Comprehensive report from the Hong Kong Wonder News Agency reported that on the evening of the 22nd, Beijing time, Buffett, the stock god, published an annual open letter to the shareholder on the official website of Berkshire-Hathaway. Buffett's open letter to shareholders in 2020 discusses Berkshire's gains and losses in 2019.

According to the financial report, Berkshire Hathaway's Income from operations in the fourth quarter of 2019 was 4.42 billion dollars, a decrease of 23% year-on-year, and 5.72 billion dollars in the same period last year; Berkshire Hathaway Shareholders' Net income was 29.159 billion dollars, compared to a net loss of 25.392 billion dollars in the same period last year. The company's 2019 net income was 81.417 billion dollars, of which Operation profit was 24 billion dollars, capital appreciation of 3.7 billion dollars has been honored, and capital appreciation of 53.7 billion dollars has not been honored.

In the fourth quarter of 2019, Berkshire Hathaway Class A (BRK.A) Income Per Share was $ 17,909, with a loss of $ 15,467 per share in the same period last year; Class B (BRK.B) Income Per Share was $ 11.94 , A loss of $ 10.31 per share in the same period last year.

As of December 31, 2019, the total number of Class A tradable shares of Berkshire Hathaway was 1,628,138 shares and the total number of Class B tradable shares was 2,422,270,505.

Looking at the full year of 2019, Net income attributable to Berkshire Hathaway shareholders was 81.417 billion dollars, compared to 4.021 billion dollars in the same period last year.

Among them, investment income was 56.272 billion dollars, compared with investment loss of 17.5 billion dollars in the same period last year; derivative income was 1.173 billion dollars, compared with 2.3.7 billion dollars in derivative loss in the same period last year; Intangible Assets Loss was zero, compared with 3.023 billion dollars in the same period last year; Operation profit was 23.972 billion dollars, compared with 24.781 billion dollars in the same period last year; Class A Ordinary Shares Income Per Share was $ 49,828, and Income Per Share was $ 2,446 in the same period last year; B Ordinary Shares Income Per Share was $ 33.22, compared with $ 1.63 for Income Per Share in the same period last year.

Berkshire Hathaway stated that due to changes in the generally accepted accounting principles (GAAP) in 2018, changes in unrealized gains / losses of stock securities investment need to be included in the income statement as a component of investment gains / losses. Therefore, the investment gains / losses in 2019 include approximately 23.6 billion dollars in the fourth quarter and approximately 53.7 billion dollars in the year, and 2018 include approximately 28.1 billion dollars in the fourth quarter and approximately 20.6 billion dollars in the year. These losses were due to changes in the fourth quarter and unrealized gains in our stock securities investment holding. Investment gains / losses also include after-tax realized gains from investment sales in the fourth quarter of 2019 and fourth quarter of 2018, which are approximately 1 billion dollars and 0.8 billion dollars, respectively, and approximately 2.6 billion dollars for the full year of 2019 and 2018 About 3.1 billion dollars per year.

By convention, the performance of Berkshire and the benchmark of the US stock market: the performance of the S & P 500 index. In 2019, Berkshire's growth rate per stock market was 11.0%, while the S & P 500 index increased by 31.5%. Seoul lost 20.5 percentage points. But in the long run, from 1965 to 2019, Berkshire's compound annual growth rate per stock market value was 20.3%, which significantly exceeded 10.0% of the S & P 500 index. From 1964 to 2019, Berkshire's market value growth rate was An astonishing 2744062%, which is more than 27440 times, and the S & P 500 index is 19784%, which is close to 200 times.

Warren Buffett Letter to Shareholder Homepage Compare Berkshire's Performance with US Stocks Benchmark: Performance of the S & P 500

Table note: data in the table is the normal calendar year data, with the exception of the following years: 1965 and 1966 are as of September 30 of the year, and 1967 is a total of 15 months, ending on December 31 of the year.

As of the end of 2019, the company's total market value of stock held was 248.027 billion dollars, which was an increase of 75.27 billion dollars or 43.57% compared to the market value of 172.757 billion dollars held at the end of 2018. The S & P 500 Index will increase by 28.88% in 2019. Buffett stock positions outperformed the market by 14.69 percentage points.  Berkshire Hathaway First largest position APPLE The stock price increased by 88.96% in 2019, contributing a lot. But Berkshire Hathaway (Class A) shares rose only 11% last year, underperforming the broader market.

Full translation of Buffett's open letter to shareholder in 2019: (continuously updated)

To  Berkshire Hathaway shareholder ：

According to the US General Purpose Accounting Standards (GAAP), Berkshire's 2019 profit is 81.4 billion dollars, including: Operation profit of 24 billion dollars, 3.7 billion dollars of realized capital gain, and 53.7 billion dollars from the stock we hold Gains from unrealized capital gain gains. Each part of the above benefits is listed on an after-tax basis.

The 53.7 billion dollars gain needs to be said. This is due to new GAAP rules implemented in 2018 that require companies holding stock securities to include in their earnings a net change in the unrealized profit or loss of these Securities. As we said in our letter last year, whether I manage a Berkshire partner  Charlie Munger (Charlie Munger), or I do not agree with this rule.

In fact, the adoption of this rule by the accounting industry is a huge change in its own thinking. Prior to 2018, GAAP insisted that-except for companies whose business is a Securities transaction-unrealized gains and losses in the stock portfolio were never included in the gains and only counted as unrealized losses if they were considered "non-provisional. right now,  Berkshire Hathaway (343449, 1327.00, 0.39%) must make a profit every quarter-this is a key project for many investors, analysts, and commentators-taking into account every fluctuation in the stocks that they own, No matter how capricious these fluctuations are.

Berkshire's 2018 and 2019 earnings reports clearly illustrate our controversy over the new rules. In 2018, when the stock market fell, our unrealized Net proceeds decreased by 20.6 billion dollars, so we reported GAAP gains of only 4 billion dollars. In 2019, due to rising stock prices, the unrealized Net proceeds increased the aforementioned 53.7 billion dollars, pushing GAAP revenue to reach the 81.4 billion dollars reported at the beginning of this letter. These market fluctuations have caused GAAP earnings to grow 1900%!

At the same time, in what we call the real world, unlike the accounting field, Berkshire ’s stock holdings averaged about 200 billion dollars in the past two years. The intrinsic value of our stocks is Steady and substantial growth throughout the period.

Charlie and I urge you to focus on Operation's profits-with little change in 2019-and ignore quarterly and annual investment gains or losses, whether those gains are realized or unrealized.

Our recommendations do not diminish the importance of these investments to Berkshire. Over time, Charlie and I expect our holdings-as a whole-to bring significant gains, albeit in an unpredictable and highly irregular manner. To understand why we are optimistic, go to the next discussion.