1998

Click here to read the letter.

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🧠 Key Takeaways

• If you’re getting more than a dollar of value for every dollar you spend, that’s a win—regardless of how it looks on this quarter’s income statement.

• Successful investing isn’t about being busy—it’s about being selective.

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✍️ Memorable Quotes

“Because of the first-year costs, companies that are concerned about quarterly or annual earnings would shy from similar investments, no matter how intelligent these might be in terms of building long-term value. Our calculus is different: We simply measure whether we are creating more than a dollar of value per dollar spent - and if that calculation is favorable, the more dollars we spend the happier I am.”

Most companies get obsessed with short-term optics—in a lot of cases, because their feet are held to the fire by the market—so they fail to make smart long-term decisions because they might hurt earnings in the short term.

But Buffett doesn’t agree with that line of thinking. Instead, he’s basically saying: if you’re getting more than a dollar of value for every dollar you spend, that’s a win—regardless of how it looks on this quarter’s income statement.

“Charlie and I have the easy jobs at Berkshire: We do very little except allocate capital. And, even then, we are not all that energetic. We have one excuse, though: In allocating capital, activity does not correlate with achievement. Indeed, in the fields of investments and acquisitions, frenetic behavior is often counterproductive. Therefore, Charlie and I mainly just wait for the phone to ring.”

In a nutshell, doing more isn’t always better—and in investing, constantly staying busy can actually hurt you. At the end of the day, successful investing isn’t about being busy—it’s about being selective.

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