Another year has gone, another Warren Buffett letter to Berkshire Hathaway shareholders (and the world) has come out. You could read the full text here, but it’s 23 pages, some of which is financial data, most of which is financial commentary related to specific entities within the Berkshire portfolio.

So this summary is a selection of the folksy wisdom that will, no doubt, be influencing my posts in the year to come.

“At Berkshire, we much prefer holding a non-controlling by substantial portion of a wonderful company to owning 100% of a so-so business; it’s better to have a partial interest in the Hope diamond than to own all of a rhinestone.”

“That old line, ‘The other guy is doing it, so we must as well,’ spells trouble in every business, but in none more so than insurance.”

“Every dime of depreciation expense we report, however, is a real cost. And that’s true at almost all other companies as well. When Wall Streeters tout EBITDA as a valuation guide, button your wallet.”

“You don’t need to be an expert in order to achieve satisfactory investment returns. But if you aren’t, you must recognise your limitations and follow a course certain to work reasonably well. Keep things simple and don’t swing for the fences. When promised quick profits, respond with a quick ‘no’.”

“Half of all coin-flippers will win their first toss; none of those winners has an expectation of profit if he continues to play the game. And the fact that a given asset has appreciated in the recent past is never a reason to buy it.”

“Games are won by players who focus on the playing field – not by those whose eyes are glued on the scoreboard. If you can enjoy Saturdays and Sundays without looking at stock prices, give it a try on weekdays.”

“Owners of stock … too often let the capricious and often irrational behaviour of their fellow owners cause them to behave irrationally as well. Because there is so much chatter about markets, the economy, interest rates, price behaviour of stocks, etc., some investors believe it is important to listen to pundits – and, worse yet, important to consider acting upon their comments.”

“A climate of fear is your friend when investing; a euphoric world is your enemy.”

“The goal of the non-professional should not be to pick winners … but should rather be to own a cross-section of businesses that in aggregate are bound to do well. A low-cost S&P 500 index fund will achieve this goal.”

“Both individuals and institutions will constantly be urged to be active by those who profit from giving advice or effecting transactions. The resulting frictional costs can be huge and, for investors in aggregate, devoid of benefit.”

“Come by bus; leave by private jet. Live a little.”