It is no secret that Buffett has left an extraordinary written record of his investment experiences and wisdom. Although I have read many of the Berkshire letters, I have not yet read the letters from the original Buffett Partnership. As I read them I will be taking notes for my own records and for readers.
- General market – in 1959 DJIA advanced 19.9% inclusive of dividends, but this is misleading because for the NYSE in general there were 710 decliners and 628 gainers, and the DJ Rail Roads and DJ Utilities were down on the year
- Notes underperformance of the nations largest closed end investment co and the largest mutual fund
- Believes price levels “blue chips” contain a substantial speculative component with a corresponding risk of loss
- “Perhaps other standards of valuation are evolving which will permanently replace the old standards. I don’t think so. I may well be wrong; however, I would rather sustain the penalties resulting from over-conservatism than face the consequences of error, perhaps with permanent capital loss, resulting from the adoption of a “New Era” philosophy where trees really do grow to the sky.”
- Description of operating procedures – net gain for the partnerships is determined on the basis of market values at the beginning and end of the year before interest to partners, profit to the GP, but after operating expenses.
- 35% of Partnerships in one security – a investment trust owning securities presently trading below NAV.