Warren Buffett Annual Letter: On Saturday, 90-year-old Warren Buffett wrote a letter to the shareholders of his company, Berkshire Hathaway. In this, he mentioned his mistakes. Also gave suggestions to investors.
- Last Updated:February 28, 2021 12:19 PM IS
Know Warren Buffet’s big mistakes
In a letter to shareholders, it was highlighted that how wrong he was about PCC, his stakes were backfired. In 2016, Berkshire Hathaway bought Precision Castparts Corp-PCC, a company that makes aircraft and industrial parts. PCC was bought in 2016 for $ 32.1 billion. This was a big deal. Warner Buffett has admitted that he spent too much money to buy PCC. He has clearly written in the letter that I was wrong in view of the average amount of future earnings. The result of which was that I proved in what I invested for the business. Let me tell you that in August last year, the value of PCC was reduced by about $ 9.8 billion i.e. about 74 thousand crore rupees, because there was a huge decline in air travel due to Corona virus and the company suffered a big loss.
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Buffett himself wrote that he bought a good company, which does a fantastic business, and he is fortunate that PCC Chief Executive Mark Donegan is still in charge. But he has also said that he was more positive about the benefits of PCC. In 2020, PCC had fired thousands of people.
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When Buffet had to sell gold
Warren Buffett has sold his entire gold holding. According to information provided to the regulatory filing, his company Berkshire Hathaway sold gold bricks in the fourth quarter of 2020 i.e. October to December. Prior to this, the company had also sold gold in the third quarter. Explain that last year, when Buffet bought gold, during that time, the price of gold was $ 2,065 an ounce. Buffett started selling gold when the price of gold fell below $ 1,800 an ounce. That is, they lost 12.8 percent from this investment.
How appropriate is investing in bonds?
Buffett said in the letter that bonds do not have much space these days. Recently, the income from 10-year US Treasury bonds was 0.93 percent. In September 1981, it had fallen to 94 percent from 15.8 percent available. In some big and important countries like Germany and Japan, investors earn negative returns on billions of dollars of sovereign loans. Fixed-income investors around the world – whether pension funds, insurance companies or retirees – face difficulties in the future.
‘Confusion is reality!’
Buffet says, you can remain confused about the market for a long time. Wall Street likes the fees it generates deal-making, and the press loves the stories that colorful promoters provide. Rising stock prices can also become “proof” that the illusion is a reality.