20%股份卖给了我们。

这些收购使我们的当前盈利能力增加了约3亿美元（税前），并为我们带来了8亿美元现金。与此同时，我在去年的信中提到过的同一项荒唐会计规则，要求我们将这些收购以比实际支付少18亿美元的账面价值入账，这一过程减少了伯克希尔的账面价值。（这笔费用计入"超面值资本"——你自己琢磨吧。）你要明白，这种古怪的会计处理瞬间使伯克希尔的内在价值超出账面价值的差额增加了同样的18亿美元。

– 2013年，我们的子公司在工厂和设备上花费了创纪录的110亿美元，大约是折旧费用的两倍。其中约89%花在了美国。尽管我们也在海外投资，但机遇的富矿仍在美国。

– 在大多数股票经理人发现自己无法跑赢标普500指数的这一年，Todd Combs和Ted Weschler都轻松做到了。他们每人管理的投资组合规模都超过70亿美元。这是他们应得的。

我必须再次承认，他们的投资业绩超过了我的。（查理说我应该加上"一大截"。）如果这种丢人的比较继续下去，我就别无选择，只能不再谈论他们了。

Todd和Ted还在与投资组合无关的几件事上为你们创造了显著价值。他们的贡献才刚刚开始：这两人血管里都流着伯克希尔的血液。

– 伯克希尔年底的员工总数（包括亨氏）创下纪录，达到330,745人，比去年增加42,283人。我必须承认，这一增长包括我们奥马哈总部办公室的一名员工。（别慌：总部团队仍然舒适地挤在一层楼里。）
- 伯克希尔去年增加了对“四大投资”的持股比例——美国运通、可口可乐、IBM和富国银行。我们增持了富国银行（持股比例从2012年底的8.7%升至9.2%）和IBM（从6.0%升至6.3%）。同时，可口可乐和美国运通的股份回购也提高了我们的持股比例。在可口可乐，我们的股权从8.9%增至9.1%；在美国运通，从13.7%增至14.2%。如果你觉得十分之一百分点无关紧要，不妨算一笔账：对这四家公司而言，我们持股比例每增加十分之一百分点，伯克希尔享有的年度收益就会增加5000万美元。

这四家公司拥有出色的业务，并由既才华横溢又以股东为导向的管理者运营。在伯克希尔，我们更倾向于持有一家优秀公司的非控股但重要股份，而不是全资拥有一家平庸的企业；与其拥有一整颗人造钻石，不如拥有希望之钻的部分权益。

按我们年底的持股计算，2013年“四大投资”归属于伯克希尔的收益达44亿美元。然而，在向你们报告的收益中，我们只包含了收到的股息——去年约为14亿美元。但别搞错了：我们未报告的30亿美元收益，与伯克希尔记录在账的部分同样有价值。

这四家公司留存的收益通常用于回购自身股票——此举能提升我们未来盈利的份额——以及用于资助通常有利可图的商业机会。所有这些都让我们预期，这四家被投公司的每股收益将随时间大幅增长。如果真如此，伯克希尔获得的股息将增加，更重要的是，我们的未实现资本利得也会增加。（截至年底，这四家公司的未实现利得已达390亿美元。）

我们在资本配置上的灵活性——愿意大规模被动投资于非控股企业——让我们比那些仅限于全权收购的公司拥有显著优势。伍迪·艾伦用一句话概括了这种理念：“双性恋的好处是周六晚上约会的机会翻倍。”同样，我们对经营企业或被动投资的双重胃口，也让我们找到明智使用源源不断现金洪流的机会翻倍。

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2009年底，在大衰退的阴霾中，我们同意收购BNSF，这是伯克希尔历史上规模最大的一笔收购。当时，我把这笔交易称为“对美国经济未来下全押注”。

这种承诺对我们来说并不新鲜：自1965年巴菲特合伙有限公司控股伯克希尔以来，我们一直在做类似的押注。而且理由充分。查理和我一直认为，押注于美国持续繁荣近乎是十拿九稳的事。

事实上，在过去237年里，有谁因做空美国而受益？如果把我国现在的状况与1776年相比，你不得不惊叹得揉揉眼睛。我们市场经济中蕴含的活力将继续发挥它的魔法。美国最好的日子还在后头。

有了这股顺风相助，查理和我希望从以下五个方面提高伯克希尔的每股内在价值：（1）持续提高我们众多子公司的基础盈利能力；（2）通过补强收购进一步增加它们的收益；（3）从被投公司的增长中受益；（4）当伯克希尔股票以显著低于内在价值的价格出售时进行回购；（5）偶尔进行大规模收购。我们还将努力实现你们的回报最大化——极少发行（即便有的话）伯克希尔股票。
这些基石建立在坚如磐石的根基之上。一个世纪后，BNSF（北伯林顿铁路公司）和MidAmerican Energy（中美能源）仍将在我们的经济中扮演重要角色。保险也将同时成为企业和个人不可或缺的保障——而没有任何一家公司能比伯克希尔为这个行业带来更雄厚的人力和财力资源。

此外，我们将始终保持至高无上的财务实力，持有至少200亿美元的现金等价物，并且绝不产生任何重大金额的短期债务。在审视这些及其他优势时，查理（Charlie）和我对公司前景充满信心。我们为被委托管理公司而感到荣幸。

内在商业价值

尽管查理和我经常谈论内在商业价值，但我们无法精确告诉你伯克希尔股票的这个数字是多少（事实上，任何其他股票也不行）。然而，在2010年的年报中，我们列出了三个要素——其中一个是定性要素——我们认为这些是合理估算伯克希尔内在价值的关键。那次讨论在109-110页上全文重印。

以下是两个定量因素的更新：2013年，我们的每股投资额增长了13.6%，达到129,253美元；来自保险和投资以外的业务的税前利润每股增长了12.8%，达到9,116美元。

自1970年以来，我们的每股投资额以每年19.3%的复合增长率增长，而我们的盈利数字则以20.6%的速度增长。伯克希尔股票价格在这43年期间的增长速度与我们的两个价值指标非常相似，这并非巧合。查理和我喜欢看到这两个方面都增长，但我们将最重点关注提升经营利润。

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现在，让我们审视我们运营的四个主要部门。每个部门在资产负债表和收入特征上都与其他部门截然不同。因此，我们将它们作为四个独立的业务来呈现，这也是查理和我看待它们的方式（尽管将它们放在同一屋檐下有着重要且持久的优势）。我们的目标是提供我们但愿在角色互换时——你们是报告经理，而我们是缺席的股东——你们希望拥有的信息。（但别想多了！）

保险

“我们对保险公司的投资，反映了我们在努力实现更多元化的盈利基础方面迈出的第一步。”

—— 1967年年报

首先来看看保险，这是伯克希尔的核心业务，也是自1967年那份报告发布以来一直推动我们扩张的引擎。

财产-意外险（"P/C"）公司先收取保费，后支付索赔。在极端情况下，例如某些工人赔偿事故引发的索赔，支付可能延续数十年。这种"先收后付"的模式让财产-意外险公司持有大量资金——我们称之为"浮存金"——这些资金最终会流向他人。与此同时，保险公司可以利用这些浮存金进行投资以获取收益。尽管个别保单和索赔来来去去，保险公司持有的浮存金金额相对于保费规模通常保持相当稳定。因此，随着我们业务增长，浮存金也随之增长。而我们增长得有多快，如下表所示：

浮存金的进一步增长将难以实现。有利的一面是，GEICO（政府雇员保险公司）的浮存金几乎肯定会增长。然而，在国家赔偿公司的再保险业务中，我们有一些残存合同，其浮存金正逐渐下降。如果未来某个时期我们的浮存金真的出现下降，那也只会非常缓慢——在任何一年里，下降幅度最多不超过3%。我们的保险合同性质决定了我们永远不会面临与现金资源相比过大的即时支付要求。（在这方面，财产意外险与某些形式的寿险存在重要区别。）

如果我们的保费收入超过费用总额和最终损失，我们就实现了承保利润，这为我们浮存金产生的投资收益锦上添花。当这样的利润实现时，我们享受的是免费资金的使用权——而且，更妙的是，我们持有这些资金还能获得报酬。

不幸的是，所有保险公司都渴望实现这种美好结果，由此引发了激烈竞争，在大多数年份里，这种竞争激烈到足以让整个财产意外险行业承受显著的承保亏损。实际上，这种亏损就是该行业为持有浮存金所付出的代价。例如，州立农业保险公司——全美最大的保险公司，也是一家管理有方的公司——在截至2012年的12年中有9年出现了承保亏损（这是我写此信时能查到的最新财务数据）。竞争态势几乎确保保险行业——尽管所有公司都享有浮存金收入——将继续保持其相对于其他行业回报率偏低的惨淡纪录。

如本报告第一部分所述，我们已连续11年实现承保盈利，期间税前收益总计220亿美元。展望未来，我相信我们在大多数年份将继续保持承保盈利。做到这一点是我们所有保险业务经理的日常关注焦点，他们深知，浮存金固然宝贵，但糟糕的承保业绩足以将其吞噬。

那么，我们的浮存金如何影响内在价值？计算伯克希尔的账面价值时，浮存金全额作为负债扣除，就像我们明天就必须支付且无法补充一样。但将浮存金严格视为负债是错误的；它更应该被看作一个循环基金。我们每天支付旧索赔——2013年向超过500万索赔人支付了约170亿美元——这会减少浮存金。同样确定的是，我们每天承保新业务，从而产生新索赔，增加浮存金。如果我们的循环浮存金既无成本又长期持续——我相信它会如此——那么这一负债的真实价值将远低于会计负债。

与这种被高估的负债相对应的是，我们的保险公司账面上有155亿美元的“商誉”作为资产计入账面价值。在很大程度上，这笔商誉代表我们为保险业务产生浮存金的能力所支付的价格。然而，商誉的成本与其真实价值并无关联。例如，如果一家保险业务持续遭受大规模承保亏损，那么账面上任何商誉资产都应被视为一文不值，无论其原始成本是多少。

幸运的是，伯克希尔并非如此。查理和我相信，我们保险商誉的真实经济价值——即我们愿意为购买一个拥有与我们类似质量的浮存金的保险业务所支付的价格——远远高于其历史账面价值。我们的浮存金价值是一个原因——一个极其重要的原因——让我们相信伯克希尔的业务内在价值大幅超过其账面价值。

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伯克希尔之所以拥有如此诱人的保险经济学，只是因为我们在一些拥有强大、难以复制的业务模式的纪律严明的业务中，拥有几位出色的管理者。让我向你介绍一下主要的保险单元。
按浮存金规模排序，首先是由阿吉特·贾因（Ajit Jain）管理的伯克希尔·哈撒韦再保险集团（Berkshire Hathaway Reinsurance Group）。阿吉特承保那些其他公司既没意愿也没资本承担的风险。他的业务将承保能力、速度、决断力，以及最重要的——头脑——以保险业独一无二的方式融为一体。但他从未让伯克希尔暴露于与自身资源不相称的风险之下。事实上，我们在规避风险方面比大多数大型保险公司保守得多。例如，假如保险业因某场超级巨灾承受2,500亿美元的损失——这大约是历史上最严重损失的三倍——伯克希尔整体上仍可能因其多元化的盈利来源录得可观利润。而且我们还会现金充裕，如果灾难导致市场陷入恐慌，我们就能寻找大机会。与此同时，所有其他大型保险公司和再保险公司都会深陷亏损，有些甚至面临破产。

从1985年白手起家，阿吉特创办了一家拥有370亿美元浮存金、且累计承销利润丰厚的保险业务，这一成就其他任何保险CEO都望尘莫及。阿吉特的大脑是一座创意工厂，总在不断寻找能在现有业务组合中增添的新险种。

去年六月诞生了一项新尝试：他成立了伯克希尔·哈撒韦专业保险公司（Berkshire Hathaway Specialty Insurance，“BHSI”）。这一举措让我们踏入了商业保险领域，美国各大保险经纪公司和公司风险管理人立刻接纳了我们。这些专业人士明白，没有哪家保险公司能与伯克希尔的财务实力匹敌，这保证了多年后产生的合理索赔都能得到及时、全额赔付。

BHSI由经验丰富的承保人彼得·伊斯伍德（Peter Eastwood）领导，他在保险界广受尊敬。彼得组建了一支出色的团队，目前已经为众多《财富》世界500强企业以及一些较小的公司承揽了大量业务。BHSI将成为伯克希尔的一笔重要资产，几年内其业务量就能达到数十亿美元。如果你在年会上见到彼得，请代我向他致以伯克希尔的问候。

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我们还有另一家再保险巨头：通用再保险公司（General Re），由泰德·蒙特罗斯（Tad Montross）管理。

从根本上说，一家稳健的保险公司必须恪守四条准则：它必须（1）了解所有可能导致保单产生损失的敞口；（2）保守地评估任何敞口实际造成损失的可能性，以及如果真的发生损失可能的成本；（3）设定一个保费水平，使得在覆盖预期损失成本和运营费用后，平均而言能产生利润；（4）如果无法获得合理的保费，愿意放弃业务。

许多保险公司通过了前三项测试，却在第四项上栽了跟头。它们就是无法拒绝竞争对手们争先恐后抢着做的业务。那句老话——“别人都在做，所以我们也得做”——在任何行业都会带来麻烦，但在保险业尤甚。

泰德恪守了全部四条保险戒律，其业绩证明了这一点。在他领导下，通用再保险公司庞大的浮存金成本远低于零，我们预计平均而言这种情况将持续下去。我们对通用再保险的国际人寿再保险业务尤其看好，自1998年收购该公司以来，该业务一直稳定且盈利地增长。

回想起来，我们收购通用再保险后不久，该公司就遇到了诸多问题，以至于评论人士——包括我在内，一度——认为我犯了一个大错。但那段日子早已过去。如今通用再保险已是一颗明珠。

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最后，来说说GEICO——63年前，我正是在这家保险公司开始摸爬滚打的。GEICO由Tony Nicely管理，他18岁加入公司，到2013年已服务满52年。Tony从1993年起担任CEO，自那以后，公司就像插上了翅膀。

1951年1月我第一次接触GEICO时，就被它相比行业巨头所拥有的巨大成本优势震撼了。这种运营效率至今仍在，是一项至关重要的资产。没人喜欢买汽车保险，但几乎所有人都喜欢开车。对大多数家庭来说，保险是一项重大开支。省钱对他们很重要——而只有低成本运营才能做到这一点。

GEICO的成本优势，正是让它年复一年抢占市场份额的利器。低成本构筑了一条护城河——一条持久的护城河，竞争对手无法逾越。与此同时，我们的小壁虎继续告诉美国人，GEICO能帮他们省下多少钱。随着我们最近进一步降低运营成本，它的故事更有说服力了。

1995年，我们买下了GEICO剩余的一半股权，支付了比所获有形净资产多出14亿美元的溢价。这就是“商誉”，它将永远在我们的账面上保持不变。不过，随着GEICO业务增长，它的真实经济商誉也在增长。我相信这个数字已接近200亿美元。

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除了三大保险业务，我们还拥有一批较小的公司，它们大多在保险行业的细分领域里经营。整体而言，这些公司业务在不断增长，并且持续带来承销利润。此外，如下表所示，它们还为我们提供了大量浮存金。查理和我珍视这些公司及其管理者。

	承销利润		年末浮存金
	（单位：百万美元）
保险业务	2013年	2012年	2013年	2012年
伯克希尔再保险	$1,294	$304	$37,231	$34,821
通用再保险	283	355	20,013	20,128
GEICO	1,127	680	12,566	11,578
其他初级保险	385	286	7,430	6,598
	$3,089	$1,625	$77,240	$73,125

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简单来说，保险就是出售承诺。“客户”现在付钱；保险公司承诺，如果未来发生某些事件，就会支付赔款。

有时，这个承诺几十年都不会被兑现（想想20多岁的人买的终身寿险）。因此，保险公司偿付的能力和意愿——即使到了支付时经济一片混乱——至关重要。

伯克希尔的承诺无可匹敌，近年来全球最大、最精明的保险公司的行动证明了这一点——其中一些希望甩掉巨额且期限超长的负债，尤其是涉及石棉索赔的负债。也就是说，这些保险公司希望将它们的负债“分保”给再保险公司。然而，如果选错了再保险公司——一家后来证明资金紧张或行为不端的公司——原始保险公司就可能面临负债重回自己手里的风险。

几乎无一例外，寻求帮助的大型保险公司都找上了伯克希尔。事实上，在有史以来最大的一笔此类交易中，劳合社在2007年将1993年以前签发的保单产生的数千起已知索赔，以及同一时期必然会在未来出现的数量未知的巨额索赔，全部移交给了我们。（没错，几十年后我们还会收到与1993年以前发生的事件相关的索赔。）
伯克希尔因劳合社交易所产生的最终赔付额，今天还无法知晓。但可以肯定的是，伯克希尔将承担所有有效索赔，最高不超过我们保单的150亿美元上限。没有其他保险公司的承诺能让劳合社像与伯克希尔签约那样安心。当时负责处理劳合社索赔的机构CEO说得最好：“‘名号’（劳合社最初的保险人）想要晚上睡个安稳觉，我们认为刚给他们买到了全世界最好的床垫。”

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

伯克希尔卓越的经理人、首屈一指的财务实力以及拥有宽阔护城河的多元化业务模式，共同构成了保险界独一无二的组合。这种组合是伯克希尔股东的巨大资产，并且只会随着时间的推移而越来越有价值。

受监管的资本密集型业务

“尽管公用事业行业存在诸多监管限制，但我们仍有可能在该领域做出更多承诺。如果这样做，涉及的金额可能很大。”

——1999年年报

我们有两项主要业务——BNSF（北伯林顿铁路公司）和MidAmerican Energy（中美能源公司）——它们具有与其它业务不同的重要特征。因此，我们在本信中为它们单独设立一个板块，并在我们的GAAP资产负债表和利润表中将其合并财务数据单独列出。

这两家公司的关键特征是对寿命极长的受监管资产进行巨额投资，这些投资部分由大量长期债务提供资金，且这些债务不由伯克希尔担保。实际上并不需要我们的信用，因为每家公司即使在极其糟糕的经济条件下，其盈利能力也远超利息支出要求。例如去年，BNSF的利息覆盖倍数为9:1（我们对覆盖倍数的定义是税前利润/利息，而非EBITDA/利息——后者是常用指标，但我们认为存在严重缺陷）。

与此同时，在中美能源，两个因素确保了该公司在任何情况下都能偿还债务的能力。第一个是所有公用事业公司的共同点：抗衰退的盈利能力，这是因为这些公司独家提供一项基本服务。第二个是其他公用事业公司很少能享受到的：盈利来源的高度多元化，这使得我们不会被任何一个监管机构严重伤害。如今，随着NV Energy（内华达能源公司）的收购，中美能源的盈利基础进一步扩大。这一优势，再加上伯克希尔的控股，使中美能源及其公用事业子公司能够显著降低债务成本。这一优势既惠及我们，也惠及我们的客户。

每一天，我们的两家子公司都在以重要方式推动美国经济：

• BNSF运输了美国所有城际货运量（以吨-英里计算）的约15%，无论这些货物是通过卡车、铁路、水运、空运还是管道运输。事实上，我们运输的货物吨-英里比任何其他公司都多，这一事实使BNSF成为美国经济循环系统中最重要的动脉。它在2013年巩固了第一名的地位。

BNSF与所有铁路公司一样，其货物运输方式也极其节能环保，每加仑柴油可运送一吨货物约500英里。承担同样工作的卡车则需要消耗大约四倍的燃料。

• 中美能源的公用事业为11个州的受监管零售客户提供服务。没有哪家公用事业公司覆盖范围更广。此外，我们在可再生能源领域处于领先地位：从九年前白手起家开始，中美能源目前已占美国风力发电装机容量的7%，并且还有更多在建。我们在太阳能领域的份额——其中大部分仍在建设中——甚至更大。
  中美能源（MidAmerican）之所以能进行这些投资，是因为它保留了全部盈利。这里有一个鲜为人知的事实：去年中美能源留存的盈利金额——远高于——美国任何其他电力公用事业公司。我们和我们的监管机构都认为这是一项重要优势——几乎可以肯定，未来五年、十年乃至二十年它都会存在。

当我们目前的项目完工后，中美能源的可再生能源组合将耗资150亿美元。我们乐于做出这样的承诺，只要它们能提供合理的回报。而在这一点上，我们对未来的监管寄予厚望。

我们的信心既来自过往的经验，也来自一个认知：社会永远需要交通和能源领域的大规模投资。政府以确保持续资金流向关键项目的方式来对待资本提供者，这是符合其自身利益的。同时，我们以赢得监管机构及其所代表民众认可的方式运营业务，也符合我们自身的利益。

去年一项涵盖52家控股公司及其101家运营电力公用事业公司的客户满意度调查，为我们对这一职责的投入提供了切实证据。我们的中美能源集团排名第一，95.3%的受访者给出“非常满意”的评价，没有一个客户给我们打“不满意”分。顺便提一句，这项调查中的最低分是可怜的34.5%。

我们旗下三家公司在被中美能源收购之前，这项指标的排名都远低于此。我们取得的卓越客户满意度在扩张时极为重要：我们希望进入的州的监管机构看到我们时都很高兴，因为他们知道我们是负责任的运营者。

我们的铁路公司也在积极预测客户需求。无论你听说过多少关于美国基础设施破败的说法，那都与BNSF或整个铁路行业毫不相干。美国的铁路系统从未如此良好过，这是行业巨额投资的结果。不过，我们并未懈怠：BNSF在2013年为铁路投入了40亿美元，是其折旧费用的两倍，也是任何铁路公司单一年份的纪录。而且，我们在2014年还将投入更多。就像诺亚（Noah）早早预见到需要可靠的交通工具一样，我们知道提前规划是我们的职责。

领导我们这两家资本密集型公司的是中美能源的Greg Abel，以及BNSF的Matt Rose和Carl Ice团队。这三位都是杰出的管理者，我感谢他们，你们也应该感谢他们。以下是他们业务的关键数据：

中美能源（持股89.8%）	盈利（单位：百万美元）
	2013	2012	2011
英国公用事业	362	429	469
爱荷华州公用事业	230	236	279
西部公用事业	982	737	771
管道业务	385	383	388
家居服务	139	82	39
其他（净额）	4	91	36
扣除公司利息和税项前的经营利润	2,102	1,958	1,982
利息	296	314	336
所得税	170	172	315
净利润	1,636	1,472	1,331
归属伯克希尔的盈利	1,470	1,323	1,204
北伯林顿铁路（BNSF）	盈利（单位：百万美元）
	2013	2012	2011
营业收入	22,014	20,835	19,548
营业费用	15,357	14,835	14,247
息税前经营利润	6,657	6,000	5,301
利息（净额）	729	623	560
所得税	2,135	2,005	1,769
净利润	3,793	3,372	2,972

Ron Peltier 继续壮大中美能源旗下的房地产经纪子公司HomeServices。去年，他的公司完成了四笔收购，其中最大的一笔是费城的 Fox & Roach，这家公司是全美单一市场最大的房地产中介。

HomeServices 现在拥有22,114名经纪人（按地区列示于第112页），较2012年增长38%。HomeServices 还持有 Prudential 和 Real Living 特许经营业务67%的股权，这两家公司正在将其加盟商重新品牌为 Berkshire Hathaway HomeServices。如果各位还没看到，很快许多人都将在“待售”标志上看到我们的名字。

制造、服务与零售业务

“看到那家店了吗，”沃伦指着内布拉斯加家具城说，“那可是门好生意。”

“那你为什么不买下来？”我说。

“那是私人公司，”沃伦说。

“哦，”我说。

“不过我还是有可能买的，”沃伦说，“总有一天。”

——亚当·斯密《超级金钱》（1972）

我们在伯克希尔的这一板块覆盖了方方面面。不过，我们还是先来看看整个集团的简要资产负债表和盈利表。

资产负债表（2013年12月31日，单位：百万美元）

资产		负债与权益
现金及现金等价物	6,625	应付票据	1,615
应收票据及账款	7,749	其他流动负债	8,965
存货	9,945	流动负债合计	10,580
其他流动资产	716
流动资产合计	25,035
		递延税款	5,184
商誉及其他无形资产	25,617	长期债务及其他负债	4,405
固定资产	19,389	非控制性权益	456
其他资产	4,274	伯克希尔权益	53,690
	74,315		74,315

盈利表（单位：百万美元）
2013 2012 2011
收入 $95,291 $83,255 $72,406
经营费用 88,414 76,978 67,239
利息费用 135 146 130
税前利润 6,742 6,131 5,037
所得税及非控制权益 2,512 2,432 1,998
净利润 $4,230 $3,699 $3,039

我们的收入和费用数据符合美国通用会计准则（GAAP），详见第29页。相比之下，上表中的经营费用是非GAAP数据，剔除了一些购买会计项目（主要是某些无形资产的摊销）。我们之所以以这种方式呈现数据，是因为Charlie和我认为，调整后的数字比GAAP数据更能准确反映表格中这些企业汇总后的真实经济费用和利润。

我不会逐一解释所有调整——有些调整既微小又晦涩——但严肃的投资者应该理解无形资产的差异本质：有些确实随时间损耗，而另一些则丝毫不会贬值。例如，软件摊销费用是非常真实的支出。然而，对其他无形资产（如客户关系摊销）的摊销，则源于购买会计规则，显然并非真实成本。GAAP会计对这两种摊销不作区分。也就是说，在计算利润时，两者都记为费用——尽管从投资者角度看，它们截然不同。

在第29页的GAAP合规数据中，本节所包含公司产生的6.48亿美元摊销费用被扣减为费用。我们认为其中大约20%是“真实的”，其余则不是。由于我们进行了大量收购，这一差异变得显著。随着我们收购更多公司，这一差异几乎肯定会进一步扩大。

当然，最终当相关的资产完全摊销后，这些非真实费用就会消失。但这通常需要15年——而且，唉——要等到我的继任者，其报告的利润才能从这些费用的到期中获益。

然而，我们报告的每一分折旧费用都是真实成本。几乎所有其他公司也是如此。当华尔街人士兜售EBITDA作为估值指南时，捂紧你的钱包。

当然，我们的公开利润报告将继续符合GAAP。但为了贴近现实，请记住要将我们报告的大部分摊销费用加回来。

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

本节中的企业群体销售的产品从棒棒糖到喷气式飞机不等。其中一些企业，以无杠杆净有形资产的利润衡量，拥有极好的经济效益，税后利润从25%到远远超过100%不等。其他一些企业则产生12%至20%的良好回报。然而，少数企业回报率很低，这是我在资本配置工作中犯下的若干严重错误的结果。我没有受误导：我只是对该公司或其所在行业的经济动态评估错了。

幸运的是，我的失误通常涉及相对较小的收购。我们的大额收购大多取得了良好效果，在少数情况下甚至远超预期。不过，我在购买企业或股票方面还没有犯下最后一个错误。并非所有事情都按计划进行。

作为一个整体，这个群体中的企业是一项出色的生意。它们在2013年平均使用了250亿美元的净有形资产，并且持有大量超额现金、杠杆率很低，资本税后收益率为16.7%。
当然，一门生意即便经济特质极好，如果买入价格过高，也会变成一笔糟糕的投资。我们为大多数企业支付了远高于有形资产净值的溢价，这笔成本体现在我们账面上庞大的商誉数字上。不过总体而言，我们从投入这一板块的资本中获得了可观的回报。此外，这些企业的内在价值总和也大幅超出其账面价值。即便如此，保险和受监管行业板块中内在价值与账面价值的差距还要大得多。真正的超级赢家就在那里。

---

这个板块内我们旗下公司太多，无法逐一评说。而且，现有和潜在的竞争对手都在阅读这份报告。在我们少数几个业务中，如果让他们知道我们的数据，我们可能会处于不利地位。因此，对于某些规模尚不足以影响伯克希尔整体评价的业务，我们只披露必要信息。不过，关于我们许多业务的细节，你可以在第80-84页找到不少。

但我还是忍不住要向你汇报一下内布拉斯加家具城（Nebraska Furniture Mart）进军德州的最新进展。我提及此事并非因为它对伯克希尔的经济重要性——开一家新店还不足以撼动伯克希尔2250亿美元的股东权益基础。但我和出色的布卢姆金家族已经共事了30年，我对他们在达拉斯都会区北部殖民地市（The Colony）建造的那家非凡门店——真正"德州规模"的——感到兴奋不已。

明年门店完工后，NFM将在一个屋顶下、占地433英亩的地块上，拥有180万平方英尺的零售及配套仓储空间。你可以通过 www.nfm.com/texas 查看项目的进度。NFM已经拥有全美销量最高的两家家居用品店（分别位于内布拉斯加州的奥马哈和堪萨斯州的堪萨斯城），每家年销售额约4.5亿美元。我预测德州这家店会把这些记录远远甩在身后。如果你住在达拉斯附近，欢迎来看看。

我回想起1983年8月30日——我的生日——我去见B夫人（罗斯·布卢姆金），带着我自己起草的一份1又1/4页的NFM购买提议。（该提议在第114-115页重现。）B夫人一个字没改就接受了我的报价，我们在没有投资银行家或律师参与的情况下完成了交易（这种经历只能用"天堂般"来形容）。尽管公司的财务报表未经审计，但我毫无顾虑。B夫人只是如实相告，她的话对我来说就足够了。

B夫人当时89岁，一直工作到103岁——绝对是我欣赏的那类女人。看看第116-117页NFM从1946年起的财务报表。NFM今天拥有的一切都来自于（a）公司当时拥有的72,264美元净资产和50美元——没有漏掉零——现金，以及（b）B夫人、她的儿子路易以及路易的儿子罗恩和埃尔文的非凡才干。

这个故事的点睛之笔是：B夫人一天学都没上过。而且，她从俄罗斯移民到美国时，一个英文单词都不认识。但她热爱她的第二故乡：应B夫人的要求，家人们在聚会上总是唱《上帝保佑美国》。

有志于商业管理的人应该仔细审视那些朴素却罕见的品质，正是这些品质造就了B夫人令人难以置信的成功。每年有来自40所大学的学生来拜访我，我让他们一天从参观NFM开始。如果他们吸收了B夫人的教诲，就不需要从我这里学什么了。

金融及金融产品

"克莱顿的贷款组合在不远的将来很可能增长到至少50亿美元，只要保持合理的信贷标准，就应该能带来可观的收益。"
——2003年年报
这个板块是我们最小的，包括两家租赁公司——XTRA（拖车租赁）和CORT（家具租赁），以及Clayton Homes——全美领先的活动房屋生产商和融资商。除了这些100%控股的子公司，我们还将一批金融资产以及我们在Berkadia Commercial Mortgage（伯卡迪亚商业抵押贷款公司）的50%权益归入这一类别。

Clayton被归入这一板块，是因为它拥有并维护着326,569笔抵押贷款，总额达136亿美元。近年来，随着活动房屋销售暴跌，Clayton很大一部分利润都来自这项抵押贷款业务。

然而，2013年新屋销售开始回升，制造和零售业务的利润再次变得可观。Clayton依然是美国头号住宅建造商：其2013年产出29,547套住宅，约占全美独栋住宅建造总量的4.7%。Clayton的首席执行官Kevin Clayton（凯文·克莱顿）在带领公司度过严峻的房市萧条方面做得极为出色。如今，他的工作——显然比过去有趣多了——还包括2014年利润再创新高的前景。

CORT和XTRA同样也是各自行业的领导者。Jeff Pederson（杰夫·佩德森）和Bill Franz（比尔·弗朗兹）将确保它们保持领先地位。我们通过购买设备来扩大它们的租赁潜力，以此支持他们的计划。

以下是该板块的税前利润汇总：

	2013	2012	2011
		（单位：百万美元）
Berkadia	$ 80	$ 35	$ 25
Clayton	416	255	154
CORT	40	42	29
XTRA	125	106	126
净金融收入*	324	410	440
	$985	$848	$ 774

* 不包括资本利得或损失

投资

“我们的股票投资组合……其市值比账面价值（成本）大约低1,700万美元……我们相信，经过若干年，整个投资组合将被证明价值超过其成本。”

——1974年年报

下面我们列出截至年末市值最大的十五项普通股投资。

股份**	公司	持股比例	2013年12月31日
			成本*	市值
			（单位：百万美元）
151,610,700	American Express Company（美国运通公司）	14.2%	$1,287	$13,756
400,000,000	The Coca-Cola Company（可口可乐公司）	9.1%	1,299	16,524
22,238,900	DIRECTV	4.2%	1,017	1,536
41,129,643	Exxon Mobil Corp.（埃克森美孚公司）	0.9%	3,737	4,162
13,062,594	The Goldman Sachs Group, Inc.（高盛集团）	2.8%	750	2,315
68,121,984	International Business Machines Corp.（国际商业机器公司）	6.3%	11,681	12,778
24,669,778	Moody’s Corporation（穆迪公司）	11.5%	248	1,936
20,060,390	Munich Re（慕尼黑再保险）	11.2%	2,990	4,415
20,668,118	Phillips 66	3.4%	660	1,594
52,477,678	The Procter & Gamble Company（宝洁公司）	1.9%	336	4,272
22,169,930	Sanofi（赛诺菲）	1.7%	1,747	2,354
301,046,076	Tesco plc（乐购）	3.7%	1,699	1,666
96,117,069	U.S. Bancorp（美国合众银行）	5.3%	3,002	3,883
56,805,984	Wal-Mart Stores, Inc.（沃尔玛公司）	1.8%	2,976	4,470
483,470,853	Wells Fargo & Company（富国银行）	9.2%	11,871	21,950
	其他		11,281	19,894
	普通股投资合计（按市值计算）		$56,581	$117,505

此为我们的实际买入价，也是我们的计税基准；美国通用会计准则下的“成本”在少数情况下因根据其规则须进行减值或增值而有所差异。
*不包括伯克希尔子公司养老基金所持股份。

伯克希尔有一笔重要的股权投资未列入上表：我们可以在2021年9月之前的任何时间，以50亿美元买入美国银行（Bank of America）7亿股股票。年末时，这些股票价值109亿美元。我们很可能会在期权到期前夕买入这些股票。与此同时，你们需要明白，美国银行实际上是我们第五大股权投资，也是我们极为看重的一笔。

除了股权持有，我们还在债券上投入了大量资金。通常来说，这些投资做得不错，但也并非总是如此。

你们大多数人从未听说过Energy Future Holdings（能源未来控股公司）。庆幸吧——我倒真希望自己也没听说过。这家公司成立于2007年，目的是对德克萨斯州的电力公用事业资产进行一笔巨额杠杆收购。股权所有者投入了80亿美元，同时还借入了巨量资金。伯克希尔买下了其中约20亿美元的债务——这个决定是我在没有咨询查理的情况下做出的。那是个大错。

除非天然气价格飙升，否则EFH几乎肯定会在2014年申请破产。去年，我们以2.59亿美元卖掉了所持的债券。持有债券期间，我们收到了8.37亿美元的现金利息。所以总体算下来，我们税前亏损了8.73亿美元。下次我一定先问问查理。

我们旗下有少数子公司（主要是电力与天然气公用事业）在其运营中使用衍生品。除此之外，我们已有好些年没有签订任何衍生品合约，现有的头寸也在持续到期。已到期的合约带来了可观的利润和数十亿美元的中期浮存金。虽然没有保证，但我们预期剩余合约也会带来类似的结果。

关于投资的一些思考

投资越像生意，就越明智。
—《聪明的投资者》本杰明·格雷厄姆

用本·格雷厄姆的引语来开启这段讨论再合适不过了，因为我的投资知识绝大部分都归功于他。稍后我会多谈谈本，甚至更早就会谈及普通股。但首先，让我说说很久以前做的两笔与股票无关的小投资。虽然它们都没怎么改变我的净资产，但颇有教益。

这个故事始于内布拉斯加州。从1973年到1981年，中西部地区的农场价格经历了一场暴涨，起因是人们普遍认为恶性通胀即将来临，而小乡村银行的贷款政策又火上浇油。随后泡沫破裂，价格下跌了50%以上，重创了杠杆农户和他们的贷款人。在这次泡沫的余波中，爱荷华州和内布拉斯加州倒闭的银行数量，是我们最近那次大衰退的五倍。

1986年，我从FDIC手中买下了一座400英亩的农场，位于奥马哈以北50英里。花了28万美元，比几年前一家倒闭银行以该农场为抵押放出的贷款少得多。我完全不懂经营农场。但我有个儿子热爱农耕，从他那里我知道了这座农场能产多少蒲式耳玉米和大豆，也知道了运营成本是多少。根据这些估算，我算出农场的正常回报率大约为10%。我还认为，随着时间的推移，生产率很可能会提高，作物价格也会上涨。这两个预期后来都实现了。

我不需要什么特别的知识或智慧就能得出这个结论：这笔投资没有下行风险，而且潜在的上行空间很大。当然，偶尔会有坏年景，价格有时也会令人失望。但那又怎样？也会有特别好的年份，而且我没有任何压力要卖掉这块地。如今，28年过去了，农场的收益已经翻了三倍，价值是我买入时的五倍甚至更多。我仍然不懂农耕，最近才第二次去看了农场。

1993年，我做了另一笔小投资。拉里·希尔弗斯坦，当年我担任所罗门公司CEO时的房东，告诉我纽约大学旁边有一处纽约零售地产，Resolution Trust Corp.正在出售。又是一个泡沫破裂了——这次是商业地产——RTC正是为了处理那些乐观贷款行为助长狂热的已倒闭储蓄机构的资产而设立的。

这里，分析同样简单。和农场一样，该地产的无杠杆当前收益率大约是10%。但该地产被RTC管理不善，一旦几间空置店铺租出去，收入就会增加。更重要的是，最大的租户——占项目面积约20%——支付的租金大约是每英尺5美元，而其他租户平均70美元。这份廉价租约九年后到期，必将大大提振收益。该地产的位置也极佳：纽约大学不会搬走。

我加入了包括拉里和我的朋友弗雷德·罗斯在内的小团体，一起买下了这块地。弗雷德是一位经验丰富、高水平的地产投资者，他和他的家人会负责管理该地产。他们确实管理得很好。随着旧租约到期，收益翻了三倍。如今每年的分配额已超过我们原始股权投资额的35%。此外，我们最初的抵押贷款在1996年和1999年进行了再融资，这些操作带来了数次特别分配，总额超过我们投资额的150%。我还没去看过那处地产。

农场和纽约大学地产的收入在未来几十年里很可能会继续增长。虽然涨幅不会惊人，但这两项投资将在我有生之年以及随后为我的子孙后代提供坚实而令人满意的持有。

我讲这些故事是为了说明投资的一些基本原则：
- 你不需要成为专家也能获得满意的投资回报。但如果你不是专家，就必须认清自己的局限，遵循一条大概率能奏效的路径。保持简单，别总想打全垒打。有人向你承诺能快速赚大钱时，干脆利落地回答“不”。
- 专注于你考虑中的资产未来的产出能力。如果你无法对其未来收益做出大致估算，那就放弃它，继续往前走。没有人有能力评估每一种投资机会。但无所不知并非必要；你只需理解自己正在做的事情。
- 如果你转而关注打算买入的资产的未来价格变动，你就是在投机。投机本身没什么不对。但我深知自己无法成功投机，也怀疑那些声称能持续做到的人。一半的抛硬币者会在第一次抛掷中胜出；但如果继续玩下去，这些胜出者中没有一人能指望获利。某资产近期价格上涨的事实，绝不是买入它的理由。
- 对于我的两笔小额投资，我考虑的只有这些资产能产出什么，完全不在乎它们每天的估值。比赛是由那些专注于赛场而非紧盯着记分牌的选手赢得的。如果你能在周末抛开股价享受生活，那就试试在工作日也这么做。
- 形成宏观观点或聆听他人的宏观或市场预测是浪费时间。实际上，这很危险，因为它可能模糊你对真正重要的事实的判断。（每当我听到电视评论员油嘴滑舌地预言市场下一步走势时，我就会想起Mickey Mantle那句尖刻的评论：“你不知道这比赛有多容易，除非你坐到那个播音台里。”）

• 我的那两笔买入分别发生在1986年和1993年。当时的经济、利率或股市在随后的几年（1987年和1994年）会怎样表现，对我做出这些投资决定毫无影响。我记不清当时的头条新闻或权威人士在说什么。无论那些闲言碎语如何，内布拉斯加州的玉米依然会长，学生们依然会涌向NYU（纽约大学）。

我的这两笔小额投资与股票投资有一个重大区别。股票会为你持有的资产提供每分钟的估值，而我至今从未见过我的农场或纽约地产有什么报价。

股票投资者拥有这些剧烈波动的持仓估值，本应是一项巨大优势——对某些投资者来说也确实如此。毕竟，如果一个情绪不定的家伙拥有与我毗邻的农场，每天向我喊出一个他愿意买我农场或卖他农场的价格——而且这些价格随着他的精神状态在短时间内大幅波动——除了从他的反复无常中获益，我还能怎样呢？如果他每天喊出的价格低得离谱，而我又有些闲钱，我就会买下他的农场。如果他喊出的价格高得离谱，我可以卖给他，或者继续种我的地。

然而，股票持有者常常让其他持有者的任性且往往非理性的行为也导致自己变得非理性。由于关于市场、经济、利率、股票价格行为等话题的闲谈太多，一些投资者认为聆听权威人士很重要——更糟的是，认为考虑根据他们的评论行动很重要。

那些在拥有农场或公寓楼时能安静坐守几十年的人，一旦暴露在源源不断的股票报价和评论员传来的“别光坐着，做点什么”的隐含信息下，常常变得狂躁。对这些投资者而言，流动性从它本应带来的纯粹好处变成了诅咒。
“闪崩”或其他极端市场波动不会伤害投资者，就像那个口无遮拦、喜怒无常的邻居不会伤害我的农场投资一样。事实上，当价格严重偏离价值时，如果手头有现金，市场暴跌反而对真正的投资者有利。恐惧氛围是投资者的朋友；狂欢世界则是敌人。

2008年末发生那场金融恐慌时，即使明显酝酿着严重衰退，我也从未想过要卖掉我的农场或纽约的房地产。而且，如果我100%持有一家前景稳健、长期良好的企业，连考虑甩卖都是愚蠢的。那么，我为什么要卖掉那些只是优秀企业一小部分权益的股票呢？没错，其中任何一只股票最终都可能让我失望，但作为一个组合，它们肯定表现良好。难道真有人相信地球会吞掉美国拥有的惊人生产力资产和无限的人类智慧？

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当我和 Charlie 买入股票时——我们视其为企业的一小部分——我们的分析与收购整家企业非常相似。我们首先要判断能否在五年或更长的时间内合理估计出盈利区间。如果能，并且股票（或企业）的卖出价格相对我们估计的下限来说合理，我们就会买入。但如果缺乏预测未来盈利能力的能力——通常都是这样——那我们就转向其他机会。在共同合作的54年里，我们从未因为宏观或政治环境，或者别人的看法而放弃一个有吸引力的买入机会。事实上，做决策时我们从不考虑这些因素。

然而，关键是要认清我们“能力圈”的边界，并始终待在圈内。即便如此，我们在股票和企业投资上仍然会犯一些错误。但这些错误不会是那种灾难性的——比如，在长期上涨的市场中，基于价格预期和“谁在行动就跟着谁”的冲动买入所导致的灾难。

当然，大多数投资者并未将研究企业前景作为生活中的要务。如果他们明智，就会意识到自己对具体生意了解不够，无法预测其未来的盈利能力。

对于这些非专业人士，我有个好消息：典型的投资者并不需要这项技能。总体来看，美国企业长期表现极为出色，而且将继续如此（尽管肯定会有难以预测的时断时续）。在20世纪，道指从66点上升到11,497点，同时派发了不断增长的股息。21世纪将见证进一步的上涨，几乎肯定是可观的。非专业人士的目标不应是挑选赢家——他自己或他的“帮手”都做不到——而应是拥有一批总体上必然表现不错的企业的横截面。一只低成本的标普500指数基金就能实现这个目标。
这就是非专业人士投资中“买什么”的问题。“何时买”也很重要。主要风险在于，胆小或初入市场的投资者会在极度亢奋时冲进市场，然后当出现账面亏损时就会幻想破灭。（还记得已故的Barton Biggs的观察：“牛市就像性爱。它在即将结束前感觉最美妙。”）避免这种择时失误的解药是：投资者应当长期持续买入，绝不要在坏消息传来、股价远低于高点时卖出。遵循这些规则，一个“一无所知”的投资者，只要分散投资且将成本降到最低，几乎必然获得满意的结果。事实上，一个能清醒认识自身不足的质朴投资者，很可能比那些连一个弱点都视而不见的知识渊博的专业人士取得更好的长期业绩。

如果“投资者”疯狂地相互买卖农田，农作物的产量和价格都不会因此提高。这种行为唯一的后果是，由于在寻求建议和更换资产时付出高昂成本，农田所有者的总体收益将会下降。

尽管如此，个人和机构都会不断受到那些靠提供建议或执行交易获利者的鼓动，变得频繁交易。由此产生的摩擦成本可能极为巨大，且对全体投资者而言毫无益处。所以，忽略那些噪音，将成本降至最低，像投资农场那样投资股票。

我要补充说，我是言行一致的：我在这里给出的建议本质上与我在遗嘱中写下的某些指示相同。其中一项遗赠规定，现金将交付给一位为妻子利益行事的受托人。（我必须在个人遗赠中使用现金，因为在我遗产处置完成后的十年内，我持有的所有伯克希尔股票将全部分配给某些慈善组织。）我给受托人的建议再简单不过了：将10%的现金投入短期政府债券，90%投入一只成本极低的标普500指数基金。（我推荐先锋集团的。）我相信，与那些聘用高收费基金经理的大多数投资者——无论是养老基金、机构还是个人——相比，这一策略将为信托带来更好的长期结果。

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好了，我们再回到Ben Graham。我在投资讨论中学到的大部分思想，都来自Ben的《聪明的投资者》一书，那是我在1949年买的。我的财务人生从那次购书起发生了改变。

在读Ben的书之前，我曾在投资领域四处游荡，贪婪地阅读所有相关题材的著作。读到的很多东西都让我着迷：我尝试过图表分析，利用市场指标预测股票走势。我坐在经纪公司的营业厅里盯着滚动的行情纸带，听评论员播报。这一切都很有趣，但我始终摆脱不了一种感觉：我毫无进展。

相比之下，Ben的思想被逻辑清晰地阐述在优雅易懂的文字中（没有希腊字母或复杂公式）。对我而言，核心要点就在后来版本标为第8章和第20章的内容中。（1949年原版的章节编号不同。）这些要点至今指引着我的投资决策。

关于这本书，还有几个有趣的细节：后来的版本中有一段后记，描述了一笔为Ben带来巨大财富的未具名投资。Ben是在1948年，也就是撰写第一版时买入的——抓好扶手——这家神秘公司就是GEICO。如果Ben没有在GEICO尚处初创期就识别出它的特殊品质，我的未来和伯克希尔的未来都会大不相同。
这本书的1949年版还推荐了一只铁路股，当时售价17美元，每股收益约10美元。（我钦佩本的原因之一是他有胆量使用当下的例子，如果失手就会招致嘲笑。）从某种程度上说，这种低估值源于当时的一项会计规则，该规则要求铁路公司从其报告的收益中排除关联公司的大量留存收益。

推荐的投资标的是Northern Pacific（北太平洋铁路），它最重要的关联公司是Chicago, Burlington and Quincy（芝加哥、伯灵顿和昆西铁路）。这些铁路如今是BNSF（Burlington Northern Santa Fe，伯灵顿北圣塔菲）的重要组成部分，而BNSF现在完全由伯克希尔拥有。当我读这本书时，北太平洋铁路的市值约为4000万美元。如今，它的继任者（当然，已经增加了大量资产）每四天就能赚到这么多钱。

我已不记得当初买那本《聪明的投资者》花了多少钱。无论花了多少，都印证了本的一句箴言：价格是你支付的，价值是你得到的。在我所有投资中，买本的书是最划算的（除了我买的两张结婚证）。

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地方和州的财政问题正在加速恶化，很大程度上是因为公共实体承诺了它们负担不起的养老金。公民和公职人员通常低估了这种巨大的财务绦虫——它诞生于承诺与资金意愿相冲突之时。不幸的是，养老金数学对大多数美国人来说至今仍是个谜。

投资政策在这些问题中也扮演着重要角色。1975年，我给当时《华盛顿邮报》公司董事长Katharine Graham（凯瑟琳·格雷厄姆）写了一份备忘录，谈养老金承诺的陷阱和投资政策的重要性。那份备忘录在本书第118-136页重新刊出。

未来十年，你会读到很多关于公共养老金计划的新闻——坏消息。我希望我的备忘录能帮助你理解，在问题存在的地方迅速采取补救行动的必要性。

年度会议

年度会议将于5月3日星期六在CenturyLink Center（世纪互联中心）举行。我们才华横溢的指挥家Carrie Sova（卡丽·索瓦）将负责，我们总部全体人员都会协助她。我们这帮人不仅比专业活动策划人做得更好，而且——没错——还能省钱。

CenturyLink（世纪互联）的大门将在早上7点开放，7:30我们将举行第三届国际报纸投掷挑战赛。我们的目标是一个Clayton Home（克莱顿家园）的门廊，距离投掷线正好35英尺。我十几岁时投过大约50万份报纸，所以我自认为相当不错。欢迎挑战：谁能把报纸投得比我更靠近门槛，我就请他吃一个Dilly Bar（迪莉棒）。报纸将有36到42页，你必须自己折叠（不允许用橡皮筋）。

8:30将放映一部新的伯克希尔影片。一小时后，我们将开始问答环节，中间（在CenturyLink的摊位用午餐休息）将持续到3:30。短暂休息后，查理和我会在3:45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，离开的最佳理由是去购物。我们会用数十家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，助您一臂之力。去年，你们各显神通，大部分销售点都创下了纪录。在九个小时内，我们卖出了1,062双Justin boots（贾斯汀靴子）（每32秒一双），12,792磅See's candy（喜诗糖果），11,162把Quikut knives（奎库特刀）（每分钟21把），以及6,344双Wells Lamont gloves（韦尔斯拉蒙特手套），总是热门商品。今年，查理和我将推出竞争的番茄酱瓶出售。当然，印有查理照片的那一瓶会有大幅折扣。但是，如果你们帮忙，我的瓶子会卖得比他好。这很重要，所以别让我失望。
Brooks（我们的跑鞋公司）又将在年会上推出一款特别纪念鞋。买一双，第二天穿上它来参加我们第二届“伯克希尔5公里跑”——早上8点从CenturyLink出发。参赛详情将收录在与会者指南中，随年会门票一起寄到您手中。参赛者将会与众多伯克希尔的经理、董事和合伙人并肩奔跑。

GEICO将在购物区设立展位，由来自全国各地的顶尖顾问组成。欢迎来询价。大多数情况下，GEICO能给您提供股东折扣（通常为8%）。在我们经营的51个司法管辖区中，有44个允许这项特惠。（补充一点：如果您已符合其他折扣条件——比如某些团体的优惠——此折扣不能叠加。）带上您现有保险的详细信息，看看我们能否帮您省钱。我相信，至少一半的人可以。

一定要去Bookworm书摊看看。那里将展出约35种图书和DVD，其中有几本新书。一本是Max Olson编选的伯克希尔致股东信汇编，收录了自1965年以来的信函。书中附有索引，我觉得特别实用，按人物、公司和主题分别标明了页码。我还推荐我儿子Howard写的《四十次机会》。你会喜欢它的。

如果您是个大买家——或者有志于此——周六中午12点到下午5点，请到奥马哈机场东侧的Signature Flight Support。那里，我们将展示NetJets的机队，保证让您心跳加速。坐巴士来，乘私人飞机走。尽情享受一下吧。

本报告所附的股东委托书材料中，有一份附件说明了如何获取入场凭证及其他活动所需证件。航空公司有时会在伯克希尔周末期间大幅提价。如果您从远方来，不妨比较一下飞往堪萨斯城和奥马哈的票价。两地车程约两个半小时，飞堪萨斯城或许能省下不少钱，尤其如果您原计划在奥马哈租车的话。省下的钱，到我们这儿花吧。

内布拉斯加家具城（Nebraska Furniture Mart）位于72街道奇街和太平洋街之间，占地77英亩。那里我们将再次推出“伯克希尔周末”折扣价。去年在年会前后的一周内，该店实现了4,020万美元的销售额，比之前纪录高出12%。还在周六创下了单日820万美元的纪录，仅床垫就卖出了近100万美元。

要在NFM享受伯克希尔折扣，您必须在4月29日（周二）至5月5日（周一）期间（含首尾两天）购物，并出示您的年会凭证。这一期间的特别定价甚至适用于几家知名制造商的产品——它们通常有严禁打折的铁律，但本着我们股东周末的精神，破例为您开了绿灯。我们感谢它们的合作。NFM的营业时间：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8点，NFM将举办野餐会，邀请大家参加。

在Borsheims，我们将再次举办两场仅限股东参加的活动。第一场是5月2日（周五）下午6点至9点的鸡尾酒招待会。第二场是5月4日（周日）上午9点至下午4点的主庆典。周六我们营业到下午6点。近年来，我们这三天的销售额远超整个12月——通常这是珠宝商最旺的月份。

周日下午1点15分左右，我将开始在Borsheims当店员。您可以就心仪的物件向我要一个“疯狂沃伦”的报价。随着年纪增长，我的定价越来越离谱。快来占我便宜吧。
整个周末，博希姆珠宝店（Borsheims）将人潮涌动。为方便起见，股东优惠价将从4月28日（周一）持续至5月10日（周六）。在此期间，请出示您的会议凭证或显示您是伯克希尔股东的券商账户证明，以确认股东身份。

周日，在博希姆旁的商场内，两届美国国际象棋冠军帕特里克·沃尔夫（Patrick Wolff）将蒙眼对阵六人一组的挑战者——而挑战者们将睁大眼睛。附近，来自达拉斯的杰出魔术师诺曼·贝克（Norman Beck）将为围观者献上令人眼花缭乱的表演。此外，我们还有两位世界顶尖桥牌专家鲍勃·哈曼（Bob Hamman）和莎伦·奥斯伯格（Sharon Osberg），他们将在周日下午与股东们切磋桥牌。别和他们赌钱。

我的朋友 Ariel Hsing（邢延华）周日也会在商场，与挑战者打乒乓球。去年，她在奥运会上的表现让美国人——尤其是我——倍感自豪。我认识Ariel时她才九岁，那时我已经一分都赢不了她。如今，她是普林斯顿大学的新生，也是美国女子乒乓球冠军。如果你不介意丢脸的话，下午一点开始来挑战她吧。比尔·盖茨（Bill Gates）和我会先上阵，给她松松筋骨。

Gorat's 和 Piccolo's 两家餐厅将在5月4日（周日）再次只为伯克希尔股东开放。两家餐厅均营业至晚上10点，Gorat's 下午1点开门，Piccolo's 下午4点开门。这两家是我最喜欢的餐厅，周日晚上我会两家都吃。记住：预订 Gorat's 请于4月1日（且只能在这天之后）拨打402-551-3733；预订 Piccolo's 请拨打402-342-9038。在Piccolo's，甜点一定要点巨型根汁汽水漂浮杯。只有娘炮才点小份。

在年会上，我们将再次请三位财经记者主持问答环节，由他们向查理和我提出股东通过电子邮件提交的问题。记者及其邮箱分别是：《财富》杂志的卡罗尔·卢米斯（Carol Loomis），邮箱 cloomis@fortunemail.com；CNBC的贝基·奎克（Becky Quick），邮箱 BerkshireQuestions@cnbc.com；《纽约时报》的安德鲁·罗斯·索尔金（Andrew Ross Sorkin），邮箱 arsorkin@nytimes.com。

每位记者将从提交的问题中选出自己认为最有趣、最重要的六个问题。他们告诉我，如果您的提问简洁、不最后一刻才发送、与伯克希尔相关、且每封邮件不超过两个问题，那么您的问题被选中的机会最大。（在邮件中，请告知记者：如果问题被选中，您是否希望被提及姓名。）

我们还将有一个由三位跟踪伯克希尔的分析师组成的小组。今年，保险专家是巴克莱的杰伊·盖尔布（Jay Gelb）。涉及非保险业务的问题将由鲁安·坎尼夫与戈德法布公司（Ruane, Cunniff & Goldfarb）的乔纳森·布兰特（Jonathan Brandt）提出。

此外，我们还会再次邀请一位持证看空伯克希尔的人士。我们欢迎做空伯克希尔的申请人（请附上您的持仓证据）。三位分析师将提出自己关于伯克希尔的具体问题，并与记者和观众交替提问。

查理和我认为，所有股东应同时获得伯克希尔的新信息，并有足够时间进行分析。这就是我们为什么选择在周五晚间或周六早间发布财务信息，以及将年会安排在周六举行的原因。我们不会与大型机构投资者或分析师单独交流，而是平等对待所有股东。我们希望记者和分析师提出的问题能进一步帮助我们的所有者了解他们的投资。
查理和我对即将被问到的问题毫无头绪。我们知道记者和分析师会提出一些尖锐的问题，而这正是我们喜欢的。总计下来，我们预计至少有54个问题，每位分析师和记者各6个，观众18个。如果时间有余，我们会从观众中多抽几个问题。提问观众将在上午8:15通过抽签决定，抽签地点设在主会场和主要 overflow 房间内的15个麦克风处。

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我经常有充分理由地赞扬我们运营经理的成就。他们堪称全明星，经营业务时仿佛那是他们家族唯一的资产。我相信，在大型上市公司中，我们的经理人拥有最以股东为导向的心态。他们中的大多数人没有经济上的工作需求；打出商业"全垒打"的喜悦对他们而言与薪水同样重要。

然而，同样重要的是与我一起在公司总部工作的24位男女同事。这个团队高效地处理着大量SEC及其他监管要求，提交23,000页的联邦所得税申报表以及州和国外申报表，回应无数股东和媒体问询，发布年报，筹备全国最大的股东大会，协调董事会活动——诸如此类，不胜枚举。

他们愉快地处理所有这些商业任务，效率令人难以置信，让我的生活轻松愉快。他们的努力超出了严格与伯克希尔相关的活动范围：去年，他们接待了40所大学（从200个申请者中选出），这些大学的学生来到奥马哈与我进行问答日。他们还处理我收到的各种请求，安排我的旅行，甚至为我准备午餐的汉堡和薯条（当然，沾满番茄酱）。没有哪个CEO比我更幸运；我确实每天都感觉像跳着舞去上班。

最后，我想现在可以忽略我们的"禁止拍照"规定，让你们看看我们了不起的总部团队。下面是我们圣诞午餐的照片。有两人未能到场；否则你们看到的就是伯克希尔总部的全部员工。他们真是奇迹创造者。

明年的信将回顾我们在伯克希尔的50年，并对未来的50年稍作展望。与此同时，5月3日来奥马哈参加我们的资本家的伍德斯托克音乐节吧。

2014年2月28日

沃伦·E·巴菲特

董事会主席

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一群穿着正式的个人围坐在宴会桌旁，在一个装饰华丽的大厅里（无可见文字或标牌）

伯克希尔风格的权力午餐