分类: 巴菲特


2024年 4月 23日


### 1958 Letter

### Warren E Buffett

### 5202 Underwood Ave. Omaha, Nebraska


A friend who runs a medium-sized investment **trust** recently wrote: “The **mercurial** **temperament**, characteristic of the American people, produced a major transformation in 1958 and ‘**exuberant**’ would be the proper word for the stock market, at least”.

I think this summarizes the change in psychology **dominating** the stock market in 1958 at both the **amateur** and professional levels. During the past year almost any reason has been **seized** upon to **justify** “Investing” in the market. There are undoubtedly more mercurially-tempered people in the stock market now than for a good many years and the **duration** of their stay will be limited to how long they think profits can be made quickly and effortlessly. While it is impossible to **determine** how long they will continue to add numbers to their ranks and thereby **stimulate** rising prices, I believe it is **valid** to say that the longer their visit, the greater the reaction from it.

I make no attempt to forecast the general market – my efforts are **devoted** to finding undervalued securities. However, I do believe that widespread public belief in the **inevitability** of profits from investment in stocks will lead to **eventual** trouble. Should this occur, prices, but not intrinsic values in my opinion, of even undervalued securities can be expected to be substantially affected.

#### 1958 年股市情况


我认为这句话很好地概括了 1958 年股市投资者的心理变化,不管是普通投资者还是专业人士都受到了影响。在过去一年中,人们几乎抓住一切机会来为投资股市找理由。显然,现在股市中情绪化的投资者比往年更多,他们在股市中停留的时长将取决于他们认为能够多快且不费力地获得收益。尽管我们无法预知这种情绪化投资的热潮将持续多久,但可以肯定的是,这种趋势持续得越久,最终可能引发的市场反应也会越激烈。


### RESULTS IN 1958

In my letter of last year, I wrote:

“Our performance, relatively, is likely to be better in a bear market than in a bull market so that deductions made from the above results should be **tempered** by the fact that it was the type of year when we should have done relatively will. In a year when the general market had a substantial advance, I would be well satisfied to match the advance of the averages.”

The latter sentence describes the type of year we had in 1958 and my forecast worked out. The Dow-Jones Industrial average advanced from 435 to 583 which, after adding back dividends of about 20 points, gave an **overall** gain of 38.5% from the Dow-Jones unit. The five partnerships that operated throughout the entire year obtained results averaging slightly better than this 38.5%. Based on market values at the end of both years, their gains ranged from 36.7% to 46.2%. Considering the fact that a substantial **portion** of assets has been and still is invested in securities, which benefit very little from a fast-rising market, I believe these results are **reasonably** good. I will continue to forecast that our results will be above average in a declining or level market, but it will be all we can do to keep pace with a rising market.

#### 1958 年的成果



后面一句话恰好描述了 1958 年的市场状况,我的预测得以证实。道琼斯工业平均指数从 435 点攀升至 583 点,再加上大约20点的股息,道琼斯指数收益达到了 38.5%。五家合伙企业所取得的平均成果略高于这一数字。根据年初和年末的市场价格,他们的收益率介于 36.7% 至 46.2% 之间。鉴于我们有相当一部分资金是在快速上涨的股市中投资的,收益比较低,所以我认为今年总体的成果是相当不错的。我的观点仍然不变,在下跌或平稳股市中,我们的业绩将高于平均水平;而在股市上升时,我们的目标是至少能够跟上股市的增长步伐。


So that you may better understand our method of operation, I think it would be well to review a specific activity of 1958. Last year I referred to our largest holding which comprised 10% to 20% of the assets of the various partnerships. I pointed out that it was to our interest to have this stock decline or remain relatively steady, so that we could acquire an even larger position and that for this reason such a security would probably hold back our comparative performance in a bull market.

This stock was the Commonwealth Trust Co. of Union City, New Jersey. At the time we started to purchase the stock, it had an intrinsic value $125 per share computed on a conservative basis. However, for good reasons, it

   4paid no cash dividend at all despite earnings of about $10 per share which was largely responsible for a depressed price of about $50 per share. So here we had a very well managed bank with substantial earnings power selling at a large discount from intrinsic value. Management was friendly to us as new stockholders and risk of any ultimate loss seemed minimal.

Commonwealth was 25.5% owned by a larger bank (Commonwealth had assets of about $50 Million – about half the size of the First National in Omaha), which had desired a merger for many years. Such a merger was prevented for persona1 reasons, but there was evidence that this situation would not continue indefinitely. Thus we had a combination of:

1. Very strong defensive characteristics;

2. Good solid value building up at a satisfactory pace and;

3. Evidence to the effect that eventually this value would be unlocked although it might be one year or ten

years. If the latter were true, the value would presumably have been built up to a considerably larger figure, say, $250 per share.

Over a period of a year or so, we were successful in obtaining about 12% of the bank at a price averaging about $51 per share. Obviously it was definitely to our advantage to have the stock remain dormant in price. Our block of stock increased in value as its size grew, particularly after we became the second largest stockholder with sufficient voting power to warrant consultation on any merger proposal.

Commonwealth only had about 300 stockholders and probably averaged two trades or so per month, so you can understand why I say that the activity of the stock market generally had very little effect on the price movement of some of our holdings.

Unfortunately we did run into some competition on buying, which railed the price to about $65 where we were neither buyer nor seller. Very small buying orders can create price changes of this magnitude in an inactive stock, which explains the importance of not having any “Leakage” regarding our portfolio holdings.

Late in the year we were successful in finding a special situation where we could become the largest holder at an attractive price, so we sold our block of Commonwealth obtaining $80 per share although the quoted market was about 20% lower at the time.

It is obvious that we could still be sitting with $50 stock patiently buying in dribs and drabs, and I would be quite happy with such a program although our performance relative to the market last year would have looked poor. The year when a situation such at Commonwealth results in a realized profit is, to a great extent, fortuitous. Thus, our performance for any single year has serious limitations as a basis for estimating long term results. However, I believe that a program of investing in such undervalued well protected securities offers the surest means of long term profits in securities.

I might mention that the buyer of the stock at $80 can expect to do quite well over the years. However, the relative undervaluation at $80 with an intrinsic value $135 is quite different from a price $50 with an intrinsic value of $125, and it seemed to me that our capital could better be employed in the situation which replaced it. This new situation is somewhat larger than Commonwealth and represents about 25% of the assets of the various partnerships. While the degree of undervaluation is no greater than in many other securities we own (or even than some) we are the largest stockholder and this has substantial advantages many times in determining the length of time required to correct the undervaluation. In this particular holding we are virtually assured of a performance better than that of the Dow-Jones for the period we hold it.


The higher the level of the market, the fewer the undervalued securities and I am finding some difficulty in securing an adequate number of attractive investments. I would prefer to increase the percentage of our assets in work-outs, but these are very difficult to find on the right terms.

To the extent possible, therefore, I am attempting to create my own work-outs by acquiring large positions in several undervalued securities. Such a policy should lead to the fulfillment of my earlier forecast – an above average performance in a bear market. It is on this basis that I hope to be judged. If you have any questions, feel free to ask them.


2024年 4月 23日 15 1

2024年 4月 8日

致股东信:1957年 (翻译完成) 




















The General Stock Market Picture in 1957

In last year’s letter to partners, I said the following: My view of the general market level is that it is priced above intrinsic value. This view relates to blue-chip securities. This view, if accurate, carries with it the possibility of a substantial decline in all stock prices, both undervalued and otherwise. In any event, I think the probability is very slight that current market levels will be thought of as cheap five years from now. Even a full-scale bear market, however, should not hurt the market value of our work-outs substantially. If the general market were to return to an undervalued status, our capital might be employed exclusively in general issues and perhaps some borrowed money would be used in this operation at that time.



Conversely, if the market should go considerably higher, our policy will be to reduce our general issues as profits present themselves and increase the work-out portfolio. All of the above is not intended to imply that market analysis is foremost in my mind. Primary attention is given at all times to the detection of substantially undervalued securities.


The past year witnessed a moderate decline in stock prices. I stress the word “moderate” since casual reading of the press or conversing with those who have had only recent experience with stocks would tend to create an impression of a much greater decline. Actually, it appears to me that the decline in stock prices has been considerably less than the decline in corporate earning power under present business conditions. This means that the public is still very bullish on blue-chip stocks and the general economic picture.


I make no attempt to forecast either business or the stock market; the above is simply intended to dispel any notions that stocks have suffered any drastic decline or that the general market is at a low level. I still consider the general market to be priced on the high side based on long-term investment value.


Our Activities in 1957

The market decline has created greater opportunity among undervalued situations so that, generally, our portfolio is heavier in undervalued situations relative to work-outs than it was last year. Perhaps an explanation of the term “work-out” is in order. A work-out is an investment which is dependent on a specific corporate action for its profit rather than a general advance in the price of the stock as in the case of undervalued situations. Work-outs come about through sales, mergers, liquidations, tenders, etc. In each case, the risk is that something will upset the applecart and cause the abandonment of the planned action, not that the economic picture will deteriorate and stocks decline generally.



At the end of 1956, we had a ratio of about 70-30 between general issues and work-outs. Now it is about 85-15. During the past year, we have taken positions in two situations which have reached a size where we may expect to take some part in corporate decisions. One of these positions accounts for between 10% and 20% of the portfolio of the various partnerships and the other accounts for about 5%. Both of these will probably take in the neighborhood of three to five years of work but they presently appear to have potential for a high average annual rate of return with a minimum of risk.


While not in the classification of work-outs, they have very little dependence on the general action of the stock market. Should the general market have a substantial rise, of course, I would expect this section of our portfolio to lag behind the action of the market.


Results for 1957

In 1957, the three partnerships which we formed in 1956 did substantially better than the general market. At the beginning of the year, the Dow-Jones Industrials stood at 499 and at the end of the year it was at 435 for a loss of 64 points. If one had owned the Averages, he would have received 22 points in dividends reducing the overall loss to 42 points or 8.470% for the year. This loss is roughly equivalent to what would have been achieved by investing in most investment funds and, to my knowledge, no investment fund invested in stocks showed a gain for the year.



All three of the 1956 partnerships showed a gain during the year amounting to about 6.2%, 7.8%, and 25% on year-end 1956 net worth. Naturally, a question is created as to the vastly superior performance of the last partnership, particularly in the mind of the partners of the first two. This performance emphasizes the importance of luck in the short run, particularly in regard to when funds are received.The third partnership was started the latest in 1956 when the market was at a lower level and when several securities were particularly attractive. Because of the availability of funds, large positions were taken in these issues. Whereas the two partnerships formed earlier were already substantially invested so that they could only take relatively small positions in these issues.


Basically, all partnerships are invested in the same securities and in approximately the same percentages. However, particularly during the initial stages, money becomes available at varying times and varying levels of the market so there is more variation in results than is likely to be the case in later years. Over the years, I will be quite satisfied with a performance that is 10% per year better than the Averages, so in respect to these three partnerships, 1957 was a successful and probably better than average, year.


Two partnerships were started during the middle of 1957 and their results for the balance of the year were
roughly the same as the performance of the Averages which were down about 12% for the period since
inception of the 1957 partnerships. Their portfolios are now starting to approximate those of the 1956
partnerships and performance of the entire group should be much more comparable in the future.


Interpretation of results

To some extent our better than average performance in 1957 was due to the fact that it was a generally poor year for most stocks. Our performance, relatively, is likely to be better in a bear market than in a bull market so that deductions made from the above results should be tempered by the fact that it was the type of year when we should have done relatively well. In a year when the general market had a substantial advance I would be well satisfied to match the advance of the Averages.



I can definitely say that our portfolio represents better value at the end of 1957 than it did at the end of 1956. This is due to both generally lower prices and the fact that we have had more time to acquire the more substantially undervalued securities which can only be acquired with patience. Earlier I mentioned our largest position which comprised 10% to 20% of the assets of the various partnerships. In time I plan to have this represent 20% of the assets of all partnerships but this cannot be hurried. Obviously during any acquisition period, our primary interest is to have the stock do nothing or decline rather than advance. Therefore, at any given time, a fair proportion of our portfolio may be in the sterile stage. This policy, while requiring patience, should maximize long term profits.


I have tried to cover points which I felt might be of interest and disclose as much of our philosophy as may be imparted without talking of individual issues. If there are any questions concerning any phase of the operation, I would welcome hearing from you.



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我和查理将你们在伯克希尔的资产按照两种所有权的形式进行资本投资。 首先,我们投资于我们控股的企业,通常是100%控股的企业。伯克希尔指导这些子公司的资本配置,并为他们挑选合适的CEO。当管理大型企业时,信任和规则都是必不可少的。伯克希尔对所挑选的CEO极其信任,——甚至到了有些人会说是极端的程度。失望是难免的。我们理解商业决策有时会做错,但对于个人的不端行为则毫不容忍。



多年来,我犯了很多错误。因此,我们现在的投资组合中除了少数几家具有优秀商业模式和业绩表现的企业,还有很多不怎么样的企业。在此过程中,我曾投资过的一些企业已经倒闭了,因为它们生产出来的产品被公众所抛弃! 资本具有两面性:不断产生失败者的同时也不断带来改进的商品和服务,这种现象被奥地利经济学家约瑟夫·熊彼特 (Joseph Schumpeter)称为 ‘创造性破坏'(creative destruction)

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