Warren Buffett Still Has Plenty of Confidence in the American Economy

Second, Buffett regarded it with mixed feelings.

Book value, a metric he's called a "crude, but useful" way to track the conglomerate's worth, climbed 13 percent to $211,750 per Class A share at the end of 2017 compared to three months earlier, the company said Saturday in a statement.

Per share, it was a value gain of 23% - the company's best result in almost 20 years. The 23% also nicely beat out the 19.1% average for Buffett's 53 years of running the company. One of Buffett's favorite charities, Girls Inc. of Omaha, received $2.2 million as a result of the bet. The $65 billion is "real,"he wrote: "Rest assured of that". "But only $36 billion came from Berkshire's operations. The remaining $29bn was delivered to us in December when Congress rewrote the USA tax code".

Treasury yields have been rising since the start of the year, stemming from brewing inflationary pressures and massive bond supply to help fund US President Donald Trump's tax overhaul.

Berkshire's cash pile swelled to $116 billion from $109 billion in the third quarter.

A footnote in Berkshire's 10-K filing with the Securities & Exchange Commission reveals the full answer, spelling out a string of positive and negative tax items that, if nothing else, prove just how complex TCJA is.

Shanahan said it also would have been nice to read Buffett's thoughts on why he is selling off Berkshire's IBM investment but maintaining big stakes in Wells Fargo and US Bancorp.

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"A large portion of our gain did NOT come from anything we accomplished at Berkshire", he wrote.

The five analysts surveyed by FactSet expected Berkshire to report operating earnings per Class B share of $1.76. But the new law reduced that rate to 21%.

"We will stick with our simple guideline: The less the prudence with which others conduct their affairs, the greater the prudence with which we must conduct our own", Buffett wrote. Some $6.6 billion of that gain meanwhile got eaten up by tax items that went the other way-and that's how TCJA managed to contribute $29 billion to Berkshire's gains for the year.

Besides the statistics, here are two things we learned (or did not learn) from Buffett's letter to shareholders.

The writer of this article, Carol Loomis, is a retired senior editor-at-large of Fortune.

The "Oracle of Omaha's" famed annual letter to Berkshire shareholders has become a favourite in the investor calendar but it has attracted heightened interest this year amid rumours that the 87-year-old would unveil plans to step down.

  • Rita Burton