Warren Buffett's "Last Letter" Full Text: I "was just lucky," but "Father Time" has caught up with me, I will "remain silent"

Warren Buffett announced to his shareholders that he is about to "go quiet," marking the end of his illustrious 60-year career at the helm of Berkshire Hathaway and opening a historic turning point for the corporate empire he built.In the letter to shareholders released on Monday, Buffett declared a significant change in his career with the British expression "I’m ‘going quiet’." The 95-year-old Buffett clearly stated that he will step down as CEO by the end of this year and officially withdraw from the company's daily management.Buffett also confirmed that the next annual letter, which is highly anticipated by global investors, will be written by someone else. However, Buffett stated that he will continue to communicate with shareholders about his charitable endeavors through a letter released every Thanksgiving.This transition plan has already impacted market sentiment. Since Buffett first announced his resignation plan in May, Berkshire's Class A shares have fallen by about 8%. In the letter, Buffett mentioned that to ensure a smooth transition for his successor, Greg Abel, he will continue to hold "a significant portion" of Berkshire's Class A shares.While announcing his personal role change, Buffett also used this letter to issue his iconic business wisdom and moral warnings. He harshly criticized the culture of greed in the corporate world, particularly the excessive comparison of executive compensation, leaving a profound admonition for his successor and the entire business community.Advice for SuccessorsIn the letter, Buffett offered clear warnings to future leaders, focusing on corporate greed. He pointed out that the disclosure requirements for executive compensation have had unintended negative effects, sparking a competition among corporate leaders over "who earns more.""What often troubles those very wealthy CEOs is that other CEOs become even wealthier," Buffett wrote, "Jealousy and greed go hand in hand." He emphasized that Berkshire should especially avoid hiring CEOs who expect to retire at 65, crave to become "look-at-me-rich," or attempt to establish a "dynasty."Commitment to Long-TermismBuffett's investment philosophy stands in stark contrast to the evolution of the financial industry in recent decades. In an era marked by the rise of speculative assets like cryptocurrencies and trading times reduced to milliseconds, his advocacy for long-term value investing is particularly unique. His candid communication with shareholders, whether through annual letters or the marathon Q&A sessions at the Omaha annual shareholder meeting, has become a hallmark of his tenure.Since his first investment in the struggling textile company Berkshire in 1962, Buffett has transformed it into a massive business empire, with operations spanning well-known consumer brands like Dairy Queen and Fruit of the Loom, as well as insurance, manufacturing, utilities, and one of North America's largest railroads. He wrote: "Berkshire's way of doing business will forever make it an asset to America and avoid activities that could lead it to become a beggar."Ongoing PhilanthropyWhile announcing a career transition, Buffett also revealed his latest charitable donations. According to the letter, he has donated 2.7 million shares of Berkshire Class B stock, valued at approximately $1.3 billion, to four family foundations managed by his children. This is consistent with his charitable donation plans announced in recent Thanksgiving letters.Buffett first committed in 2006 to donate all of his Berkshire stock for charitable purposes. Since then, he has co-founded the Giving Pledge with Bill Gates and Melinda French Gates, advocating for the world's wealthiest individuals to donate more than half of their wealth to charity.Click the link to read the full text of Buffett's letter to shareholders, with the following Chinese translation:Dear Shareholders:I will no longer write Berkshire's annual report, nor will I ramble on at the annual meeting. As the British say, I will "keep silent."Sort of.Greg Abel will take over at the end of the year. He is an outstanding manager, a tireless worker, and a candid communicator. I wish him a long tenure.I will continue to talk to you and my children about Berkshire through my annual Thanksgiving address. The individual shareholders of Berkshire are a very special group of people who always generously share their earnings with those less fortunate than themselves. I enjoy the opportunity to stay in touch with you. This year, please allow me to reminisce a bit. After that, I will discuss my plans for the distribution of my Berkshire shares. Finally, I will share some business and personal insights.\\\**********As Thanksgiving approaches, I feel both grateful and surprised to have lived to 95. In my youth, such an outcome seemed unlikely. Earlier, I almost died.It was 1938, when the citizens of Omaha believed that local hospitals were either Catholic or Protestant, a classification that seemed quite natural at the time.Our family doctor, Dr. Harold Hoats, was a friendly Catholic who always carried a black medical bag when he made house calls. Dr. Hoats called me "Little Captain," and his fees were always reasonable. In 1938, I had a severe stomach ache, and Dr. Hoats came over, examined me, and told me I would be fine by the next morning.He then went home for dinner and played some bridge. However, Dr. Hoats could not forget my somewhat peculiar symptoms and later that evening took me to St. Catherine's Hospital for an emergency appendectomy. For the next three weeks, I felt like I was in a monastery and began to enjoy my new "pulpit." I loved to talk—yes, even then—the nuns were very kind to meThe best part was that Mrs. Madsen, my third-grade teacher, had all 30 students in the class write me a letter. I probably threw away the boys' letters, but I read the girls' letters over and over again; there are benefits to being hospitalized.The happiest thing during my recovery—actually, the first week was quite dangerous—was a gift from my dear Aunt Eddie. She brought me a very professional-looking fingerprint collection kit, and I immediately collected fingerprints from the nuns who were taking care of me. (I might have been the first Protestant child they had ever seen at St. Catherine's Hospital, and they didn't know what to expect from me.)My thought—of course, it was completely fanciful—was that one day a nun would commit a crime, and the FBI would discover that they had never collected fingerprints from the nuns. The FBI and its director J. Edgar Hoover were admired by Americans in the 1930s, and I imagined Mr. Hoover personally coming to Omaha to check out my precious fingerprint collection. I also fantasized that J. Edgar and I would quickly identify and arrest that wayward nun. A national reputation seemed within reach.Obviously, my fantasy never came true. But ironically, a few years later, I found out that I should have collected fingerprints from J. Edgar himself, as he later fell from grace due to abuse of power.Well, that was Omaha in the 1930s, when my friends and I all longed for a sled, a bicycle, a baseball glove, and an electric train. Let's take a look at a few other kids from that era who lived nearby and had a significant impact on me, though I didn't know of their existence for a long time.I'll start with Charlie Munger, who has been my friend for 64 years. In the 1930s, Charlie lived just a block away from the house where I have lived since 1958.Earlier, I almost became friends with Charlie. He is six and a half years older than me, and in the summer of 1940, he worked at his grandfather's grocery store, working 10 hours a day for $2. (Frugality is a tradition in the Buffett family.) The following year, I also did a similar job at the store, but I didn't meet Charlie until 1959, when he was 35 and I was 28.After serving in World War II, Charlie graduated from Harvard Law School and then permanently settled in California. However, Charlie has always regarded his early years in Omaha as an important phase of his life. For over sixty years, Charlie has had a huge influence on me; he is an excellent teacher and a "big brother" I protect dearly. Although we have our differences, we have never had a quarrel. He never says, "I told you so."In 1958, I bought my first and only house. Of course, it was in Omaha, about two miles from where I grew up (roughly speaking), less than two blocks from my in-laws' house, and about six blocks from the Buffett grocery store, with just a 6 to 7-minute drive to the office building where I worked for 64 years.Let's talk about another Omaha resident, Stan Lipsey. In 1968, Stan sold the Omaha Sun (a weekly) to Berkshire and moved to Buffalo at my request ten years laterAt that time, a subsidiary of Berkshire owned the Buffalo Evening News, which was engaged in a life-and-death struggle with the publisher of the city's only weekly newspaper—its morning competitor—and we were steadily losing ground.Stan ultimately created our new Sunday product, and for several years thereafter, this investment, which had originally been losing a lot of money each year, yielded a pre-tax return rate of over 100% annually. In the early 1980s, this $33 million investment was significant capital for Berkshire.Stan grew up about five blocks from my house. One of Stan's neighbors was young Walter Scott. Walter, you may remember, brought MidAmerican Energy Company to Berkshire in 1999. He was also a director of Berkshire until his death in 2021 and was a dear friend of mine. For decades, Walter was a charitable leader in Nebraska, leaving a deep mark on Omaha and the entire state.Walter attended Benson High School, and I had originally planned to go to that school—until 1942, when my father unexpectedly defeated an incumbent opponent in a congressional election. Life is always full of surprises.Wait, there's more.In 1959, Don Keough and his young family lived in a house across the street from my home, about 100 yards from the old Munger residence. At that time, Don was a coffee salesman, but he later became the president of Coca-Cola and a loyal director of Berkshire.When I met Don, he was earning $12,000 a year, and he and his wife Mickey had to support five children, all of whom had to attend Catholic schools (which were not cheap).Our two families quickly became close friends. Don came from a farm in northwest Iowa and graduated from Creighton University in Omaha. Early on, he married a girl from Omaha named Mickey. After joining Coca-Cola, Don quickly became famous worldwide.In 1985, during Don's presidency at Coca-Cola, the company launched the ill-fated New Coke. Don gave a famous speech apologizing to the public and reintroduced the "old" Coca-Cola. This shift occurred after Don explained that letters sent to the "supreme idiots" would quickly land on his desk. His "retraction" speech is a classic and can be viewed on YouTube. He cheerfully acknowledged that, in fact, Coca-Cola products belonged to the public rather than the company. Sales then surged significantly.You can watch a great interview with Don on CharlieRose.com. (Tom Murphy and Kay Graham also have some great segments.) Like Charlie Munger, Don has always been a genuine Midwestern boy, warm, friendly, and thoroughly American at heart.Finally, Ajit Jain, who was born and raised in India, and Greg Abel, a Canadian who is about to become our CEO, both lived in Omaha for several years at the end of the 20th century. In fact, in the 1990s, Greg lived just a few blocks away from me on Farnam Street, although we never met at that timeIs there some magical ingredient in the water of Omaha?\\\**********I lived in Washington D.C. for a few years when I was a teenager (my father was serving in Congress at the time), and in 1954, I found a job in Manhattan that I thought I would do for a lifetime. There, Ben Graham and Jerry Newman were very kind to me, and I made many lifelong friends. New York has a unique charm—still does. However, just a year and a half later, in 1956, I returned to Omaha and have never left since.Later, my three children and several grandchildren grew up in Omaha. My children attended public schools (graduating from the same high school, which also educated my father (class of 1921), my first wife Susie (class of 1950), and key figures in the development of Nebraska Furniture Mart like Charlie, Stan Lipsey, Erv and Ron Blumkin, as well as Jack Ringwalt, class of 1923, who founded National Indemnity Company and sold it to Berkshire in 1967, laying the foundation for our massive property insurance business).\\\**********Our country has many great companies, great schools, and great medical institutions, each with its unique strengths and talented individuals. But I feel very fortunate to have made many lifelong friends, to have met my two wives, to have received a good education in public schools, to have met many interesting and friendly adults in Omaha as a child, and to have made a variety of friends in the Nebraska National Guard. In short, Nebraska has always been my true home.Looking back, I believe that Berkshire and I have achieved better results largely because we are rooted in Omaha. If I had been born elsewhere, the outcome could have been very different. The heartland of America is an excellent place to be born, raise a family, and start a business. I was lucky to draw an unusually long straw when I was born.\\\**********Now, let's talk about my old age. My genes haven't given me much of an advantage—the family longevity record (of course, the further back you trace, the more blurred the family records become) has always been 92 years, until I broke that record. However, I have wise, kind, and diligent doctors in Omaha, starting with Dr. Harrey Hots and continuing to the present. At least three times, my life has been saved by doctors not far from home. (However, I no longer give nurses my fingerprints. A 95-year-old can have many quirks... but there is a limit.)\\\**********Living to such an old age as a centenarian requires a great deal of luck, dodging banana peels, natural disasters, drunk or distracted drivers, lightning strikes, and other such dangers every dayBut Lady Luck is capricious, and—there's no other way to describe it—extremely unfair. In many cases, our leaders and the wealthy receive far more luck than they deserve—and these fortunate individuals often refuse to acknowledge it. Some privileged children are born into lifelong financial security, while others face hellish circumstances in their childhood, and even worse, suffer disabilities, losing everything I take for granted. In many densely populated areas of the world, I might live a miserable life, while my sisters would have it even worse.I was born in 1930 in the United States, healthy, smart, white, and male. Wow! Thank you, Lady Luck. My sisters are just as smart as I am, with better personalities, but their life prospects are vastly different. Lady Luck has favored me for most of my life, but she hasn’t had time to look after those in their nineties. Luck also has its limits.Father Time, on the other hand, is quite the opposite; as I grow older, he finds me increasingly interesting. He is undefeated; for him, everyone eventually counts on his "winners" list. When balance, vision, hearing, and memory continue to decline, you know Father Time is nearby.I entered old age relatively late—the onset of aging varies from person to person—but once it appears, it cannot be denied.To my surprise, I feel generally good. Although I move slowly and reading is becoming increasingly difficult, I still work five days a week in the office, collaborating with outstanding people. Occasionally, I come up with some useful ideas, or someone presents us with suggestions that might not have otherwise arisen. Due to Berkshire's size and market conditions, good ideas are scarce—but not nonexistent.\\\**********However, my unexpectedly long life has had a significant and unavoidable impact on my family and the realization of my charitable goals.Let’s explore them.What’s NextMy children are all past the normal retirement age, at 72, 70, and 67 years old, respectively. It is clearly unrealistic to expect all three of them—who have reached their peaks in many ways—to delay aging like I have. To increase the likelihood that they will handle nearly all of my estate before my designated trustees take over, I need to accelerate my lifetime gifts to their three foundations. My children are now at their peak in experience and wisdom, but they have not yet entered old age. This "honeymoon period" will not last forever.Fortunately, adjusting the course is easy to execute. However, there is an additional factor to consider: I want to retain a significant amount of Class A shares until Berkshire's shareholders have confidence in Greg, just as Charlie and I do. This level of trust should not take too long. My children are fully supportive of Greg, and so are the directors of Berkshire.Today, these three children are all mature, intelligent, energetic, and instinctively capable of managing a large fortune. They will remain active in the world long after I am gone, which will be their advantageIf necessary, they can adopt both proactive and responsive strategies to address federal tax policies or other factors affecting the development of charities. They will likely need to adapt to the significant changes occurring in the world around them. Remote control after death has never been effective, and I have never had that impulse.Fortunately, all three children inherited dominant genes from their mother. As the years go by, I have gradually become a better role model for their thinking and behavior. However, I can never compare to their mother.My children have three alternate guardians in case of any accidental death or disability. These three alternate guardians are not in any particular order and are not bound to any specific child. They are all outstanding individuals with a deep understanding of the world. They have no conflicting motives.I have assured my children that they do not need to create miracles, nor should they fear failure or disappointment. These are inevitable, and I have experienced them too. They only need to make progress based on the achievements typically made by government activities and/or private charities, while recognizing that there are shortcomings in these wealth redistribution methods.Earlier, I had envisioned various grand charitable plans. Despite my stubborn personality, these plans ultimately did not come to fruition. Throughout my long life, I have also witnessed politicians' clumsy wealth transfers, familial choices, and of course, those incompetent or eccentric philanthropists.If my children do well, they can be sure that both I and their mother will be pleased. They have good instincts, and each of them has years of practical experience, starting with small amounts and gradually increasing to over $500 million annually.All three enjoy working long hours to help others, just in different ways.\\\**********I am accelerating my donations to the children's foundation, not because I have changed my view on Berkshire's prospects. Greg Abel has far exceeded my expectations when I initially thought he should become Berkshire's next CEO. His understanding of many of our businesses and personnel far surpasses mine, and he can quickly grasp issues that many CEOs have not considered. Whether you are talking about a CEO, a management consultant, an academic, or a government official, I cannot think of anyone more suitable than Greg to manage your and my savings.For example, Greg's understanding of the potential benefits and risks of our property and casualty insurance business far exceeds that of many executives who have been in the business for a long time. I hope his health remains good for decades. If luck is on our side, Berkshire will only need five or six CEOs over the next century. It is especially important to avoid those who are solely focused on retiring at 65, wanting to become a prominent billionaire, or wishing to establish a family dynasty.An unpleasant fact is that sometimes, an outstanding and loyal CEO of the parent company or subsidiary may suffer from dementia, Alzheimer's disease, or other debilitating and long-term afflictionsCharlie and I have encountered this issue many times, but we have not taken action. This failure could lead to significant mistakes. The board must remain vigilant at the CEO level, and the CEO must also remain vigilant at the subsidiary level. It's easier said than done; I can cite examples from some large companies in the past. All I can suggest is that directors stay alert and dare to speak up.In my lifetime, reformers have tried to embarrass CEOs by requiring the disclosure of the comparison between CEO compensation and that of ordinary employees. As a result, the length of proxy statements quickly ballooned from around 20 pages to over 100 pages.However, these good-intentioned measures have not worked; instead, they have backfired. From my observation, in most cases, when CEO A sees the situation of competitor B, he hints to the board that he should receive a higher salary. Of course, he also raises the compensation of the directors and is particularly cautious in selecting members of the compensation committee. The new regulations have sparked jealousy rather than restraint.This upward spiral trend seems to have a life of its own. What often troubles those very wealthy CEOs is that other CEOs are becoming wealthier. Jealousy and greed always go hand in hand. Which advisor would suggest significantly cutting the CEO's salary or the board's compensation?Overall, the prospects for Berkshire's subsidiaries are slightly better than average, with several substantial and relatively uncorrelated shining gems among them. However, ten or twenty years from now, many companies will outperform Berkshire; our size also brings disadvantages.The likelihood of Berkshire encountering a catastrophic disaster is smaller than any company I know of. Moreover, Berkshire's management and board pay more attention to shareholder interests than almost any company I am familiar with (and I have seen quite a few). Ultimately, Berkshire's way of operating will always ensure its existence as a source of wealth in America, rather than engaging in activities that would reduce it to begging. Over time, our managers should become quite wealthy—they bear significant responsibilities—but they do not aspire to build hereditary wealth or pursue that kind of conspicuous wealth.Our stock price will be volatile, sometimes dropping around 50%, just as it has happened three times in the past 60 years under the current management. Don't be discouraged; America will recover, and Berkshire's stock will rebound.A few final thoughtsPerhaps this is a self-serving observation. I am pleased to say that I am more satisfied with the second half of my life than the first half. My advice is: don't blame yourself for past mistakes—at least learn a lesson from them and move on. It's never too late to improve. Find the right role models and emulate them. You can start with Tom Murphy, who is the best.Do you remember Alfred Nobel? He later became famous for establishing the Nobel Prize. It is said that he once read his mistakenly printed obituary, which was published when his brother died, and the newspaper got it wrong. The content he read shocked him, leading him to realize that he should change his behaviorDon't expect the newsroom to get it wrong: think about what you want your obituary to say, and then strive to live that kind of life.Greatness does not come from accumulating vast wealth, gaining extensive exposure, or wielding immense power in government. When you help others in thousands of ways, you are helping the world. Acts of kindness come at no cost, yet are invaluable. Whether you are religious or not, the Golden Rule is hard to surpass as a code of conduct.I write this as someone who has been careless and made many mistakes countless times, but has also been fortunate to learn from some wonderful friends how to navigate life better (though I am far from perfect). Remember, a janitor and a chairman are both human.\\\**********Wishing a happy Thanksgiving to everyone reading this. Yes, including those grumpy ones; it's never too late to change. Don't forget to be grateful that America has provided you with the greatest opportunities. But America is inevitably capricious in distributing rewards, sometimes even profit-driven.Choose your role models wisely, and then emulate them. You may never achieve perfection, but you can always strive to be better