Berkshire Hathaway has published its 2024 results and Warren Buffett’s letter to shareholders. The financial indicators show a new record, and the billionaire’s letter admits mistakes and gives advice on hiring top managers.
Berkshire Hathaway’s annual report is traditionally accompanied by a letter from Warren Buffett to shareholders. This time, the central idea of the message was the admission of his own mistakes and a discussion of hiring employees.
Mistakes related to assessing the future results of companies. We are talking about shares that the investor selected for the conglomerate’s portfolio regardless of the share of ownership (both partial and 100%). “In each case, it was the wrong allocation of capital,” Buffett admits.
Mistakes related to personnel selection. “In other cases, I made mistakes in assessing the abilities or loyalty of the managers that Berkshire hired,” the billionaire notes. The pain of disappointment in loyalty could be compared to the pain of an unsuccessful marriage. When hiring, the best you can hope for is a “decent GPA.” The worst thing you can hope for is procrastination, or, as Vice Chairman Charlie Munger, who died aged 99, “thumb-sucking.” Problems require action, no matter how unpleasant, Buffett summed up.
He said he used the words “error” and “mistake” a total of 16 times in his shareholder pitches from 2019 to 2023, while many other large companies used them none during that period. The taboo around those words, which imply managerial perfectionism, has always made Buffett nervous.
