Download Warren Buffett Berkshire Hathway 2016 Letter To Shareholders

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Download Warren Buffett Berkshire Hathway 2016 Letter To Shareholders

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Warren Buffett’s Letter to Berkshire Hathaway Shareholders

http://www.berkshirehathaway.com/letters/2016ltr.pdf

Buffett on Active Management: '1,000 Monkeys Would be Just as Likely to Produce a Seemingly All-Wise Prophet'
Mr. Buffett's screed against pricey active managers in the 2016 shareholder letter is punctuated with a pithy three-part explainer for why he thinks popular managers almost inevitably fail over the long run.

In his lifetime, Mr. Buffett says that he's only identified "ten or so professionals" that he expected to beat the market long term.

"There are three connected realities that cause investing success to breed failure. First, a good record quickly attracts a torrent of money. Second, huge sums invariably act as an anchor on investment performance: What is easy with millions, struggles with billions (sob!). Third, most managers will nevertheless seek new money because of their personal equation – namely, the more funds they have under management, the more their fees."

This part of the letter is peppered with his trademark folksiness:

"If 1,000 managers make a market prediction at the beginning of a year, it’s very likely that the calls of at least one will be correct for nine consecutive years. Of course, 1,000 monkeys would be just as likely to produce a seemingly all-wise prophet. But there would remain a difference: The lucky monkey would not find people standing in line to invest with him."

Chris Dieterich

http://www.wsj.com/livecoverage/warren- ... hareholder
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