Buffett Changes Tone on Bank of America

This was addressed in Mr Buffett’s letter, where he writes: “For decades, Jack has urged investors to invest in ultra-low-cost index funds”.

The Wizard of Wall Street unveils his much-awaited annual take on the state of Berkshire Hathaway and the economy in general Saturday morning, all wrapped in the wit and wisdom that investors have come to expect from Warren Buffett’s annual letter to shareholders. “Of course, 1,000 monkeys would be just as likely to produce a seemingly all-wise prophet”, he wrote.

Buffett bet that an index fund which invests in the S&P 500 – he chose Vanguard 500 Index Fund Admiral Shares – would perform better than five active “fund of funds” picked by the company.

In this Thursday, Jan. 19, 2017, file photo, Warren Buffett attends the world premiere screening of HBO’s “Becoming Warren Buffett” at The Museum of Modern Art in NY.

Warren Buffett has revealed that Berkshire Hathaway’s stake in Apple is twice as large as previously disclosed at more than $18 billion (€17 billion) but said that the iPhone maker’s share price is now so high it is no longer an attractive investment.

He said a $1 million investment in hedge funds would have generated a $220,000 gain in the nine years through 2016, compared with the index fund’s $854,000 increase.

“In 2016 Berkshire’s insurance unit reported an underwriting profit for the 14th consecutive year and continues to generate substantial no-cost float of $92 billion available for investing (increasing to over $100 billion including an AIG reinsurance transaction)”, Gelb wrote. He said pricing shares of airlines has historically been a “very tough game” and that he has not met the chief executives of any of the four airlines in which Berkshire holds stakes.

In his annual letter to Berkshire shareholders, Buffett said investors “will nearly certainly do well” by staying with the long term with a “collection of large, conservatively financed American businesses”.

“[Berkshire Vice Chair] Charlie [Munger] and I have no magic plan to add earnings except to dream big and to be prepared mentally and financially to act fast when opportunities present themselves. And that we will do”. That works out to Berkshire buying an average of almost 3.8 million shares a day. “There, price would always factor into a buy-or-pass decision”.

Similarly, UBS analysts were satisfied with what they saw.