6 Lessons From Warren Buffett's Latest Letter

Investing nerds – and I use that term lovingly and self-referentially – have our favourite times of the year.

Earnings season is one such time: the two months a year (February and August) when most ASX companies release their updated profit numbers.

Another is the day I've come to call 'Vanguard Index Chart Day' (unimaginatively, because, well, that's the day Vanguard releases its updated Index Chart).

And then there are two Warren Buffett days.

One is the day (usually late April or early May) when the master investor runs a five-hour Q&A at his company's – Berkshire Hathaway (I own shares) – annual meeting.

The other is the release of his annual shareholder letter, in which Buffett shares an update on the company, plus some investing lessons to go along with it. And he does it with humour, self-deprecation and using easily accessible language. His aim is to teach, and he continues to do it well.

The good news is that that day was yesterday, and the letter was as useful and enjoyable as ever.

Here is my take on a few of the letter's highlights.

Mistakes happen. Just make sure you fix them

Buffett is as candid as ever about his mistakes. He openly acknowledges that he's made plenty of them, whether in capital allocation, hiring decisions, or assessing business prospects.

But what really matters, according to the Oracle of Omaha, is correcting those errors quickly. His late business partner Charlie Munger called inaction in the face of a problem "thumb-sucking" – a costly habit for any investor or business leader.

The lesson for investors? We all get things wrong. The key is to recognise mistakes, cut losses when necessary, and avoid clinging to bad decisions out of stubbornness.

A strong year from Berkshire

Berkshire Hathaway had a solid year, with operating earnings hitting US$47.4 billion – an increase from US$37.4 billion the year before. The big driver? Higher investment income from US government bonds thanks to rising interest rates, and strong performance from car insurer GEICO, which Buffett praises for its turnaround under Todd Combs.

Berkshire's insurance businesses remain its core strength, generating billions in "float" – money collected from premiums before claims are paid out. This gives Berkshire a competitive edge, allowing it to invest capital long before it's needed.

The result of finding value overseas

Buffett's move into Japan – buying stakes in five trading houses (ITOCHU, Marubeni, Mitsubishi, Mitsui, and Sumitomo) – is looking like another masterstroke. The investments, initially made in 2019, have grown significantly, with their value rising from US$13.8 billion to US$23.5 billion.

Buffett and Berkshire vice-chair Greg Abel are – unsurprisingly, given Buffett's track record – committed to these holdings for the long haul, reminding us that patient investing pays off.

Berkshire pays more tax than any other US company

Check out this number: Berkshire paid a record US$26.8 billion in corporate income tax in 2024. That's more than any other company, including the trillion-dollar tech giants, and a full 5% of all corporate tax paid to the US taxman!

This is a direct result of Berkshire's long-term approach. By reinvesting earnings rather than paying dividends, the company has compounded its growth and, in turn, generated massive tax obligations. Buffett sees it as a point of pride – proof that Berkshire contributes meaningfully to the US economy.

Investing in businesses – not just shares

Buffett once again emphasised the difference between owning shares and owning businesses. Berkshire does both. It fully owns 189 businesses and holds significant stakes in giants like Apple, American Express, and Coca-Cola.

His core philosophy remains unchanged: whether it's buying an entire company or a minority stake, the goal is to invest in great businesses run by competent, ethical managers. Here at The Motley Fool, we adopt the same mindset – we buy companies, not just three-letter codes.

The future without Buffett

At 94, Buffett knows his time at the helm is limited. He again said that Greg Abel will take over as CEO and that Berkshire's culture and investment philosophy will remain intact. Crucially, he warns that if future leaders start deceiving shareholders, they'll end up deceiving themselves – a powerful lesson in business integrity (and maybe a little reminder from the grave for those future leaders!).

Buffett's wisdom has guided Berkshire for decades, but the company's foundation is built to last well beyond his tenure.

And, overall?

Buffett's latest letter is filled with gems of wisdom. As always, I recommend reading the whole thing yourself.

But if there's one overarching theme, it's this: Buffett thinks that patience, discipline, and a focus on great businesses will always pay off.

For investors, that means avoiding the hype, staying the course, and always thinking long-term. 

After all, if it's good enough for Buffett, it's definitely good enough for the rest of us.

—–

Moley Fool Financial Literacy Week

At The Motley Fool, our core business is providing investment recommendations, analysis and education.

But we know that many people aren't ready to invest yet and want help getting their finances in order. Some want to learn more about what investing actually entails before getting started, too.

So, once a year, we host a week-long free educational series we call Financial Literacy Week.

We break down money myths, offer tips and tricks to get your finances in order, explain the beauty of Superannuation, and demystify the stock market.

In short, our aim is to help you take control of your finances so you can start to build your nest egg.

And it kicks off TODAY!

Click here to RSVP (and receive a reminder and a special offer at the end of the series!)

See you at 12.30pm AEDT!

The post 6 Lessons from Warren Buffett's latest letter appeared first on The Motley Fool Australia.

More reading

• Warren Buffett's AI bets: 24% of Berkshire Hathaway's $299 billion stock portfolio is in these 2 artificial intelligence stocks
• Does Warren Buffett know something Wall Street doesn't? He just made a shocking move that could be a warning for investors
• Why Warren Buffett isn't predicting a stock market crash in 2025
• I would follow Warren Buffett's advice and buy high-quality ASX shares at fair prices
• I'd listen to Warren Buffett and invest in ASX shares with wide economic moats

American Express is an advertising partner of Motley Fool Money. Motley Fool contributor Scott Phillips has positions in Berkshire Hathaway. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple and Berkshire Hathaway. The Motley Fool Australia has recommended Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.