Even Berkshire Hathaway Isn’t Immune to Bad Economy

2008 was Berkshire Hathaway’s worst year ever, according to its annual letter to shareholders. Has the Buff lost his touch? Probably not–Berkshire Hathaway was just doing what it always does, but in a horrible economy. The Wall Street Journal reports:

Warren Buffett’s Berkshire Hathaway Inc. reported Saturday morning that 2008 was the legendary investor’s worst year ever. It also reported a grim fourth quarter, though it eked out a slight gain.

It was only the second year in more than 40 years that Berkshire posted negative results. In 2001, Berkshire’s book value per share fell 6.2%. The company’s performance in 2008 still far outpaced the Standard & Poor’s 500-stock index, which fell 37% last year, including dividends.

Berkshire’s fourth-quarter net income was $117 million, a whopping 96% decline from last year’s $2.9 billion fourth-quarter income. The results mark Berkshire’s fifth year-over-year quarterly decline in a row.

I have a lot of faith in Warren Buffet, and wager that Berkshire Hathaway will eventually regain its losses. I read about some people comparing the Oracle of Omaha to Alan Greenspan, the former Oracle of the Economy, but I think it’s a moot point. Warren Buffet’s personal investment principles were seeded as early as the Great Depression, and have guided him well until now. His core philosophy is steadfast, but can be adapted to many new situations.

At $78,600 a share (as of closing on Friday), BRK-A itself might be a value buy.

  • Berkshire is a little salty for me! But if I was going to do stocks, Buffet would be one of the few I feel are trustworthy and competent. losses in ’08 are inevitable, not a sign of weakness necessarily

  • There’s something that’s indeed common between Alan Greenspan and Warren Buffet.

    Both of them are epitomes of humility and gracious enough to admit that they were wrong.

    I actually alluded to this in my blog post at:
    http://subbaiyer.wordpress.com/2009/03/02/warren-buffet-an-enlightened-sage/