Berkshire Hathaway Annual Letter to Shareholders 2022

Buffett argued that Berkshire's 19.8% compounded annual gain since 1965—nearly double the S&P 500's 9.9%—resulted not from stock-picking skill but from disciplined capital allocation, a handful of exceptional long-term holdings, and the reinvestment of earnings over decades. He emphasized that "the weeds wither away in significance as the flowers bloom," citing Coca-Cola and American Express as examples: both $1.3 billion investments made in the mid-1990s that now generate over $700 million and $300 million in annual dividends, respectively, and are valued at $25 billion and $22 billion. Buffett stressed that most of his capital-allocation decisions over 58 years were "no better than so-so," with success driven by roughly one truly good decision every five years, combined with luck and the "American Tailwind"—the country's long-term economic growth. He cautioned against manipulated earnings figures and highlighted Berkshire's 2022 operating earnings record of $30.8 billion, arguing that GAAP earnings are misleading when viewed quarterly due to capital-gains volatility. Buffett also noted Berkshire's ownership stakes in eight S&P 500 giants—American Express, Bank of America, Chevron, Coca-Cola, HP Inc., Moody's, Occidental Petroleum, and Paramount Global—plus 100% control of BNSF and 92% of BHE, positioning the company as uniquely aligned with America's economic future. He closed by reaffirming his 80-year conviction that long-term bets against America have never made sense.