Buffett admits his `very big mistake'
Monday 15 March 1999
In his annual letter to shareholders, Mr Buffett admitted Berkshire's performance was "not as good as it looks", with most of the gains coming from issuing shares in subsidiary companies.
Mr Buffett, whose homely utterances have earned him the nickname Sage of Omaha, said his equity portfolio had underperformed the S&P 500 index and derided his own decision to sell pounds 30m of shares in McDonalds at the start of 1998. Shares in McDonalds returned 62 per cent over the year.
"My decision to sell McDonalds was a very big mistake," he wrote. "Overall, you would have been better off last year if I had regularly snuck off to the movies during market hours."
Mr Buffett said he and his vice-chairman, Charles Munger, were struggling to find stocks with long-term appeal. But he avoided a repeat of remarks he made earlier this month on a US talk show, when he said market valuations were "high by historic standards".
He also failed to disclose the outcome of large, high-profile investments in silver, oil and bonds, except to say he had "eliminated certain of the positions discussed last year and added certain others".
Mr Buffett said in February last year he had spent $650m buying 129.7 million ounces of silver, close to a quarter of annual world output, calculating demand would outpace production. The price of silver has since fallen by 15 per cent.
At the start of 1998, Berkshire Hathaway also held $4.6bn in zero-coupon Treasury bonds. US regulators' records show the company sold $20bn during the year.
Since he took over as head of Berkshire Hathaway in 1965, Mr Buffett has grown the value of the company's book value from $19 to $37,801 a share, much of it through holdings in Coca-Cola, American Express and Gillette.
Mr Buffett's annual report shows he ditched a holding in Citigroup, the world's biggest financial services company, worth around $1bn. His purchases included General Re, the US reinsurance giant, for $16bn.
Berkshire last year amassed a $15bn cash stockpile which may be used for a large acquisition.
- 1 Tidal launch: The most pretentious lines from Alicia Keys' valedictory speech
- 2 Trevor Noah: Jon Stewart's replacement faces online criticism over 'anti-Semitic' tweets
- 3 I might be an MP, but that doesn't stop me fighting sexism with my breasts
- 4 Martha Stewart accuses Snoop Dogg of 'smoking for four hours' during Justin Bieber Roast
- 5 Gamers confess the worst things they've done in The Sims
Prince Charles ‘burns 1.3 tons of carbon’ in private helicopter after urging public to turn off lights for Earth Hour
Martha Stewart accuses Snoop Dogg of 'smoking for four hours' during Justin Bieber Roast
April Fools' Day 2015 live: The best pranks and fake stories from around the world
University of Cambridge: Remains of 1,300 scholars are found under building
Jeremy Clarkson 'could be given minder' ahead of a potential Top Gear return
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
Street preacher quoting from the Bible fined for calling homosexuality an 'abomination'
Woman filmed launching racist tirade against men on the Tube for speaking in 'own lingo'
The West has it totally wrong on Lee Kuan Yew
Katie Hopkins attacked me on Twitter — so I reported her to the police for inciting racial hatred
David Cameron calls Labour 'hopeless, sneering socialists' while announcing 7-day NHS plans
iJobs Money & Business
£20000 per annum + commission: SThree: Sthree have an exciting opportunity for...
£18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...
£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...