Warren Buffett shared “bad news” to his Berkshire Hathaway investors recently. The "bad news" was a return of 14.4%, which was less than S&P 500s 16% gain, the Christian Science Monitor reported Sunday.
Buffett called the 2012 14.4% return “subpar” in an annual letter to shareholders.
Buffett wrote, “But subpar it was. For the ninth time in 48 years, Berkshire’s percentage increase in book value was less than the S&P’s percentage gain (a calculation that includes dividends as well as price appreciation). In eight of those nine years, it should be noted, the S&P had a gain of 15% or more. We do better when the wind is in our face. To date, we’ve never had a five-year period of underperformance, having managed 43 times to surpass the S&P over such a stretch. (The record is on page 103.) But the S&P has now had gains in each of the last four years, outpacing us over that period. If the market continues to advance in 2013, our streak of fiveyear wins will end.”
You can read the complete Warren Buffett “bad news” newsletter in this link.
Buffett wrote optimistically for his two new investment managers, Todd Combs and Ted Weschler. He wrote that "we hit the jackpot with these two." He noted that they both outperformed the S&P by double digits.
“They left me in the dust as well,” he wrote.
What does Buffett see as a good investment going forward? He wrote that he sees a buying opportunity in local newspapers. Berkshire already spent $344 million to buy 28 daily newspapers and Buffett said he expected to invest in more. If Buffett has his way, you won't get as much free content on the Internet. Buffett wrote that newspapers do a better job at retaining circulation when they don’t give away content on the Internet.
What do you think of Warren Buffett overall as handled his “bad news?” Do you think he is overrated as an investment guru? What do you think of some of his political excursions? What do you think of his idea for newspapers to retain circulation by limiting free content on the Internet? Please leave your comments below.
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