Two Strings to Our Bow

Two Strings to Our Bow(bō)

excerpted(ˈekˌsərpt) from Warren Buffett’s 2020 letter(ˈledər) to Berkshire(ˈbərkSHər) Hathaway shareholders

Charlie(ˈCHärlē) and I want our conglomerate(kənˈɡlämərət) to own all or part of a diverse(dəˈvərs) group of businesses with good economic(ˌekəˈnämik) characteristics and good managers. Whether Berkshire controls these businesses, however, is unimportant to us.

It took me a while to wise(wīz) up. But Charlie – and also my 20-year struggle with the textile(ˈtekˌstīl) operation I inherited(inˈherədəd) at Berkshire – finally convinced me that owning a non-controlling portion(ˈpôrSH(ə)n) of a wonderful business is more profitable(ˈpräfədəb(ə)l), more enjoyable and far less work than struggling with 100% of a marginal(ˈmärjənl) enterprise(ˈen(t)ərˌprīz).

For those reasons, our conglomerate will remain(rəˈmān) a collection of controlled and non-controlled businesses. Charlie and I will simply deploy your capital into whatever we believe makes the most sense, based on a company’s durable(ˈd(y)o͝orəb(ə)l) competitive(kəmˈpedədiv) strengths, the capabilities and character of its management, and price.

If that strategy requires little or no effort on our part, so much the better. In contrast to the scoring(skôr) system utilized(ˈyo͞odlˌīz) in diving competitions, you are awarded(əˈwôrd) no points in business endeavors(ənˈdevər) for “degree of difficulty.” Furthermore, as Ronald Reagan(ˈrāɡən) cautioned(ˈkôSH(ə)n): “It’s said that hard work never killed anyone, but I say why take the chance?”