Dec 12, 2011

Excerpts of Letter of Warren Buffett to Shareholders, year 1977

Excerpts/Key Learnings from Warren Buffett’s Letter to Shareholders for year 1977:
The excerpts are taken from the letter and not changed with words or sentences. References are given as and wherever necessary.

After all, even a totally dormant savings account will produce steadily rising interest earnings each year because of compounding.

     …Except for special cases (for example, companies with unusual debt-equity ratios or those with important assets carried at unrealistic balance sheet values), we believe a more appropriate measure of managerial economic performance to be return on equity capital.

     …The textile business again had a very poor year in 1977.  We have mistakenly predicted better results in each of the last two years.  This may say something about our forecasting abilities, the nature of the textile industry, or both.