Warren Buffett Still Has Plenty of Confidence in the American Economy

Two Things We Learned From Billionaire Warren Buffett's Annual Shareholder Letter

Berkshire CEO Warren Buffett said he expects the company's insurers will have to pay about $3 billion in claims related to the hurricanes that struck Texas, Florida and Puerto Rico last fall.

Over the years, Buffett has lavished equal praise on both, but provided little indication as to his preferences about who he thinks will succeed him.

Berkshire on Saturday reported a record quarterly and annual profit, benefiting from a lower USA corporate income tax rate.

Warren Buffett is retiring from the board of directors of Kraft Heinz, a subsidiary of his company Berkshire Hathaway.

Buffett's Berkshire was sitting on more than $109 billion in cash at the end of the third quarter of 2017.

Berkshire attributed roughly $29.11 billion of its net income to the reduction of the US corporate tax rate, to 21 percent from 35 percent, that President Donald Trump signed into law in December.

Buffett concluded with a little advice to fellow investors: 'Though markets are generally rational, they occasionally do insane things, ' he wrote.

Buffett got a $29 billion boost to net earnings in the fourth quarter from the tax code changes.

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.

'Price seemed nearly irrelevant to an army of optimistic purchasers, ' Buffett noted. That kept Berkshire from making the kinds of big deals Buffett prefers.

Price proved to be the barrier to a new, big-time acquisition in 2017, Buffett said.

The lower tax rate also contributed to a 23% full-year boost in Berkshire's book value, which measures assets minus liabilities and which Buffett considers a good indicator of Berkshire's net worth, to $211,750 per class A share. Insurance float at December 31, 2017 was approximately $114 billion.

Operating profit fell 18 per cent to $14.5bn due to a $2.2bn loss from the group's insurance underwriting unit as a string of natural disasters hit the US.

Berkshire also owns clothing, furniture and jewelry firms. That compares with $548 million gain the previous year. And it holds major investments in such companies as Coca-Cola Co., Apple and Wells Fargo & Co.

Buffett says investors shouldn't assume that bonds are less risky than stocks.

Warren Buffett's letter to shareholders released Saturday showed the final scorecard of his 10-year bet against hedge funds.

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