Buffett has written to his partners and then his shareholders every year since the 1950s. The letters are the closest thing this collection has to a laboratory notebook: opinions recorded before the outcome was known, then revisited.
The disclosure standard
“Our intent is to supply you with the financial information that we would wish you to give us if our positions were reversed. At Berkshire, we believe in Charlie’s dictum — ‘Just tell me the bad news; the good news will take care of itself’ — and that is the behavior we expect of our managers when they are reporting to us.”
— Warren Buffett, Berkshire Hathaway Shareholder Letter, 1979
Owning the bad year
The 1969 partnership letter, written as he wound the partnership down:
“Documenting one’s boners is unpleasant business. I find ‘selective reporting’ even more distasteful. Our poor experience this year is 100% my fault. It did not reflect bad luck, but rather an improper assessment of a very fast-developing governmental trend.”
— Warren Buffett, Buffett Partnership Letters, 1969
Note the sequence: names the loss, refuses the softer framing, assigns cause to judgement rather than luck. That is the whole model.
How he asks to be judged
From 1963, before he had a record to protect:
“Whether we do a good job or a poor job is not to be measured by whether we are plus or minus for the year. It is instead to be measured against the general experience in securities … If our record is better than that of these yardsticks, we consider it a good year whether we are plus or minus. If we do poorer, we deserve the tomatoes.”
— Warren Buffett, Buffett Partnership Letters, 1963
Setting the benchmark in advance, in public, is the part almost nobody imitates.
Where to be sceptical
The candour is real and it is also affordable. Buffett could report a bad year against a record that made the bad year look like noise. The letters are a superb model of disclosure and a poor guide to whether you could survive practising it — which is a fact about incentives, not about him.
A note on availability. Our library’s copy of the collected letters indexes the early decades well and later years unevenly, so some famous lines from the 1990s and 2000s cannot be verified here. Where this archive cites a letter it cannot check, it says so.
