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4 Lessons from Warren Buffett’s Letter to Shareholders

Each year, Berkshire Hathaway CEO Warren Buffett lets us inside his mind when he writes his letter to shareholders. This year Buffett’s leadership lessons include: don’t invest in gold, hormones will cause housing to bounce back, the Facebook IPO may not be the event of the century, and maybe most importantly, it’s okay for CEOs to admit their missteps.

Most executives would kill to have the investing prowess and success that Berkshire Hathaway CEO Warren Buffett has seen. In his 2012 letter to shareholders, and Time’s coverage of the letter, CEOs can find important insights into what Buffett thinks about his companies, the economy and leadership style.

  1. Invest in productive assets instead of gold or other currency assets: investing in farmland or oil companies like Exxon Mobil will provide far more significant returns over the long run
  2. Hormones help housing rebound: in uncertain times people put off getting married, but Buffett says that living with parents will get old and desires to pair off will ensure a housing rebound
  3. It may be okay to forgo the Facebook IPO: though Buffett doesn’t say any of this explicitly, he fails to mention investing in internet IPOs, and makes it clear that long-term investment in productive and under-valued assets are safer and will provide better returns
  4. Even Warren Buffett makes mistakes and it’s okay to acknowledge them: not even Buffett’s batting average is perfect, like his investment in Texas’ Energy Future holdings that caused him to write down $1.4 billion. He went so far as to say, “In tennis parlance, this was a major unforced error by your chairman.”

Read: Warren Buffett on Succession, Stock Buybacks and Why He Doesn’t Like Gold

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