Saturday, February 28, 2009

Warren Buffett's Berkshire Hathaway Reports 2008 Was It's Worst Year EVER

Well, if you needed any other proof that 2008 was a horrendous year, the king of investing Warren Buffett's company Berkshire Hathaway, Inc. reported this morning that 2008 was it's worst year ever. Here are the grim details from the Wall Street Journal:

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.

A common metric Berkshire uses to track performance, book value per share, fell 9.6% in 2008, its biggest decline since Mr. Buffett took over the company in 1965.

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.

Later in the article:

In his letter to shareholders, Mr. Buffett conceded that he "did some dumb things" in the past year, such as boosting the company's holdings of the oil giant ConocoPhillips when oil prices were near their peak. Since then, oil prices have tumbled and shares of ConocoPhillips and many other energy outfits are down sharply. Mr. Buffett said he believes "odds are good that oil sells far higher in the future than the current $40 to $50 price. But so far I have been dead wrong."

Buffett did offer some encouragement to his troops though in his letter:

Still, Mr. Buffett struck an upbeat note in his letter that detailed the current woes of the financial system. "[N]ever forget that our country has faced far worse travails in the past. … Without fail, however, we've overcome them."

Go here to read the entire article.

Click here to read Buffett's letter to shareholders.

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