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Warren Buffett's Letters
To Berkshire Shareholders 1979
巴菲特致股東函
1979年版
BERKSHIRE HATHAWAY INC.
波克夏海瑟崴股份有限公司
To the Shareholders of Berkshire Hathaway Inc.:
致Berkshire公司全體股東:
Again, we must lead off with a few words about accounting. Since our
last annual report, the accounting profession has decided that equity
securities owned by insurance companies must be carried on the balance
sheet at market value. We previously have carried such equity securities at
the lower of aggregate cost or aggregate market value. Because we have
large unrealized gains in our insurance equity holdings, the result of this new
policy is to increase substantially both the 1978 and 1979 yearend net worth,
even after the appropriate liability is established for taxes on capital gains
that would be payable should equities be sold at such market valuations.
首先，還是會計相關的議題，從去年年報開始，會計原則要求保險公司持有的股票投
資在資產負債表日的評價方式，從原先的成本與市價孰低法，改按公平市價法列示，
由於我們帳上的股票投資擁有大量的未實現利益，因此即便我們已提列了資本利得實
現時應該支付的估計所得稅負債，我們1978年及1979年的淨值依然大幅增加。
As you know, Blue Chip Stamps, our 60% owned subsidiary, is fully
consolidated in Berkshire Hathaway’s financial statements. However, Blue
Chip still is required to carry its equity investments at the lower of aggregate
cost or aggregate market value, just as Berkshire Hathaway’s insurance
subsidiaries did prior to this year. Should the same equities be purchased at
an identical price by an insurance subsidiary of Berkshire Hathaway and by
Blue Chip Stamps, present accounting principles often would require that
they end up carried on our consolidated balance sheet at two different
values. (That should keep you on your toes.) Market values of Blue Chip
Stamps’ equity holdings are given in footnote 3 on page 18.
大家都知道，我們持股60%的藍籌郵票業已併入Berkshire的合併報表之中，然而依
照現行會計原則規定，藍籌郵票的股票投資仍必須按照舊制-也就是成本與市價孰低
法列示，換句話說，以同一種價格買進同一種股票，不同公司的會計評價方法竟不一
樣，(這是不是讓你毛骨悚然)，藍籌郵票持股的市值請參閱18頁的附註三。
1979 Operating Results
1979年營運成果
We continue to feel that the ratio of operating earnings (before
securities gains or losses) to shareholders’ equity with all securities valued at
cost is the most appropriate way to measure any single year’s operating
performance.
就短期間而言，我們一向認為營業利益(不含出售證券損益)除以股東權益(所有股票投
資按原始成本計算)所得出的比率，為衡量單一年度經營成果的最佳方式。
Measuring such results against shareholders’ equity with securities
valued at market could significantly distort the operating performance
percentage because of wide year-to-year market value changes in the net
worth figure that serves as the denominator. For example, a large decline in
securities values could result in a very low “market value” net worth that, in
turn, could cause mediocre operating earnings to look unrealistically good.
Alternatively, the more successful that equity investments have been, the
larger the net worth base becomes and the poorer the operating performance
figure appears. Therefore, we will continue to report operating performance
measured against beginning net worth, with securities valued at cost.
之所以不按市價計算的原因，是因為如此做將使得分母每年大幅波動而失去比較意
義，舉例來說，股票價格大幅下跌造成股東權益跟著下滑，其結果將使得原本平常的
營業利益看起來反而不錯，同樣的，股價表現越好，股東權益分母跟著變大的結果，
將使得營業利益率變得失色，所以我們仍將按期初的股東權益(股票投資以原始成本
計)為基準來衡量經營績效。
On this basis, we had a reasonably good operating performance in 1979
- but not quite as good as that of 1978 - with operating earnings amounting
to 18.6% of beginning net worth. Earnings per share, of course, increased
somewhat (about 20%) but we regard this as an improper figure upon which
to focus. We had substantially more capital to work with in 1979 than in
1978, and our performance in utilizing that capital fell short of the earlier
year, even though per-share earnings rose. “Earnings per share” will rise
constantly on a dormant savings account or on a U.S. Savings Bond bearing a
fixed rate of return simply because “earnings” (the stated interest rate) are
continuously plowed back and added to the capital base. Thus, even a
“stopped clock” can look like a growth stock if the dividend payout ratio is
low.
在這樣的基礎下，1979年我們獲得了不錯的經營成果，營業利益達到期初淨值的
18.6%，略遜於1978年的數字，當然每股盈餘成長了不少(約20%)，但我們不認為
應該對每股盈餘過於關注，因為雖然1979年我們可運用的資金又增加了不少，但運
用的績效卻反而不如前一年度，因為即便是利率固定的定存帳戶，只要擺著不動，將
領取的利息滾入本金，每年的盈餘還是能達到穩定成長的效果，一個靜止不動的時鐘，
只要不注意，看起來也像是運作正常的時鐘。
The primary test of managerial economic performance is the
achievement of a high earnings rate on equity capital employed (without
undue leverage, accounting gimmickry, etc.) and not the achievement of
consistent gains in earnings per share. In our view, many businesses would
be better understood by their shareholder owners, as well as the general
public, if managements and financial analysts modified the primary emphasis
they place upon earnings per share, and upon yearly changes in that figure.
所以我們判斷一家公司經營好壞的主要依據，取決於其股東權益報酬率(排除不當的財
務槓桿或會計作帳)，而非每股盈餘的成長與否，我們認為如果管理當局及證券分析師
能修正其對每股盈餘的關注，則股東及一般投資大眾將會對這些公司的營運情況有更
深入的了解。
Long Term Results
長期績效
In measuring long term economic performance - in contrast to yearly
performance - we believe it is appropriate to recognize fully any realized
capital gains or losses as well as extraordinary items, and also to utilize
financial statements presenting equity securities at market value. Such
capital gains or losses, either realized or unrealized, are fully as important to
shareholders over a period of years as earnings realized in a more routine
manner through operations; it is just that their impact is often extremely
capricious in the short run, a characteristic that makes them inappropriate as
an indicator of single year managerial performance.
就長期間而言，我們則認為公司純益(包含已實現、未實現資本利得與非常損益)除以
股東權益(所有投資以公平市價計算)所得的比率，為衡量永續經營成果的最佳方式，
其中額外的資本利得，短期間看起來或許相當特殊，但就長期而言，其對股東利益的
影響與日常的營業利益並無太大差別。
The book value per share of Berkshire Hathaway on September 30, 1964
(the fiscal yearend prior to the time that your present management assumed
responsibility) was $19.46 per share. At yearend 1979, book value with
equity holdings carried at market value was $335.85 per share. The gain in
book value comes to 20.5% compounded annually. This figure, of course, is
far higher than any average of our yearly operating earnings calculations, and
reflects the importance of capital appreciation of insurance equity
investments in determining the overall results for our shareholders. It
probably also is fair to say that the quoted book value in 1964 somewhat
overstated the intrinsic value of the enterprise, since the assets owned at that
time on either a going concern basis or a liquidating value basis were not
worth 100 cents on the dollar. (The liabilities were solid, however.)
自現有經營階層接掌Berkshire(1964-1979)的十五年來，公司每股淨值由19.46美
元成長至335.85美元(持有股票投資以市價計)，年複合成長率達20.5%。這個比率
遠高於每年營業利益率的平均數，突顯保險子公司股票增值利益對於股東權益的重要
性，而且1964年的帳面價值實際上超過其實質價值，因為當時帳列的資產不論是以
繼續經營或清算的基礎來看，其價值都遠低於帳面淨值，(至於負債則一毛也少不了)。
We have achieved this result while utilizing a low amount of leverage
(both financial leverage measured by debt to equity, and operating leverage
measured by premium volume to capital funds of our insurance business),
and also without significant issuance or repurchase of shares. Basically, we
have worked with the capital with which we started. From our textile base
we, or our Blue Chip and Wesco subsidiaries, have acquired total ownership
of thirteen businesses through negotiated purchases from private owners for
cash, and have started six others. (It’s worth a mention that those who have
sold to us have, almost without exception, treated us with exceptional honor
and fairness, both at the time of sale and subsequently.)
我們極少運用財務槓桿(不論是財務面的負債比，或是營運面的保費收入與資本比都相
當低)，亦很少發行新股籌資或買回自家股份，基本上我們就是利用現有的資金，在原
有紡織業或藍籌郵票及Wesco子公司的基礎下，前後總計以現金購併了十三家公司，
另外也成立了六家公司，(必須說明的是，這些人在把公司賣給我們的當時與事後，對
我們都相當客氣且坦誠)。
But before we drown in a sea of self-congratulation, a further - and
crucial - observation must be made. A few years ago, a business whose
per-share net worth compounded at 20% annually would have guaranteed its
owners a highly successful real investment return. Now such an outcome
seems less certain. For the inflation rate, coupled with individual tax rates,
will be the ultimate determinant as to whether our internal operating
performance produces successful investment results - i.e., a reasonable gain
in purchasing power from funds committed - for you as shareholders.
但在各位過度沈溺於歡樂氣氛之前，我們必須更嚴格的自我檢視，幾年前，年複合報
酬率達到20%的投資或許就可以稱得上是成功的投資，但目前則未必，因為我們還須
把通貨膨脹率與個人所得稅率列入考量，投資人惟有將這些負面因素扣除後所得購買
力的淨增加，才能論定最後的投資結果是否令人感到滿意。
Just as the original 3% savings bond, a 5% passbook savings account or
an 8% U.S. Treasury Note have, in turn, been transformed by inflation into
financial instruments that chew up, rather than enhance, purchasing power
over their investment lives, a business earning 20% on capital can produce a
negative real return for its owners under inflationary conditions not much
more severe than presently prevail.
就像是3%的儲蓄債券、5%的銀行定存以及8%的國庫券，由於通膨因素使得這些投資
變成侵蝕而非增加投資人購買力的工具，同樣的一項每年可以賺取20%盈餘的事業，
在嚴重的通貨膨脹情況下，也會產生類似的效果。
If we should continue to achieve a 20% compounded gain - not an easy
or certain result by any means - and this gain is translated into a
corresponding increase in the market value of Berkshire Hathaway stock as it
has been over the last fifteen years, your after-tax purchasing power gain is
likely to be very close to zero at a 14% inflation rate. Most of the remaining
six percentage points will go for income tax any time you wish to convert
your twenty percentage points of nominal annual gain into cash.
而如果我們繼續維持每年20%的獲利，這成績已相當不簡單，而且無法保證每年都如
此，而這樣的成績又完全轉化成Berkshire股票價格的上漲，如同過去15年來的情
況，那麼在14%的高通貨膨脹率之下，各位的購買力可以說幾乎沒有任何增加，因為
剩下的6%將會在你決定將這20%的所得變現放入口袋時，用來繳交所得稅給國庫。
That combination - the inflation rate plus the percentage of capital that
must be paid by the owner to transfer into his own pocket the annual
earnings achieved by the business (i.e., ordinary income tax on dividends and
capital gains tax on retained earnings) - can be thought of as an “investor’s
misery index”. When this index exceeds the rate of return earned on equity
by the business, the investor’s purchasing power (real capital) shrinks even
though he consumes nothing at all. We have no corporate solution to this
problem; high inflation rates will not help us earn higher rates of return on
equity.
通貨膨脹率以及股東在將每年公司獲利放入口袋之前必須支付的所得稅率(通常是股
利以及資本利得所需繳納的所得稅)，兩者合計可被稱為「投資人痛苦指數」，當這個
指數超過股東權益的報酬率時，意味著投資人的購買力(真正的資本)不增反減，對於
這樣的情況我們無計可施，因為高通貨膨脹率不代表股東報酬率也會跟著提高。
One friendly but sharp-eyed commentator on Berkshire has pointed out
that our book value at the end of 1964 would have bought about one-half
ounce of gold and, fifteen years later, after we have plowed back all earnings
along with much blood, sweat and tears, the book value produced will buy
about the same half ounce. A similar comparison could be drawn with
Middle Eastern oil. The rub has been that government has been
exceptionally able in printing money and creating promises, but is unable to
print gold or create oil.
一位長期觀察Berkshire的朋友曾指出，1964年底我們每股帳面淨值約可換得半盎
斯黃金，十五年之後，在我們流血流汗地努力耕耘後，每股帳面淨值還是只能換得半
盎斯黃金，相同的道理也可以適用於中東地區的石油之上，關鍵就在於我們的政府只
會印鈔票及劃大餅，卻不會出產黃金或石油。
We intend to continue to do as well as we can in managing the internal
affairs of the business. But you should understand that external conditions
affecting the stability of currency may very well be the most important factor
in determining whether there are any real rewards from your investment in
Berkshire Hathaway.
我們仍將持續努力地妥善管理企業內部事務，但大家必須了解外界環境，如貨幣情勢
的變化卻是決定各位在Berkshire投資回報的最後關鍵因素。
Sources of Earnings
盈餘報告
We again present a table showing the sources of Berkshire’s earnings.
As explained last year, Berkshire owns about 60% of Blue Chip Stamps which,
in turn, owns 80% of Wesco Financial Corporation. The table shows both
aggregate earnings of the various business entities, as well as Berkshire’s
share. All of the significant capital gains or losses attributable to any of the
business entities are aggregated in the realized securities gain figure at the
bottom of the table, and are not included in operating earnings.
下表係Berkshire盈餘的報告，去年我們曾向各位說明過，Berkshire持有藍籌郵票
60%的股權，後者又持有80%的Wesco金融公司，表中顯示各個事業體的盈餘合計
數，以及Berkshire依持股比例可分得的部份，各事業體的資本利得或損失則不包含
在營業利益項下，而是加總列在已實現資本利得項下。
Net Earnings
Earnings Before Income Taxes After Tax
--------------------------------- ------------------
Total Berkshire Share Berkshire Share
---------------- --------------- ------------------
(in thousands of dollars) 1979 1978 1979 1978 1979 1978
------- ------- -------- -------- -------- --------
Total - all entities ......... $68,632 $66,180 $56,427 $54,350 $42,817 $39,242
===== ===== ====== ====== ====== ======
Earnings from Operations:
Insurance Group:
Underwriting ............ $ 3,742 $ 3,001 $ 3,741 $ 3,000 $ 2,214 $ 1,560
Net Investment Income ..24,224 19,705 24,216 19,691 20,106 16,400
Berkshire-Waumbec textiles 1,723 2,916 1,723 2,916 848 1,342
Associated Retail
Stores, Inc. ........... 2,775 2,757 2,775 2,757 1,280 1,176
See’s Candies ............. 12,785 12,482 7,598 7,013 3,448 3,049
Buffalo Evening News ...... (4,617) (2,913) (2,744) (1,637) (1,333) (738)
Blue Chip Stamps - Parent 2,397 2,133 1,425 1,198 1,624 1,382
Illinois National Bank and
Trust Company .......... 5,747 4,822 5,614 4,710 5,027 4,262
Wesco Financial
Corporation - Parent ... 2,413 1,771 1,098 777 937 665
Mutual Savings and Loan
Association ............ 10,447 10,556 4,751 4,638 3,261 3,042
Precision Steel ........... 3,254 -- 1,480 -- 723 --
Interest on Debt .......... (8,248) (5,566) (5,860) (4,546) (2,900) (2,349)
Other ..................... 1,342 720 996 438 753 261
-------- -------- -------- -------- -------- --------
Total Earnings from
Operations .......... $57,984 $52,384 $46,813 $40,955 $35,988 $30,052
Realized Securities Gain 10,648 13,796 9,614 13,395 6,829 9,190
-------- -------- -------- -------- -------- --------
Total Earnings ......... $68,632 $66,180 $56,427 $54,350 $42,817 $39,242
===== ====== ====== ====== ====== ======
Blue Chip and Wesco are public companies with reporting requirements
of their own. On pages 37-43 of this report, we have reproduced the
narrative reports of the principal executives of both companies, in which they
describe 1979 operations. Some of the numbers they mention in their
reports are not precisely identical to those in the above table because of
accounting and tax complexities. (The Yanomamo Indians employ only three
numbers: one, two, and more than two. Maybe their time will come.)
However, the commentary in those reports should be helpful to you in
understanding the underlying economic characteristics and future prospects
of the important businesses that they manage.
藍籌郵票及Wesco都是公開發行公司，各自都必須對外公開報告，在年報的後段附有
這兩家公司主要經理人關於公司1979年現況的書面報告，他們運用的部份數字可能
無法與我們所報告的絲毫不差，但這又是因為會計與稅務一些細節規定所致，
(Yanomamo印地安人只會用三個數字：一、二、大於二)，不過我認為他們的見解
將有助於各位了解這些旗下重要事業的經營現況，以及未來發展的前景。
A copy of the full annual report of either company will be mailed to any
shareholder of Berkshire upon request to Mr. Robert H. Bird for Blue Chip
Stamps, 5801 South Eastern Avenue, Los Angeles, California 90040, or to
Mrs. Bette Deckard for Wesco Financial Corporation, 315 East Colorado
Boulevard, Pasadena, California 91109.
若有需要Berkshire的股東可向Mr. Robert(地址：加州洛杉磯5801 South Eastern
Avenue)索取藍籌郵票的年報或向Mrs. Bette(地址：加州Pasadena 315 East
Colorado Boulevard)索取Wesco的年報。
Textiles and Retailing
紡織業及零售業
The relative significance of these two areas has diminished somewhat
over the years as our insurance business has grown dramatically in size and
earnings. Ben Rosner, at Associated Retail Stores, continues to pull rabbits
out of the hat - big rabbits from a small hat. Year after year, he produces
very large earnings relative to capital employed - realized in cash and not in
increased receivables and inventories as in many other retail businesses - in
a segment of the market with little growth and unexciting demographics.
Ben is now 76 and, like our other “up-and-comers”, Gene Abegg, 82, at
Illinois National and Louis Vincenti, 74, at Wesco, regularly achieves more
each year.
隨著保險事業規模與盈餘快速的成長，紡織業與零售業佔整體事業的重要性日益下
滑，然而儘管如此，聯合零售商店的Ben Rosner還是不斷地化腐朽為神奇，即使產
業面臨停滯不前的窘境，卻能利用有限的資本創造出可觀的盈餘，且大多是現金而非
儘是增加一些應收款或存貨。Ben現年76歲，就像是其他後進者，伊利諾國家銀行
82歲的Gene Abegg、Wesco 74歲的Louis Vincenti一樣，其功力日益深厚。
Our textile business also continues to produce some cash, but at a low
rate compared to capital employed. This is not a reflection on the
managers, but rather on the industry in which they operate. In some
businesses - a network TV station, for example - it is virtually impossible to
avoid earning extraordinary returns on tangible capital employed in the
business. And assets in such businesses sell at equally extraordinary prices,
one thousand cents or more on the dollar, a valuation reflecting the splendid,
almost unavoidable, economic results obtainable. Despite a fancy price tag,
the “easy” business may be the better route to go.
雖然我們的紡織事業仍持續不斷地有現金流入，但與過去所投入的資金實在是不成正
比，這並非經理人的過錯，主要是產業的環境使然，在某些產業，比如說地方電視台，
只要少數的有形資產就能賺取大量的盈餘，而這行的資產售價也奇高，帳面一塊錢的
東西可以喊價到十塊錢，這反應出其驚人獲利能力的身價，雖然價格有點嚇人，但那
樣的產業路子可能反而比較好走。
We can speak from experience, having tried the other route. Your
Chairman made the decision a few years ago to purchase Waumbec Mills in
Manchester, New Hampshire, thereby expanding our textile commitment.
By any statistical test, the purchase price was an extraordinary bargain; we
bought well below the working capital of the business and, in effect, got very
substantial amounts of machinery and real estate for less than nothing. But
the purchase was a mistake. While we labored mightily, new problems arose
as fast as old problems were tamed.
當然我們也不是沒有試過其他方法，在紡織業就曾經過數度掙扎，各位的董事長也就
是本本人，在數年前曾買下位於Manchester的Waumbec 紡織廠，以擴大我們在紡
織業的投資，雖然買進的價格相當划算，也取得一些價美物廉的機器設備與不動產，
幾乎可以說是半買半送的，但即使我們再怎麼努力，整個決策事後證明依然是個錯誤。
因為就算我們再努力，舊的問題好不容易才解決，新的狀況又冒出來。
Both our operating and investment experience cause us to conclude
that “turnarounds” seldom turn, and that the same energies and talent are
much better employed in a good business purchased at a fair price than in a
poor business purchased at a bargain price. Although a mistake, the
Waumbec acquisition has not been a disaster. Certain portions of the
operation are proving to be valuable additions to our decorator line (our
strongest franchise) at New Bedford, and it’s possible that we may be able to
run profitably on a considerably reduced scale at Manchester. However, our
original rationale did not prove out.
最後在經過多次慘痛的教訓之後，我們得到的結論是，所謂有「轉機」(Turn-arounds)
的公司，最後顯少有成功的案例，所以與其把時間與精力花在購買廉價的爛公司上，
還不如以合理的價格投資一些體質好的企業。Waumbec雖然是個錯誤，但所幸並未
釀成災難，部份的產業仍對位於New Bedford的室內裝飾品生產線(這是我們最強的
業務)有所助益，而我們也相信Manchester在大幅縮減營運規模之後，仍將有獲利的
空間，只是我們原先的理論被證明不可行。
Insurance Underwriting
保險核保業務
We predicted last year that the combined underwriting ratio (see
definition on page 36) for the insurance industry would “move up at least a
few points, perhaps enough to throw the industry as a whole into an
underwriting loss position”. That is just about the way it worked out. The
industry underwriting ratio rose in 1979 over three points, from roughly
97.4% to 100.7%. We also said that we thought our underwriting performance
relative to the industry would improve somewhat in 1979 and, again, things
worked out as expected. Our own underwriting ratio actually decreased
from 98.2% to 97.1%. Our forecast for 1980 is similar in one respect; again
we feel that the industry’s performance will worsen by at least another few
points. However, this year we have no reason to think that our performance
relative to the industry will further improve. (Don’t worry - we won’t hold
back to try to validate that forecast.)
去年我們曾預估保險業的綜合核保比率(Combined Underwriting Ratio)會上昇幾個
百分點，甚至有可能使得整體保險業界發生核保損失的狀況，結果正如我們所預期，
綜合核保比率從97.4%上昇到100.7%。我們也預言1979年我們本身的核保表現會
比同業平均好一點，事實證明我們確實從98.2%降至97.1%。展望1980年，第一項
預期不變，那就是整個業界表現將如去年一般會持續惡化，但另一方面，我們卻無法
保證自己的表現能像去年一般優於同業。(但請大家放心，我們絕不會為了讓本人的預
測成真而故意鬆懈)。
Really extraordinary results were turned in by the portion of National
Indemnity Company’s insurance operation run by Phil Liesche. Aided by
Roland Miller in Underwriting and Bill Lyons in Claims, this section of the
business produced an underwriting profit of $8.4 million on about $82
million of earned premiums. Only a very few companies in the entire
industry produced a result comparable to this.
國家產險公司的Phil Liesche在核保部門Roland以及理賠部門Bill Lyons的協助
下，再度繳出漂亮的成績單，這個部門總計為我們創造840萬美金的核保利益與
8,200萬美金的保費收入，這在同業間並不多見。
You will notice that earned premiums in this segment were down
somewhat from those of 1978. We hear a great many insurance managers
talk about being willing to reduce volume in order to underwrite profitably,
but we find that very few actually do so. Phil Liesche is an exception: if
business makes sense, he writes it; if it doesn’t, he rejects it. It is our policy
not to lay off people because of the large fluctuations in work load produced
by such voluntary volume changes. We would rather have some slack in the
organization from time to time than keep everyone terribly busy writing
business on which we are going to lose money. Jack Ringwalt, the founder
of National Indemnity Company, instilled this underwriting discipline at the
inception of the company, and Phil Liesche never has wavered in maintaining
it. We believe such strong-mindedness is as rare as it is sound - and
absolutely essential to the running of a first-class casualty insurance
operation.
而或許你可能會發現這比去年的數字少了些，雖然我們常聽到同業提及寧願少接點保
單也不願虧錢作生意，然真正能貫策執行的並不多，但Phil卻能真正作到，若保單合
理他便簽，否則一慨拒絕。我們不願因為生意時好時壞而必須常常裁員，相對地，我
們寧願保持一點寬鬆的彈性，而不是讓大家忙的要死，到頭來卻發現作的是虧本的生
意，公司在Jack Ringwalt創辦時便立下此一理念，而Phil 從未放棄保持此一優良傳
統，我們也認為這是經營一家一流的產險公司必備的條件。
John Seward continues to make solid progress at Home and Automobile
Insurance Company, in large part by significantly expanding the marketing
scope of that company in general liability lines. These lines can be
dynamite, but the record to date is excellent and, in John McGowan and Paul
Springman, we have two cautious liability managers extending our
capabilities.
負責家庭與汽車保險公司營運的John Seward持續有重大的進展，目前該公司大舉進
軍一般責任險業務，這類的業務極具爆炸性，到目前為止的表現還算不錯，我們有John
MaGowan及Paul Springman等兩位經理人來處理這類的新業務。
Our reinsurance division, led by George Young, continues to give us
reasonably satisfactory overall results after allowing for investment income,
but underwriting performance remains unsatisfactory. We think the
reinsurance business is a very tough business that is likely to get much
tougher. In fact, the influx of capital into the business and the resulting
softer price levels for continually increasing exposures may well produce
disastrous results for many entrants (of which they may be blissfully unaware
until they are in over their heads; much reinsurance business involves an
exceptionally “long tail”, a characteristic that allows catastrophic current loss
experience to fester undetected for many years). It will be hard for us to be
a whole lot smarter than the crowd and thus our reinsurance activity may
decline substantially during the projected prolonged period of extraordinary
competition.
由George Young 領軍的再保險部門，在將投資收益併入考量後，持續地給予我們
滿意的成績，惟核保部門的績效仍有待改進。事實上，未來產業的前景並不看好，由
於外來資金持續大舉投入這一行業，讓競爭變得更為激烈，保費水準一降再降的結果，
使得新進者勇於承擔著極高風險而不自知，直到真正出事時早已為時已晚，而更不幸
的是，這類業務的有效期間通常長達許多年，而我們自認並不比其他同業聰明到哪裡
去的情況下，我們只有選擇暫時退出競爭激烈的市場觀望，業務量下滑的結果將無可
避免。
The Homestate operation was disappointing in 1979. Excellent results
again were turned in by George Billings at Texas United Insurance Company,
winner of the annual award for the low loss ratio among Homestate
companies, and Floyd Taylor at Kansas Fire and Casualty Company. But
several of the other operations, particularly Cornhusker Casualty Company,
our first and largest Homestate operation and historically a winner, had poor
underwriting results which were accentuated by data processing,
administrative and personnel problems. We have made some major
mistakes in reorganizing our data processing activities, and those mistakes
will not be cured immediately or without cost. However, John Ringwalt has
thrown himself into the task of getting things straightened out and we have
confidence that he, aided by several strong people who recently have been
brought aboard, will succeed.
Homestate 1979的營運則令人感到失望，George Billings負責的德州聯合保險再
度以低損失率獲得冠軍，至於其他分支的營運，尤其是Cornhusker產險-Homestate
最大的營運單位，過去一向是傳統的贏家，去年不但核保績效不佳，同時還有資料處
理、行政以及人員方面的問題，我們在重新整理資料處理犯下了幾件大錯，而且未能
及時改進，然而目前John Ringwalt已經投入火線全力導正錯誤，而我們也相信在幾
位新上任且頗具才幹同仁的協助下，應該可以順利達成任務。
Our performance in Worker’s Compensation was far, far better than we
had any right to expect at the beginning of 1979. We had a very favorable
climate in California for the achievement of good results but, beyond this,
Milt Thornton at Cypress Insurance Company and Frank DeNardo at National
Indemnity’s California Worker’s Compensation operation both performed in a
simply outstanding manner. We have admitted - and with good reason -
some mistakes on the acquisition front, but the Cypress purchase has turned
out to be an absolute gem. Milt Thornton, like Phil Liesche, follows the
policy of sticking with business that he understands and wants, without
giving consideration to the impact on volume. As a result, he has an
outstanding book of business and an exceptionally well functioning group of
employees. Frank DeNardo has straightened out the mess he inherited in
Los Angeles in a manner far beyond our expectations, producing savings
measured in seven figures. He now can begin to build on a sound base.
我們勞工退休金的表現遠優於1979年初可能的預期，加州今年的天候相當不錯，這
相當有利我們的營運，除此之外，賽普路斯的Milt Thornton以及國家產險加州勞工
退休金部門的Frank Denardo的表現也很好，我們確實在購併面犯了些錯誤，但賽
普路斯事後被證明是塊寶，而Milt Thornton就像Phil Liesche一樣，不以追求業務
量為依歸，堅持固守自己了解且熟悉的業務，這使得他擁有絕佳的營運記錄以及運作
良好的組織，另外Frank Denardo已經完全導正他在加州所接手的爛攤子，節省的
成果甚至超乎我們預期達到七位數，有了好的開始，他現在可以進一步建立穩固的基
礎。
At yearend we entered the specialized area of surety reinsurance under
the management of Chet Noble. At least initially, this operation will be
relatively small since our policy will be to seek client companies who
appreciate the need for a long term “partnership” relationship with their
reinsurers. We are pleased by the quality of the insurers we have attracted,
and hope to add several more of the best primary writers as our financial
strength and stability become better known in the surety field.
去年年底在Chet Noble的管理下，我們正式進入保證再保險這類專門領域，初期這
類的業務量不會太大，因為我們的策略是先與有意願的客戶建立起長期的夥伴關係，
對於目前上門的保險客戶素質，我們感到相當滿意，也期望我們穩健的財務實力在保
證業務界建立起名聲後，能夠吸引更多優質的保險公司加入。
The conventional wisdom is that insurance underwriting overall will be
poor in 1980, but that rates will start to firm in a year or so, leading to a turn
in the cycle some time in 1981. We disagree with this view. Present
interest rates encourage the obtaining of business at underwriting loss levels
formerly regarded as totally unacceptable. Managers decry the folly of
underwriting at a loss to obtain investment income, but we believe that many
will. Thus we expect that competition will create a new threshold of
tolerance for underwriting losses, and that combined ratios will average
higher in the future than in the past.
從前大家認為核保績效通常會一年好、一年壞，1980年若差一點，那麼1981年應
該會好轉。但我們卻不這麼認為，現在的低利率環境使得業者會傾向犧牲部份核保損
失，再試圖從投資收益上彌補回來，這在過去高利率的時代是不可能發生的。許多同
業高喊殺價競爭愚不可及，但實際上跟進者卻不少，因此我們判斷，同業忍受承保損
失的限度將較過去提高，導致競爭越加激烈，綜合比率將因此提高。
To some extent, the day of reckoning has been postponed because of
marked reduction in the frequency of auto accidents - probably brought on
in major part by changes in driving habits induced by higher gas prices. In
our opinion, if the habits hadn’t changed, auto insurance rates would have
been very little higher and underwriting results would have been much
worse. This dosage of serendipity won’t last indefinitely.
某種程度而言，這樣的預測發生的時點將略微延後，主要是由於車禍事故發生率明顯
的下滑，可能的原因在於油價上漲導致駕駛習慣改變，我們的看法是多虧駕駛習慣發
生改變，否則在保險費率沒有提高的情況下，核保結果肯定會惡化，當然這種僥倖的
意外情況肯定不會一直維持下去。
Our forecast is for an average combined ratio for the industry in the 105
area over the next five years. While we have a high degree of confidence
that certain of our operations will do considerably better than average, it will
be a challenge to us to operate below the industry figure. You can get a lot
of surprises in insurance.
我們的估計是未來五年產險綜合比率平均將會落在105左右，雖然我們有相當程度的
信心，旗下部份的業務應該會比平均數好，但總的來說，還是一項艱難的挑戰，保險
業總是了充滿意外。
Nevertheless, we believe that insurance can be a very good business. It
tends to magnify, to an unusual degree, human managerial talent - or the
lack of it. We have a number of managers whose talent is both proven and
growing. (And, in addition, we have a very large indirect interest in two truly
outstanding management groups through our investments in SAFECO and
GEICO.) Thus we expect to do well in insurance over a period of years.
However, the business has the potential for really terrible results in a single
specific year. If accident frequency should turn around quickly in the auto
field, we, along with others, are likely to experience such a year.
盡管如此，我們還是認為保險業是個相當不錯的行業，它有加大(而且是極大幅度)經
營能力良窳的特性，我們有一大群經理人，其能力不但經過考驗且不斷地增強當中，(此
外透過SAFECO及GEICO的間接投資，我們擁有兩組非常傑出的經營團隊)，因此我
們預期這幾年在保險業界將大有可為，當然一旦事故比率快速增加，我們以及其他同
業也有可能面臨某一個表現特別差的年度。
Insurance Investments
保險業投資
In recent years we have written at length in this section about our
insurance equity investments. In 1979 they continued to perform well,
largely because the underlying companies in which we have invested, in
practically all cases, turned in outstanding performances. Retained
earnings applicable to our insurance equity investments, not reported in our
financial statements, continue to mount annually and, in aggregate, now
come to a very substantial number. We have faith that the managements of
these companies will utilize those retained earnings effectively and will
translate a dollar retained by them into a dollar or more of subsequent
market value for us. In part, our unrealized gains reflect this process.
最近這幾年，我們花了相當大的篇幅談到集團保險業的相關投資，主要是因為這些保
險公司由於被投資公司繳出漂亮的成績單而表現優異，這些被投資公司的保留盈餘，
雖然未能反應在我們的財務報表之上，但實際上卻不斷地累積，目前的金額已到了極
為可觀的地步，我們有信心這些管理階層將會有效地運用保留下來的每一分錢，進一
步創造出比原先更多的價值，從而轉化為我們帳上未實現的資本利得。
Below we show the equity investments which had a yearend market
value of over $5 million:
以下所列出的是我們年底市值超過500萬美元的股權投資。
No. of Sh. Company Cost Market
---------- ------- ---------- ----------
(000s omitted)
289,700 Affiliated Publications, Inc. ........... $ 2,821 $ 8,800
112,545 Amerada Hess ............................ 2,861 5,487
246,450 American Broadcasting Companies, Inc. ... 6,082 9,673
5,730,114 GEICO Corp. (Common Stock) .............. 28,288 68,045
328,700 General Foods, Inc. ..................... 11,437 11,053
1,007,500 Handy & Harman .......................... 21,825 38,537
711,180 Interpublic Group of Companies, Inc. .... 4,531 23,736
1,211,834 Kaiser Aluminum & Chemical Corp. ........ 20,629 23,328
282,500 Media General, Inc. ..................... 4,545 7,345
391,400 Ogilvy & Mather International ........... 3,709 7,828
953,750 SAFECO Corporation ...................... 23,867 35,527
1,868,000 The Washington Post Company ............. 10,628 39,241
771,900 F. W. Woolworth Company ................. 15,515 19,394
---------- ----------
Total ................................... $156,738 $297,994
All Other Holdings ...................... 28,675 38,686
---------- ----------
Total Equities .......................... $185,413 $336,680
======== =======
We currently believe that equity markets in 1980 are likely to evolve in a
manner that will result in an underperformance by our portfolio for the first
time in recent years. We very much like the companies in which we have
major investments, and plan no changes to try to attune ourselves to the
markets of a specific year.
目前我們認為1980年的股票市場將會是近幾年來我們投資組合頭一次的表現不如市
場大盤，我們相當喜愛目前這些我們擁有主要持股的公司，同時在未來的幾年內，也
沒有計畫主動調整目前的投資組合。
Since we have covered our philosophy regarding equities extensively in
recent annual reports, a more extended discussion of bond investments may
be appropriate for this one, particularly in light of what has happened since
yearend. An extraordinary amount of money has been lost by the insurance
industry in the bond area - notwithstanding the accounting convention that
allows insurance companies to carry their bond investments at amortized
cost, regardless of impaired market value. Actually, that very accounting
convention may have contributed in a major way to the losses; had
management been forced to recognize market values, its attention might
have been focused much earlier on the dangers of a very long-term bond
contract.
過去幾年的年報，談的主要是股票投資哲學，現在我想應該換個話題，談談債券投資，
尤其是去年底以來發生了那麼多的事。整個保險業界，因投資債券而蒙受了相當龐大
的損失，雖然依照會計原則，允許保險公司以攤銷成本而非已嚴重受損的市場價值來
記錄其債券投資，事實上，這種會計方法反而是導致更大損失的元兇，因為當初若是
保險公司被迫以市場價格來認列損失，那他們或許就會早一點注意到問題的嚴重性。
Ironically, many insurance companies have decided that a one-year
auto policy is inappropriate during a time of inflation, and six-month policies
have been brought in as replacements. “How,” say many of the insurance
managers, “can we be expected to look forward twelve months and estimate
such imponderables as hospital costs, auto parts prices, etc.?” But, having
decided that one year is too long a period for which to set a fixed price for
insurance in an inflationary world, they then have turned around, taken the
proceeds from the sale of that six-month policy, and sold the money at a
fixed price for thirty or forty years.
更諷刺的是，某些產物保險公司有鑑於通貨膨脹高漲，決定將原本一年期的保單縮短
為半年為期，因為他們認為實在是無法去衡量未來的十二個月內，醫療成本、汽車零
件價格會是多少? 然而荒謬的是，他們在收到保費之後，一轉身卻將剛收到的保費，
拿去購買以三、四十年為期的固定利率債券。
The very long-term bond contract has been the last major fixed price
contract of extended duration still regularly initiated in an inflation-ridden
world. The buyer of money to be used between 1980 and 2020 has been
able to obtain a firm price now for each year of its use while the buyer of auto
insurance, medical services, newsprint, office space - or just about any other
product or service - would be greeted with laughter if he were to request a
firm price now to apply through 1985. For in virtually all other areas of
commerce, parties to long-term contracts now either index prices in some
manner, or insist on the right to review the situation every year or so.
長期的債券是目前通貨膨脹高漲的環境下唯一還存在的長期固定價格合約，合約的買
家可以輕易地鎖定1980年到2020年，每年使用這筆錢固定必須支付的價格，相較
之下，其他諸如汽車保險、醫療服務、新聞資訊、辦公空間或是其他任何產品服務，
如果他要求在未來五年內給予一個固定報價時，肯定會被別人笑掉大牙，在其他商業
領域中，只要是簽訂長期，合約的任何一方，通常都會要求適時反應價格或是堅持每
年必須重新審議合約。
A cultural lag has prevailed in the bond area. The buyers (borrowers)
and middlemen (underwriters) of money hardly could be expected to raise
the question of whether it all made sense, and the sellers (lenders) slept
through an economic and contractual revolution.
然而在債券的領域卻存在有文化落差，不必指望買家(借款人)以及仲介(承銷商)會提出
合理性的懷疑，至於賣家(債權人)即便歷經經濟與合約變革，卻依舊渾然不覺。
For the last few years our insurance companies have not been a net
purchaser of any straight long-term bonds (those without conversion rights
or other attributes offering profit possibilities). There have been some
purchases in the straight bond area, of course, but they have been offset by
sales or maturities. Even prior to this period, we never would buy thirty or
forty-year bonds; instead we tried to concentrate in the straight bond area on
shorter issues with sinking funds and on issues that seemed relatively
undervalued because of bond market inefficiencies.
最近這幾年來，我們的保險公司幾乎未增加一般長期債券方面的部位(Straight
long-term Bond)(即不含轉換權或可提供額外獲利可能性的債券)，即使有買進也是
為了彌補先前到期或出售的部位，而在此之前，我們也從未投資那些長達三、四十年
的債券，頂多是那些較短期且備有償債基金或是因市場缺乏效率而使得價格被低估的
債券。
However, the mild degree of caution that we exercised was an improper
response to the world unfolding about us. You do not adequately protect
yourself by being half awake while others are sleeping. It was a mistake to
buy fifteen-year bonds, and yet we did; we made an even more serious
mistake in not selling them (at losses, if necessary) when our present views
began to crystallize. (Naturally, those views are much clearer and definite in
retrospect; it would be fair for you to ask why we weren’t writing about this
subject last year.)
然而，雖然較之同業我們稍具警覺心，卻仍是不夠的。「雖然半夢半醒，比起熟睡要
好得多，但卻不能保證你不會被熊吃掉。」若說買進四十年期的債券是個大錯，那麼
投資十五年期的也好不到那裏去，很遺憾的是，我們屬於後者，更慘的是，我們未能
適時地忍痛賣掉，而眼睜睜的看著它們的價值日益縮水。(當然，事後回想起來，會覺
得真是笨得可以，而或許你會認為要是去年我就看透這點就好了)。。
Of course, we must hold significant amounts of bonds or other fixed
dollar obligations in conjunction with our insurance operations. In the last
several years our net fixed dollar commitments have been limited to the
purchase of convertible bonds. We believe that the conversion options
obtained, in effect, give that portion of the bond portfolio a far shorter
average life than implied by the maturity terms of the issues (i.e., at an
appropriate time of our choosing, we can terminate the bond contract by
conversion into stock).
當然基於保險營運所需，我們必須持有大量的債券或固定收益部位，但最近幾年我們
在固定收益方面的投資多屬具轉換權的債券，也由於具有轉換權，使得這些債券實際
發行的時間比其票面的到期日要短得多，因為在到期前，依合約規定我們可以要求轉
換為股份。
This bond policy has given us significantly lower unrealized losses than
those experienced by the great majority of property and casualty insurance
companies. We also have been helped by our strong preference for equities
in recent years that has kept our overall bond segment relatively low.
Nevertheless, we are taking our lumps in bonds and feel that, in a sense, our
mistakes should be viewed less charitably than the mistakes of those who
went about their business unmindful of the developing problems.
這樣的規定使得我們實際的損失要比一些產險或意外險的同業來的輕了許多。另外由
於對於股票投資的特別偏好，也讓我們在債券投資的部位相對偏低。盡管如此，在債
券方面我們還是跌了一跤，而且比起那些從來不管問題發生的同業，我們犯得錯實在
是不應該。
Harking back to our textile experience, we should have realized the
futility of trying to be very clever (via sinking funds and other special type
issues) in an area where the tide was running heavily against us.
回顧我們在紡織業的經驗，我們早該知道逆流而上(買進備有償債基金或其他特種債
券) 的結果肯定是徒勞無功。
We have severe doubts as to whether a very long-term fixed-interest
bond, denominated in dollars, remains an appropriate business contract in a
world where the value of dollars seems almost certain to shrink by the day.
Those dollars, as well as paper creations of other governments, simply may
have too many structural weaknesses to appropriately serve as a unit of long
term commercial reference. If so, really long bonds may turn out to be
obsolete instruments and insurers who have bought those maturities of 2010
or 2020 could have major and continuing problems on their hands. We,
likewise, will be unhappy with our fifteen-year bonds and will annually pay a
price in terms of earning power that reflects that mistake.
我們實在很懷疑，為什麼長期固定利率的債券還能在市場上存在，當我們確信美金的
購買力幾乎每天都在變小，這些美元，也包含政府發行的任何貨幣，實在是很難作為
長期的商業指標，同理長期的債券終將會淪為壁紙，而那些買進2010年或2020年
才到期債券將會變成投資人手中的燙手山芋，而我們同樣地也會對這些十五年期的債
券，而且每年都必須為這個錯誤付出購買力下滑的代價。
Some of our convertible bonds appear exceptionally attractive to us,
and have the same sort of earnings retention factor (applicable to the stock
into which they may be converted) that prevails in our conventional equity
portfolio. We expect to make money in these bonds (we already have, in a
few cases) and have hopes that our profits in this area may offset losses in
straight bonds.
在這其中，部份的可轉換債券(經由潛在的轉換權利)，有著跟我們股票投資組合一樣
的吸引力，我們預計可從中賺不少錢(而事實上，有些個案已開始獲利)，同時亦期盼
這部份的獲利能彌補我們在一般債券上的損失。
And, of course, there is the possibility that our present analysis is much
too negative. The chances for very low rates of inflation are not nil.
Inflation is man-made; perhaps it can be man-mastered. The threat which
alarms us may also alarm legislators and other powerful groups, prompting
some appropriate response.
當然，我們對債券的看法也有可能保守了些，通膨降低的機率也不是沒有，畢竟通貨
膨漲多是人為因素所造成的，也或許有一天人們真能有效地控制它，立法當局及有力
團體應該也已注意到這個警訊，進而採取必要的措施。
Furthermore, present interest rates incorporate much higher inflation
projections than those of a year or two ago. Such rates may prove adequate
or more than adequate to protect bond buyers. We even may miss large
profits from a major rebound in bond prices. However, our unwillingness to
fix a price now for a pound of See’s candy or a yard of Berkshire cloth to be
delivered in 2010 or 2020 makes us equally unwilling to buy bonds which set
a price on money now for use in those years. Overall, we opt for Polonius
(slightly restated): “Neither a short-term borrower nor a long-term lender
be.”
此外，現今的利率已反應較高的預期通貨膨脹率，使得新發行的債券對投資者較有保
障，這甚至將使我們可能錯過債券價格反彈而獲利的機會，然而就像我們不願意以一
個固定的價格預先出售西元2010年或2020年一磅喜斯糖果或一呎Berkshire生產
的布料一樣，我們也不願意以一個固定的價格預先出售我們未來四十年金錢的使用
權，我們傾向莎士比亞筆下的Polonius 的看法(稍微經過改編): 「不要作一個短期的
借錢者，也不要當長期的借款人」。
Banking
銀行業
This will be the last year that we can report on the Illinois National Bank
and Trust Company as a subsidiary of Berkshire Hathaway. Therefore, it is
particularly pleasant to report that, under Gene Abegg’s and Pete Jeffrey’s
management, the bank broke all previous records and earned approximately
2.3% on average assets last year, a level again over three times that achieved
by the average major bank, and more than double that of banks regarded as
outstanding. The record is simply extraordinary, and the shareholders of
Berkshire Hathaway owe a standing ovation to Gene Abegg for the
performance this year and every year since our purchase in 1969.
這將會是我們最後一次報告Illinois National Bank的狀況，而我們也很開心的向各
位宣佈在Gene Abegg及Pete Jeffrey優秀的領導下，這家銀行的獲利打破歷年來的
記錄，去年的資產報酬率高達2.3%，約是同業平均的三倍，對於如此優異的表現，實
在值得所有Berkshire的股東再度給予Gene Abegg熱烈的掌聲，感謝他們自1969
年成為Berkshire一員以來所作的貢獻。
As you know, the Bank Holding Company Act of 1969 requires that we
divest the bank by December 31, 1980. For some years we have expected to
comply by effecting a spin-off during 1980. However, the Federal Reserve
Board has taken the firm position that if the bank is spun off, no officer or
director of Berkshire Hathaway can be an officer or director of the spun-off
bank or bank holding company, even in a case such as ours in which one
individual would own over 40% of both companies.
而如同各位所知，1969年通過的銀行控股公司法要求我們必須在1980年結束以前
將這家銀行處份掉，事實上我們曾試圖以分割(spin-off)的方式處理，但聯邦準備局
卻堅持若要如此，則Berkshire不能有任何一位董事或經理人在分割後的銀行擔任任
何職務，即使依照我們這個個案，沒有任何一個人同時擁有兩家公司40% 以上的股
份也一樣。
Under these conditions, we are investigating the possible sale of
between 80% and 100% of the stock of the bank. We will be most choosy
about any purchaser, and our selection will not be based solely on price.
The bank and its management have treated us exceptionally well and, if we
have to sell, we want to be sure that they are treated equally as well. A
spin-off still is a possibility if a fair price along with a proper purchaser
cannot be obtained by early fall.
在這種情況下，我們只能探詢出售該公司80%-100% 股權的可能性，但請相信，我
們絕對會嚴格挑選買主，而且價格也不是惟一考量的重點，這家銀行與其經營階層待
我們實在不薄，所以即使要賣，我們也要確定能以相同態度回報之。當然如果我們無
法在秋天以前以合理的價格找到合適的買主，最後還是有可能以分割的方式解決。
However, you should be aware that we do not expect to be able to fully,
or even in very large part, replace the earning power represented by the bank
from the proceeds of the sale of the bank. You simply can’t buy high quality
businesses at the sort of price/earnings multiple likely to prevail on our bank
sale.
同時大家必須明瞭，我們經由出售這家銀行所得的資金將來如果再轉投資，其為
Berkshire創造盈餘的能力可能永遠無法與前者比擬。因此同等優質的產業實在是很
難以如此低的本益比取得。
Financial Reporting
財務報告
During 1979, NASDAQ trading was initiated in the stock of Berkshire
Hathaway. This means that the stock now is quoted on the Over-the-Counter
page of the Wall Street journal under “Additional OTC Quotes”. Prior to such
listing, the Wall Street journal and the Dow-Jones news ticker would not
report our earnings, even though such earnings were one hundred or more
times the level of some companies whose reports they regularly picked up.
1979年Berkshire在那斯達克上市，這表示在每天的華爾街日報證券版將可以看得
到Berkshire的報價，在此之前，不管是華爾街日報或是道瓊工業指數都沒有報導我
們經營情況，即使我們的獲利數百倍於它們常常提及的一些公司。
Now, however, the Dow-Jones news ticker reports our quarterly
earnings promptly after we release them and, in addition, both the ticker and
the Wall Street journal report our annual earnings. This solves a
dissemination problem that had bothered us.
現在當我們按季公佈獲利狀況後，華爾街日報將會立即報導相關訊息，這將幫我們一
舉解決了長期困擾著我們發佈消息的難題。
In some ways, our shareholder group is a rather unusual one, and this
affects our manner of reporting to you. For example, at the end of each year
about 98% of the shares outstanding are held by people who also were
shareholders at the beginning of the year. Therefore, in our annual report
we build upon what we have told you in previous years instead of restating a
lot of material. You get more useful information this way, and we don’t get
bored.
在某些方面，我們的股東是相當特別的一群，這影響著我撰寫年報的方式。舉例來說，
每年結束，約有98% 股份的股東會保留他們在Berkshire的持股，因此每年年報的
撰寫皆延續前一年度，避免一再重複敘述相同的東西，從而大家可獲得一些有用的訊
息，而我也不會覺得厭煩。
Furthermore, perhaps 90% of our shares are owned by investors for
whom Berkshire is their largest security holding, very often far and away the
largest. Many of these owners are willing to spend a significant amount of
time with the annual report, and we attempt to provide them with the same
information we would find useful if the roles were reversed.
此外，約有90% 股份的股東其最大的股票投資就是Berkshire，所以有許多股東願意
花相當的時間在研讀每年年報之上，而我們也努力設身處地的提供所有我們認為有用
的資訊給全體股東。
In contrast, we include no narrative with our quarterly reports. Our
owners and managers both have very long time-horizons in regard to this
business, and it is difficult to say anything new or meaningful each quarter
about events of long-term significance.
相較之下，我們並未花太多時間對每季季報加以著墨，因為所有股東與經營者，皆以
長期的眼光來看待這份事業，所以並不是每季都有新的或有重大的事需要報告。
But when you do receive a communication from us, it will come from the
fellow you are paying to run the business. Your Chairman has a firm belief
that owners are entitled to hear directly from the CEO as to what is going on
and how he evaluates the business, currently and prospectively. You would
demand that in a private company; you should expect no less in a public
company. A once-a-year report of stewardship should not be turned over
to a staff specialist or public relations consultant who is unlikely to be in a
position to talk frankly on a manager-to-owner basis. We feel that you, as
owners, are entitled to the same sort of reporting by your manager as we feel
is owed to us at Berkshire Hathaway by managers of our business units.
Obviously, the degree of detail must be different, particularly where
information would be useful to a business competitor or the like. But the
general scope, balance, and level of candor should be similar. We don’t
expect a public relations document when our operating managers tell us
what is going on, and we don’t feel you should receive such a document.
當然當各位果真收到某些訊息時，是因為各位付費聘請的董事長-也就是我本人認為
一個股東-亦即是公司老闆，應該從經理人那邊聽到有關公司的狀況以及其評估此事
的看法。你在一般事業所要求的待遇，在Berkshire這家公開公司一點也不會少。我
們認為一年一度的年報，絕對不應該只是交給底下員工或公關顧問處理便了事，而是
應該以經理人向老闆報告的方式去作才對，也就是像我們希望旗下被投資公司應該跟
我們報告的一樣。當然，詳細的程度不一樣，以免競爭者窺視，但大方向與誠摯的態
度卻並無二致。
In large part, companies obtain the shareholder constituency that they
seek and deserve. If they focus their thinking and communications on
short-term results or short-term stock market consequences they will, in
large part, attract shareholders who focus on the same factors. And if they
are cynical in their treatment of investors, eventually that cynicism is highly
likely to be returned by the investment community.
而事實上，一家公司往往會吸引同類型的人成為其股東，若公司注重的是短期的成果
或是股價的波動，則具有這種特色的投資人便會自動上門成為其股東，而若公司對其
股東採取輕蔑的態度，最後投資大眾亦會以相同的態度回報之。
Phil Fisher, a respected investor and author, once likened the policies of
the corporation in attracting shareholders to those of a restaurant attracting
potential customers. A restaurant could seek a given clientele - patrons of
fast foods, elegant dining, Oriental food, etc. - and eventually obtain an
appropriate group of devotees. If the job were expertly done, that clientele,
pleased with the service, menu, and price level offered, would return
consistently. But the restaurant could not change its character constantly
and end up with a happy and stable clientele. If the business vacillated
between French cuisine and take-out chicken, the result would be a revolving
door of confused and dissatisfied customers.
費雪(Phil Fisher)一位令人尊敬的投資專家與作者，曾比喻一家公司吸引股東的方
式，就好比餐廳招攬客戶的方法一樣，餐廳可標榜其特色，如便利的速食店、優雅的
西餐廳或特別的東方食物等，以吸引同一性質的客戶群，若服務好、菜色佳、價錢公
道，相信客戶會一再上門。然而餐廳卻不能時常變換其所強調的特色，一下是法國美
食、一下又是外帶披薩，最後反而可能導致顧客的忿怒與失望。。
So it is with corporations and the shareholder constituency they seek.
You can’t be all things to all men, simultaneously seeking different owners
whose primary interests run from high current yield to long-term capital
growth to stock market pyrotechnics, etc.
同樣的，一家公司亦不可能同時迎合所有投資大眾的口味，有的要高股利報酬、有的
要長期資本成長，有的又要短期股價爆炸性成長。
The reasoning of managements that seek large trading activity in their
shares puzzles us. In effect, such managements are saying that they want a
good many of the existing clientele continually to desert them in favor of new
ones - because you can’t add lots of new owners (with new expectations)
without losing lots of former owners.
所以我們對於一些公司總是希望自家公司的股票保持高週轉率感到疑惑不解，感覺上
這些公司好像希望原有的股東趕快厭倦而琵琶別抱、另結新歡，以使得新的股東能夠
抱著新希望、新幻想趕快加入。。
We much prefer owners who like our service and menu and who return
year after year. It would be hard to find a better group to sit in the Berkshire
Hathaway shareholder “seats” than those already occupying them. So we
hope to continue to have a very low turnover among our owners, reflecting a
constituency that understands our operation, approves of our policies, and
shares our expectations. And we hope to deliver on those expectations.
相反的，我們希望原有股東一直喜歡我們的服務、我們的菜單，而且常常來光顧，我
們很難找到比原來的股東更好的新股東來加入我們的行列，因此我們期待公司的股份
保持極低的週轉率，這表示我們的股東了解並認同公司經營的方向與期待的未來。
Prospects
未來前景
Last year we said that we expected operating earnings in dollars to
improve but return on equity to decrease. This turned out to be correct.
Our forecast for 1980 is the same. If we are wrong, it will be on the
downside. In other words, we are virtually certain that our operating
earnings expressed as a percentage of the new equity base of approximately
$236 million, valuing securities at cost, will decline from the 18.6% attained
in 1979. There is also a fair chance that operating earnings in aggregate
dollars will fall short of 1979; the outcome depends partly upon the date of
disposition of the bank, partly upon the degree of slippage in insurance
underwriting profitability, and partly upon the severity of earnings problems
in the savings and loan industry.
去年我曾說過公司的盈餘會成長但股東權益報酬率可能會下降，結果正如我所預期，
展望1980年亦是如此，而若我預測錯誤，那表示可能會更慘。換句話說，我們幾乎
可以肯定的說，公司營業利益除以期初股東權益2.36億美元(股票投資以原始成本計)
所得的報酬率將會比1979年的18.6%下滑，甚至營業利益本身也有可能會比去年減
少，其結果取決於何時正式處份銀行、保險業核保獲利的好壞以及儲貸業虧損的嚴重
性。
We continue to feel very good about our insurance equity investments.
Over a period of years, we expect to develop very large and growing amounts
of underlying earning power attributable to our fractional ownership of these
companies. In most cases they are splendid businesses, splendidly
managed, purchased at highly attractive prices.
我們對保險事業持有的股票投資依然非常看好，在往後的數年內，我們預期這些部份
股權投資將會持續為母公司累積獲利，大部份的個案皆屬績優公司且由優秀的人才所
管理，而投資的成本更是價美物廉。
Your company is run on the principle of centralization of financial
decisions at the top (the very top, it might be added), and rather extreme
delegation of operating authority to a number of key managers at the
individual company or business unit level. We could just field a basketball
team with our corporate headquarters group (which utilizes only about 1500
square feet of space).
本公司有關財務決策一向是屬於中央集權，且決策集中於最高當局。但在營運方面卻
是極端授權予集團子公司或事業體的專業經理人，我們的集團總部佔地僅1,500平方
呎，約合42坪左右)總共只有十二人，剛好可以組一隻籃球隊。
This approach produces an occasional major mistake that might have
been eliminated or minimized through closer operating controls. But it also
eliminates large layers of costs and dramatically speeds decision-making.
Because everyone has a great deal to do, a very great deal gets done. Most
important of all, it enables us to attract and retain some extraordinarily
talented individuals - people who simply can’t be hired in the normal course
of events - who find working for Berkshire to be almost identical to running
their own show.
也因此在管理上難免會出點差錯，但另一方面扁平化的組織卻能大幅降低成本並加速
決策時程。因為每個人都有很多事可做，所以大家就可以完成很多事。更重要的是這
使得我們能請到最優秀的人才來為我們工作，這是一般企業無法作到的，因為這些人
就像是在經營自己的事業般盡情發揮。
We have placed much trust in them - and their achievements have far
exceeded that trust.
我們對他們寄與相當的厚望，然而他們的表現卻遠遠超出我們的預期。
Warren E. Buffett, Chairman
March 3, 1980
華倫．巴菲特
董事會主席
1980年3月3日
To Berkshire Shareholders 1979
巴菲特致股東函
1979年版
BERKSHIRE HATHAWAY INC.
波克夏海瑟崴股份有限公司
To the Shareholders of Berkshire Hathaway Inc.:
致Berkshire公司全體股東:
Again, we must lead off with a few words about accounting. Since our
last annual report, the accounting profession has decided that equity
securities owned by insurance companies must be carried on the balance
sheet at market value. We previously have carried such equity securities at
the lower of aggregate cost or aggregate market value. Because we have
large unrealized gains in our insurance equity holdings, the result of this new
policy is to increase substantially both the 1978 and 1979 yearend net worth,
even after the appropriate liability is established for taxes on capital gains
that would be payable should equities be sold at such market valuations.
首先，還是會計相關的議題，從去年年報開始，會計原則要求保險公司持有的股票投
資在資產負債表日的評價方式，從原先的成本與市價孰低法，改按公平市價法列示，
由於我們帳上的股票投資擁有大量的未實現利益，因此即便我們已提列了資本利得實
現時應該支付的估計所得稅負債，我們1978年及1979年的淨值依然大幅增加。
As you know, Blue Chip Stamps, our 60% owned subsidiary, is fully
consolidated in Berkshire Hathaway’s financial statements. However, Blue
Chip still is required to carry its equity investments at the lower of aggregate
cost or aggregate market value, just as Berkshire Hathaway’s insurance
subsidiaries did prior to this year. Should the same equities be purchased at
an identical price by an insurance subsidiary of Berkshire Hathaway and by
Blue Chip Stamps, present accounting principles often would require that
they end up carried on our consolidated balance sheet at two different
values. (That should keep you on your toes.) Market values of Blue Chip
Stamps’ equity holdings are given in footnote 3 on page 18.
大家都知道，我們持股60%的藍籌郵票業已併入Berkshire的合併報表之中，然而依
照現行會計原則規定，藍籌郵票的股票投資仍必須按照舊制-也就是成本與市價孰低
法列示，換句話說，以同一種價格買進同一種股票，不同公司的會計評價方法竟不一
樣，(這是不是讓你毛骨悚然)，藍籌郵票持股的市值請參閱18頁的附註三。
1979 Operating Results
1979年營運成果
We continue to feel that the ratio of operating earnings (before
securities gains or losses) to shareholders’ equity with all securities valued at
cost is the most appropriate way to measure any single year’s operating
performance.
就短期間而言，我們一向認為營業利益(不含出售證券損益)除以股東權益(所有股票投
資按原始成本計算)所得出的比率，為衡量單一年度經營成果的最佳方式。
Measuring such results against shareholders’ equity with securities
valued at market could significantly distort the operating performance
percentage because of wide year-to-year market value changes in the net
worth figure that serves as the denominator. For example, a large decline in
securities values could result in a very low “market value” net worth that, in
turn, could cause mediocre operating earnings to look unrealistically good.
Alternatively, the more successful that equity investments have been, the
larger the net worth base becomes and the poorer the operating performance
figure appears. Therefore, we will continue to report operating performance
measured against beginning net worth, with securities valued at cost.
之所以不按市價計算的原因，是因為如此做將使得分母每年大幅波動而失去比較意
義，舉例來說，股票價格大幅下跌造成股東權益跟著下滑，其結果將使得原本平常的
營業利益看起來反而不錯，同樣的，股價表現越好，股東權益分母跟著變大的結果，
將使得營業利益率變得失色，所以我們仍將按期初的股東權益(股票投資以原始成本
計)為基準來衡量經營績效。
On this basis, we had a reasonably good operating performance in 1979
- but not quite as good as that of 1978 - with operating earnings amounting
to 18.6% of beginning net worth. Earnings per share, of course, increased
somewhat (about 20%) but we regard this as an improper figure upon which
to focus. We had substantially more capital to work with in 1979 than in
1978, and our performance in utilizing that capital fell short of the earlier
year, even though per-share earnings rose. “Earnings per share” will rise
constantly on a dormant savings account or on a U.S. Savings Bond bearing a
fixed rate of return simply because “earnings” (the stated interest rate) are
continuously plowed back and added to the capital base. Thus, even a
“stopped clock” can look like a growth stock if the dividend payout ratio is
low.
在這樣的基礎下，1979年我們獲得了不錯的經營成果，營業利益達到期初淨值的
18.6%，略遜於1978年的數字，當然每股盈餘成長了不少(約20%)，但我們不認為
應該對每股盈餘過於關注，因為雖然1979年我們可運用的資金又增加了不少，但運
用的績效卻反而不如前一年度，因為即便是利率固定的定存帳戶，只要擺著不動，將
領取的利息滾入本金，每年的盈餘還是能達到穩定成長的效果，一個靜止不動的時鐘，
只要不注意，看起來也像是運作正常的時鐘。
The primary test of managerial economic performance is the
achievement of a high earnings rate on equity capital employed (without
undue leverage, accounting gimmickry, etc.) and not the achievement of
consistent gains in earnings per share. In our view, many businesses would
be better understood by their shareholder owners, as well as the general
public, if managements and financial analysts modified the primary emphasis
they place upon earnings per share, and upon yearly changes in that figure.
所以我們判斷一家公司經營好壞的主要依據，取決於其股東權益報酬率(排除不當的財
務槓桿或會計作帳)，而非每股盈餘的成長與否，我們認為如果管理當局及證券分析師
能修正其對每股盈餘的關注，則股東及一般投資大眾將會對這些公司的營運情況有更
深入的了解。
Long Term Results
長期績效
In measuring long term economic performance - in contrast to yearly
performance - we believe it is appropriate to recognize fully any realized
capital gains or losses as well as extraordinary items, and also to utilize
financial statements presenting equity securities at market value. Such
capital gains or losses, either realized or unrealized, are fully as important to
shareholders over a period of years as earnings realized in a more routine
manner through operations; it is just that their impact is often extremely
capricious in the short run, a characteristic that makes them inappropriate as
an indicator of single year managerial performance.
就長期間而言，我們則認為公司純益(包含已實現、未實現資本利得與非常損益)除以
股東權益(所有投資以公平市價計算)所得的比率，為衡量永續經營成果的最佳方式，
其中額外的資本利得，短期間看起來或許相當特殊，但就長期而言，其對股東利益的
影響與日常的營業利益並無太大差別。
The book value per share of Berkshire Hathaway on September 30, 1964
(the fiscal yearend prior to the time that your present management assumed
responsibility) was $19.46 per share. At yearend 1979, book value with
equity holdings carried at market value was $335.85 per share. The gain in
book value comes to 20.5% compounded annually. This figure, of course, is
far higher than any average of our yearly operating earnings calculations, and
reflects the importance of capital appreciation of insurance equity
investments in determining the overall results for our shareholders. It
probably also is fair to say that the quoted book value in 1964 somewhat
overstated the intrinsic value of the enterprise, since the assets owned at that
time on either a going concern basis or a liquidating value basis were not
worth 100 cents on the dollar. (The liabilities were solid, however.)
自現有經營階層接掌Berkshire(1964-1979)的十五年來，公司每股淨值由19.46美
元成長至335.85美元(持有股票投資以市價計)，年複合成長率達20.5%。這個比率
遠高於每年營業利益率的平均數，突顯保險子公司股票增值利益對於股東權益的重要
性，而且1964年的帳面價值實際上超過其實質價值，因為當時帳列的資產不論是以
繼續經營或清算的基礎來看，其價值都遠低於帳面淨值，(至於負債則一毛也少不了)。
We have achieved this result while utilizing a low amount of leverage
(both financial leverage measured by debt to equity, and operating leverage
measured by premium volume to capital funds of our insurance business),
and also without significant issuance or repurchase of shares. Basically, we
have worked with the capital with which we started. From our textile base
we, or our Blue Chip and Wesco subsidiaries, have acquired total ownership
of thirteen businesses through negotiated purchases from private owners for
cash, and have started six others. (It’s worth a mention that those who have
sold to us have, almost without exception, treated us with exceptional honor
and fairness, both at the time of sale and subsequently.)
我們極少運用財務槓桿(不論是財務面的負債比，或是營運面的保費收入與資本比都相
當低)，亦很少發行新股籌資或買回自家股份，基本上我們就是利用現有的資金，在原
有紡織業或藍籌郵票及Wesco子公司的基礎下，前後總計以現金購併了十三家公司，
另外也成立了六家公司，(必須說明的是，這些人在把公司賣給我們的當時與事後，對
我們都相當客氣且坦誠)。
But before we drown in a sea of self-congratulation, a further - and
crucial - observation must be made. A few years ago, a business whose
per-share net worth compounded at 20% annually would have guaranteed its
owners a highly successful real investment return. Now such an outcome
seems less certain. For the inflation rate, coupled with individual tax rates,
will be the ultimate determinant as to whether our internal operating
performance produces successful investment results - i.e., a reasonable gain
in purchasing power from funds committed - for you as shareholders.
但在各位過度沈溺於歡樂氣氛之前，我們必須更嚴格的自我檢視，幾年前，年複合報
酬率達到20%的投資或許就可以稱得上是成功的投資，但目前則未必，因為我們還須
把通貨膨脹率與個人所得稅率列入考量，投資人惟有將這些負面因素扣除後所得購買
力的淨增加，才能論定最後的投資結果是否令人感到滿意。
Just as the original 3% savings bond, a 5% passbook savings account or
an 8% U.S. Treasury Note have, in turn, been transformed by inflation into
financial instruments that chew up, rather than enhance, purchasing power
over their investment lives, a business earning 20% on capital can produce a
negative real return for its owners under inflationary conditions not much
more severe than presently prevail.
就像是3%的儲蓄債券、5%的銀行定存以及8%的國庫券，由於通膨因素使得這些投資
變成侵蝕而非增加投資人購買力的工具，同樣的一項每年可以賺取20%盈餘的事業，
在嚴重的通貨膨脹情況下，也會產生類似的效果。
If we should continue to achieve a 20% compounded gain - not an easy
or certain result by any means - and this gain is translated into a
corresponding increase in the market value of Berkshire Hathaway stock as it
has been over the last fifteen years, your after-tax purchasing power gain is
likely to be very close to zero at a 14% inflation rate. Most of the remaining
six percentage points will go for income tax any time you wish to convert
your twenty percentage points of nominal annual gain into cash.
而如果我們繼續維持每年20%的獲利，這成績已相當不簡單，而且無法保證每年都如
此，而這樣的成績又完全轉化成Berkshire股票價格的上漲，如同過去15年來的情
況，那麼在14%的高通貨膨脹率之下，各位的購買力可以說幾乎沒有任何增加，因為
剩下的6%將會在你決定將這20%的所得變現放入口袋時，用來繳交所得稅給國庫。
That combination - the inflation rate plus the percentage of capital that
must be paid by the owner to transfer into his own pocket the annual
earnings achieved by the business (i.e., ordinary income tax on dividends and
capital gains tax on retained earnings) - can be thought of as an “investor’s
misery index”. When this index exceeds the rate of return earned on equity
by the business, the investor’s purchasing power (real capital) shrinks even
though he consumes nothing at all. We have no corporate solution to this
problem; high inflation rates will not help us earn higher rates of return on
equity.
通貨膨脹率以及股東在將每年公司獲利放入口袋之前必須支付的所得稅率(通常是股
利以及資本利得所需繳納的所得稅)，兩者合計可被稱為「投資人痛苦指數」，當這個
指數超過股東權益的報酬率時，意味著投資人的購買力(真正的資本)不增反減，對於
這樣的情況我們無計可施，因為高通貨膨脹率不代表股東報酬率也會跟著提高。
One friendly but sharp-eyed commentator on Berkshire has pointed out
that our book value at the end of 1964 would have bought about one-half
ounce of gold and, fifteen years later, after we have plowed back all earnings
along with much blood, sweat and tears, the book value produced will buy
about the same half ounce. A similar comparison could be drawn with
Middle Eastern oil. The rub has been that government has been
exceptionally able in printing money and creating promises, but is unable to
print gold or create oil.
一位長期觀察Berkshire的朋友曾指出，1964年底我們每股帳面淨值約可換得半盎
斯黃金，十五年之後，在我們流血流汗地努力耕耘後，每股帳面淨值還是只能換得半
盎斯黃金，相同的道理也可以適用於中東地區的石油之上，關鍵就在於我們的政府只
會印鈔票及劃大餅，卻不會出產黃金或石油。
We intend to continue to do as well as we can in managing the internal
affairs of the business. But you should understand that external conditions
affecting the stability of currency may very well be the most important factor
in determining whether there are any real rewards from your investment in
Berkshire Hathaway.
我們仍將持續努力地妥善管理企業內部事務，但大家必須了解外界環境，如貨幣情勢
的變化卻是決定各位在Berkshire投資回報的最後關鍵因素。
Sources of Earnings
盈餘報告
We again present a table showing the sources of Berkshire’s earnings.
As explained last year, Berkshire owns about 60% of Blue Chip Stamps which,
in turn, owns 80% of Wesco Financial Corporation. The table shows both
aggregate earnings of the various business entities, as well as Berkshire’s
share. All of the significant capital gains or losses attributable to any of the
business entities are aggregated in the realized securities gain figure at the
bottom of the table, and are not included in operating earnings.
下表係Berkshire盈餘的報告，去年我們曾向各位說明過，Berkshire持有藍籌郵票
60%的股權，後者又持有80%的Wesco金融公司，表中顯示各個事業體的盈餘合計
數，以及Berkshire依持股比例可分得的部份，各事業體的資本利得或損失則不包含
在營業利益項下，而是加總列在已實現資本利得項下。
Net Earnings
Earnings Before Income Taxes After Tax
--------------------------------- ------------------
Total Berkshire Share Berkshire Share
---------------- --------------- ------------------
(in thousands of dollars) 1979 1978 1979 1978 1979 1978
------- ------- -------- -------- -------- --------
Total - all entities ......... $68,632 $66,180 $56,427 $54,350 $42,817 $39,242
===== ===== ====== ====== ====== ======
Earnings from Operations:
Insurance Group:
Underwriting ............ $ 3,742 $ 3,001 $ 3,741 $ 3,000 $ 2,214 $ 1,560
Net Investment Income ..24,224 19,705 24,216 19,691 20,106 16,400
Berkshire-Waumbec textiles 1,723 2,916 1,723 2,916 848 1,342
Associated Retail
Stores, Inc. ........... 2,775 2,757 2,775 2,757 1,280 1,176
See’s Candies ............. 12,785 12,482 7,598 7,013 3,448 3,049
Buffalo Evening News ...... (4,617) (2,913) (2,744) (1,637) (1,333) (738)
Blue Chip Stamps - Parent 2,397 2,133 1,425 1,198 1,624 1,382
Illinois National Bank and
Trust Company .......... 5,747 4,822 5,614 4,710 5,027 4,262
Wesco Financial
Corporation - Parent ... 2,413 1,771 1,098 777 937 665
Mutual Savings and Loan
Association ............ 10,447 10,556 4,751 4,638 3,261 3,042
Precision Steel ........... 3,254 -- 1,480 -- 723 --
Interest on Debt .......... (8,248) (5,566) (5,860) (4,546) (2,900) (2,349)
Other ..................... 1,342 720 996 438 753 261
-------- -------- -------- -------- -------- --------
Total Earnings from
Operations .......... $57,984 $52,384 $46,813 $40,955 $35,988 $30,052
Realized Securities Gain 10,648 13,796 9,614 13,395 6,829 9,190
-------- -------- -------- -------- -------- --------
Total Earnings ......... $68,632 $66,180 $56,427 $54,350 $42,817 $39,242
===== ====== ====== ====== ====== ======
Blue Chip and Wesco are public companies with reporting requirements
of their own. On pages 37-43 of this report, we have reproduced the
narrative reports of the principal executives of both companies, in which they
describe 1979 operations. Some of the numbers they mention in their
reports are not precisely identical to those in the above table because of
accounting and tax complexities. (The Yanomamo Indians employ only three
numbers: one, two, and more than two. Maybe their time will come.)
However, the commentary in those reports should be helpful to you in
understanding the underlying economic characteristics and future prospects
of the important businesses that they manage.
藍籌郵票及Wesco都是公開發行公司，各自都必須對外公開報告，在年報的後段附有
這兩家公司主要經理人關於公司1979年現況的書面報告，他們運用的部份數字可能
無法與我們所報告的絲毫不差，但這又是因為會計與稅務一些細節規定所致，
(Yanomamo印地安人只會用三個數字：一、二、大於二)，不過我認為他們的見解
將有助於各位了解這些旗下重要事業的經營現況，以及未來發展的前景。
A copy of the full annual report of either company will be mailed to any
shareholder of Berkshire upon request to Mr. Robert H. Bird for Blue Chip
Stamps, 5801 South Eastern Avenue, Los Angeles, California 90040, or to
Mrs. Bette Deckard for Wesco Financial Corporation, 315 East Colorado
Boulevard, Pasadena, California 91109.
若有需要Berkshire的股東可向Mr. Robert(地址：加州洛杉磯5801 South Eastern
Avenue)索取藍籌郵票的年報或向Mrs. Bette(地址：加州Pasadena 315 East
Colorado Boulevard)索取Wesco的年報。
Textiles and Retailing
紡織業及零售業
The relative significance of these two areas has diminished somewhat
over the years as our insurance business has grown dramatically in size and
earnings. Ben Rosner, at Associated Retail Stores, continues to pull rabbits
out of the hat - big rabbits from a small hat. Year after year, he produces
very large earnings relative to capital employed - realized in cash and not in
increased receivables and inventories as in many other retail businesses - in
a segment of the market with little growth and unexciting demographics.
Ben is now 76 and, like our other “up-and-comers”, Gene Abegg, 82, at
Illinois National and Louis Vincenti, 74, at Wesco, regularly achieves more
each year.
隨著保險事業規模與盈餘快速的成長，紡織業與零售業佔整體事業的重要性日益下
滑，然而儘管如此，聯合零售商店的Ben Rosner還是不斷地化腐朽為神奇，即使產
業面臨停滯不前的窘境，卻能利用有限的資本創造出可觀的盈餘，且大多是現金而非
儘是增加一些應收款或存貨。Ben現年76歲，就像是其他後進者，伊利諾國家銀行
82歲的Gene Abegg、Wesco 74歲的Louis Vincenti一樣，其功力日益深厚。
Our textile business also continues to produce some cash, but at a low
rate compared to capital employed. This is not a reflection on the
managers, but rather on the industry in which they operate. In some
businesses - a network TV station, for example - it is virtually impossible to
avoid earning extraordinary returns on tangible capital employed in the
business. And assets in such businesses sell at equally extraordinary prices,
one thousand cents or more on the dollar, a valuation reflecting the splendid,
almost unavoidable, economic results obtainable. Despite a fancy price tag,
the “easy” business may be the better route to go.
雖然我們的紡織事業仍持續不斷地有現金流入，但與過去所投入的資金實在是不成正
比，這並非經理人的過錯，主要是產業的環境使然，在某些產業，比如說地方電視台，
只要少數的有形資產就能賺取大量的盈餘，而這行的資產售價也奇高，帳面一塊錢的
東西可以喊價到十塊錢，這反應出其驚人獲利能力的身價，雖然價格有點嚇人，但那
樣的產業路子可能反而比較好走。
We can speak from experience, having tried the other route. Your
Chairman made the decision a few years ago to purchase Waumbec Mills in
Manchester, New Hampshire, thereby expanding our textile commitment.
By any statistical test, the purchase price was an extraordinary bargain; we
bought well below the working capital of the business and, in effect, got very
substantial amounts of machinery and real estate for less than nothing. But
the purchase was a mistake. While we labored mightily, new problems arose
as fast as old problems were tamed.
當然我們也不是沒有試過其他方法，在紡織業就曾經過數度掙扎，各位的董事長也就
是本本人，在數年前曾買下位於Manchester的Waumbec 紡織廠，以擴大我們在紡
織業的投資，雖然買進的價格相當划算，也取得一些價美物廉的機器設備與不動產，
幾乎可以說是半買半送的，但即使我們再怎麼努力，整個決策事後證明依然是個錯誤。
因為就算我們再努力，舊的問題好不容易才解決，新的狀況又冒出來。
Both our operating and investment experience cause us to conclude
that “turnarounds” seldom turn, and that the same energies and talent are
much better employed in a good business purchased at a fair price than in a
poor business purchased at a bargain price. Although a mistake, the
Waumbec acquisition has not been a disaster. Certain portions of the
operation are proving to be valuable additions to our decorator line (our
strongest franchise) at New Bedford, and it’s possible that we may be able to
run profitably on a considerably reduced scale at Manchester. However, our
original rationale did not prove out.
最後在經過多次慘痛的教訓之後，我們得到的結論是，所謂有「轉機」(Turn-arounds)
的公司，最後顯少有成功的案例，所以與其把時間與精力花在購買廉價的爛公司上，
還不如以合理的價格投資一些體質好的企業。Waumbec雖然是個錯誤，但所幸並未
釀成災難，部份的產業仍對位於New Bedford的室內裝飾品生產線(這是我們最強的
業務)有所助益，而我們也相信Manchester在大幅縮減營運規模之後，仍將有獲利的
空間，只是我們原先的理論被證明不可行。
Insurance Underwriting
保險核保業務
We predicted last year that the combined underwriting ratio (see
definition on page 36) for the insurance industry would “move up at least a
few points, perhaps enough to throw the industry as a whole into an
underwriting loss position”. That is just about the way it worked out. The
industry underwriting ratio rose in 1979 over three points, from roughly
97.4% to 100.7%. We also said that we thought our underwriting performance
relative to the industry would improve somewhat in 1979 and, again, things
worked out as expected. Our own underwriting ratio actually decreased
from 98.2% to 97.1%. Our forecast for 1980 is similar in one respect; again
we feel that the industry’s performance will worsen by at least another few
points. However, this year we have no reason to think that our performance
relative to the industry will further improve. (Don’t worry - we won’t hold
back to try to validate that forecast.)
去年我們曾預估保險業的綜合核保比率(Combined Underwriting Ratio)會上昇幾個
百分點，甚至有可能使得整體保險業界發生核保損失的狀況，結果正如我們所預期，
綜合核保比率從97.4%上昇到100.7%。我們也預言1979年我們本身的核保表現會
比同業平均好一點，事實證明我們確實從98.2%降至97.1%。展望1980年，第一項
預期不變，那就是整個業界表現將如去年一般會持續惡化，但另一方面，我們卻無法
保證自己的表現能像去年一般優於同業。(但請大家放心，我們絕不會為了讓本人的預
測成真而故意鬆懈)。
Really extraordinary results were turned in by the portion of National
Indemnity Company’s insurance operation run by Phil Liesche. Aided by
Roland Miller in Underwriting and Bill Lyons in Claims, this section of the
business produced an underwriting profit of $8.4 million on about $82
million of earned premiums. Only a very few companies in the entire
industry produced a result comparable to this.
國家產險公司的Phil Liesche在核保部門Roland以及理賠部門Bill Lyons的協助
下，再度繳出漂亮的成績單，這個部門總計為我們創造840萬美金的核保利益與
8,200萬美金的保費收入，這在同業間並不多見。
You will notice that earned premiums in this segment were down
somewhat from those of 1978. We hear a great many insurance managers
talk about being willing to reduce volume in order to underwrite profitably,
but we find that very few actually do so. Phil Liesche is an exception: if
business makes sense, he writes it; if it doesn’t, he rejects it. It is our policy
not to lay off people because of the large fluctuations in work load produced
by such voluntary volume changes. We would rather have some slack in the
organization from time to time than keep everyone terribly busy writing
business on which we are going to lose money. Jack Ringwalt, the founder
of National Indemnity Company, instilled this underwriting discipline at the
inception of the company, and Phil Liesche never has wavered in maintaining
it. We believe such strong-mindedness is as rare as it is sound - and
absolutely essential to the running of a first-class casualty insurance
operation.
而或許你可能會發現這比去年的數字少了些，雖然我們常聽到同業提及寧願少接點保
單也不願虧錢作生意，然真正能貫策執行的並不多，但Phil卻能真正作到，若保單合
理他便簽，否則一慨拒絕。我們不願因為生意時好時壞而必須常常裁員，相對地，我
們寧願保持一點寬鬆的彈性，而不是讓大家忙的要死，到頭來卻發現作的是虧本的生
意，公司在Jack Ringwalt創辦時便立下此一理念，而Phil 從未放棄保持此一優良傳
統，我們也認為這是經營一家一流的產險公司必備的條件。
John Seward continues to make solid progress at Home and Automobile
Insurance Company, in large part by significantly expanding the marketing
scope of that company in general liability lines. These lines can be
dynamite, but the record to date is excellent and, in John McGowan and Paul
Springman, we have two cautious liability managers extending our
capabilities.
負責家庭與汽車保險公司營運的John Seward持續有重大的進展，目前該公司大舉進
軍一般責任險業務，這類的業務極具爆炸性，到目前為止的表現還算不錯，我們有John
MaGowan及Paul Springman等兩位經理人來處理這類的新業務。
Our reinsurance division, led by George Young, continues to give us
reasonably satisfactory overall results after allowing for investment income,
but underwriting performance remains unsatisfactory. We think the
reinsurance business is a very tough business that is likely to get much
tougher. In fact, the influx of capital into the business and the resulting
softer price levels for continually increasing exposures may well produce
disastrous results for many entrants (of which they may be blissfully unaware
until they are in over their heads; much reinsurance business involves an
exceptionally “long tail”, a characteristic that allows catastrophic current loss
experience to fester undetected for many years). It will be hard for us to be
a whole lot smarter than the crowd and thus our reinsurance activity may
decline substantially during the projected prolonged period of extraordinary
competition.
由George Young 領軍的再保險部門，在將投資收益併入考量後，持續地給予我們
滿意的成績，惟核保部門的績效仍有待改進。事實上，未來產業的前景並不看好，由
於外來資金持續大舉投入這一行業，讓競爭變得更為激烈，保費水準一降再降的結果，
使得新進者勇於承擔著極高風險而不自知，直到真正出事時早已為時已晚，而更不幸
的是，這類業務的有效期間通常長達許多年，而我們自認並不比其他同業聰明到哪裡
去的情況下，我們只有選擇暫時退出競爭激烈的市場觀望，業務量下滑的結果將無可
避免。
The Homestate operation was disappointing in 1979. Excellent results
again were turned in by George Billings at Texas United Insurance Company,
winner of the annual award for the low loss ratio among Homestate
companies, and Floyd Taylor at Kansas Fire and Casualty Company. But
several of the other operations, particularly Cornhusker Casualty Company,
our first and largest Homestate operation and historically a winner, had poor
underwriting results which were accentuated by data processing,
administrative and personnel problems. We have made some major
mistakes in reorganizing our data processing activities, and those mistakes
will not be cured immediately or without cost. However, John Ringwalt has
thrown himself into the task of getting things straightened out and we have
confidence that he, aided by several strong people who recently have been
brought aboard, will succeed.
Homestate 1979的營運則令人感到失望，George Billings負責的德州聯合保險再
度以低損失率獲得冠軍，至於其他分支的營運，尤其是Cornhusker產險-Homestate
最大的營運單位，過去一向是傳統的贏家，去年不但核保績效不佳，同時還有資料處
理、行政以及人員方面的問題，我們在重新整理資料處理犯下了幾件大錯，而且未能
及時改進，然而目前John Ringwalt已經投入火線全力導正錯誤，而我們也相信在幾
位新上任且頗具才幹同仁的協助下，應該可以順利達成任務。
Our performance in Worker’s Compensation was far, far better than we
had any right to expect at the beginning of 1979. We had a very favorable
climate in California for the achievement of good results but, beyond this,
Milt Thornton at Cypress Insurance Company and Frank DeNardo at National
Indemnity’s California Worker’s Compensation operation both performed in a
simply outstanding manner. We have admitted - and with good reason -
some mistakes on the acquisition front, but the Cypress purchase has turned
out to be an absolute gem. Milt Thornton, like Phil Liesche, follows the
policy of sticking with business that he understands and wants, without
giving consideration to the impact on volume. As a result, he has an
outstanding book of business and an exceptionally well functioning group of
employees. Frank DeNardo has straightened out the mess he inherited in
Los Angeles in a manner far beyond our expectations, producing savings
measured in seven figures. He now can begin to build on a sound base.
我們勞工退休金的表現遠優於1979年初可能的預期，加州今年的天候相當不錯，這
相當有利我們的營運，除此之外，賽普路斯的Milt Thornton以及國家產險加州勞工
退休金部門的Frank Denardo的表現也很好，我們確實在購併面犯了些錯誤，但賽
普路斯事後被證明是塊寶，而Milt Thornton就像Phil Liesche一樣，不以追求業務
量為依歸，堅持固守自己了解且熟悉的業務，這使得他擁有絕佳的營運記錄以及運作
良好的組織，另外Frank Denardo已經完全導正他在加州所接手的爛攤子，節省的
成果甚至超乎我們預期達到七位數，有了好的開始，他現在可以進一步建立穩固的基
礎。
At yearend we entered the specialized area of surety reinsurance under
the management of Chet Noble. At least initially, this operation will be
relatively small since our policy will be to seek client companies who
appreciate the need for a long term “partnership” relationship with their
reinsurers. We are pleased by the quality of the insurers we have attracted,
and hope to add several more of the best primary writers as our financial
strength and stability become better known in the surety field.
去年年底在Chet Noble的管理下，我們正式進入保證再保險這類專門領域，初期這
類的業務量不會太大，因為我們的策略是先與有意願的客戶建立起長期的夥伴關係，
對於目前上門的保險客戶素質，我們感到相當滿意，也期望我們穩健的財務實力在保
證業務界建立起名聲後，能夠吸引更多優質的保險公司加入。
The conventional wisdom is that insurance underwriting overall will be
poor in 1980, but that rates will start to firm in a year or so, leading to a turn
in the cycle some time in 1981. We disagree with this view. Present
interest rates encourage the obtaining of business at underwriting loss levels
formerly regarded as totally unacceptable. Managers decry the folly of
underwriting at a loss to obtain investment income, but we believe that many
will. Thus we expect that competition will create a new threshold of
tolerance for underwriting losses, and that combined ratios will average
higher in the future than in the past.
從前大家認為核保績效通常會一年好、一年壞，1980年若差一點，那麼1981年應
該會好轉。但我們卻不這麼認為，現在的低利率環境使得業者會傾向犧牲部份核保損
失，再試圖從投資收益上彌補回來，這在過去高利率的時代是不可能發生的。許多同
業高喊殺價競爭愚不可及，但實際上跟進者卻不少，因此我們判斷，同業忍受承保損
失的限度將較過去提高，導致競爭越加激烈，綜合比率將因此提高。
To some extent, the day of reckoning has been postponed because of
marked reduction in the frequency of auto accidents - probably brought on
in major part by changes in driving habits induced by higher gas prices. In
our opinion, if the habits hadn’t changed, auto insurance rates would have
been very little higher and underwriting results would have been much
worse. This dosage of serendipity won’t last indefinitely.
某種程度而言，這樣的預測發生的時點將略微延後，主要是由於車禍事故發生率明顯
的下滑，可能的原因在於油價上漲導致駕駛習慣改變，我們的看法是多虧駕駛習慣發
生改變，否則在保險費率沒有提高的情況下，核保結果肯定會惡化，當然這種僥倖的
意外情況肯定不會一直維持下去。
Our forecast is for an average combined ratio for the industry in the 105
area over the next five years. While we have a high degree of confidence
that certain of our operations will do considerably better than average, it will
be a challenge to us to operate below the industry figure. You can get a lot
of surprises in insurance.
我們的估計是未來五年產險綜合比率平均將會落在105左右，雖然我們有相當程度的
信心，旗下部份的業務應該會比平均數好，但總的來說，還是一項艱難的挑戰，保險
業總是了充滿意外。
Nevertheless, we believe that insurance can be a very good business. It
tends to magnify, to an unusual degree, human managerial talent - or the
lack of it. We have a number of managers whose talent is both proven and
growing. (And, in addition, we have a very large indirect interest in two truly
outstanding management groups through our investments in SAFECO and
GEICO.) Thus we expect to do well in insurance over a period of years.
However, the business has the potential for really terrible results in a single
specific year. If accident frequency should turn around quickly in the auto
field, we, along with others, are likely to experience such a year.
盡管如此，我們還是認為保險業是個相當不錯的行業，它有加大(而且是極大幅度)經
營能力良窳的特性，我們有一大群經理人，其能力不但經過考驗且不斷地增強當中，(此
外透過SAFECO及GEICO的間接投資，我們擁有兩組非常傑出的經營團隊)，因此我
們預期這幾年在保險業界將大有可為，當然一旦事故比率快速增加，我們以及其他同
業也有可能面臨某一個表現特別差的年度。
Insurance Investments
保險業投資
In recent years we have written at length in this section about our
insurance equity investments. In 1979 they continued to perform well,
largely because the underlying companies in which we have invested, in
practically all cases, turned in outstanding performances. Retained
earnings applicable to our insurance equity investments, not reported in our
financial statements, continue to mount annually and, in aggregate, now
come to a very substantial number. We have faith that the managements of
these companies will utilize those retained earnings effectively and will
translate a dollar retained by them into a dollar or more of subsequent
market value for us. In part, our unrealized gains reflect this process.
最近這幾年，我們花了相當大的篇幅談到集團保險業的相關投資，主要是因為這些保
險公司由於被投資公司繳出漂亮的成績單而表現優異，這些被投資公司的保留盈餘，
雖然未能反應在我們的財務報表之上，但實際上卻不斷地累積，目前的金額已到了極
為可觀的地步，我們有信心這些管理階層將會有效地運用保留下來的每一分錢，進一
步創造出比原先更多的價值，從而轉化為我們帳上未實現的資本利得。
Below we show the equity investments which had a yearend market
value of over $5 million:
以下所列出的是我們年底市值超過500萬美元的股權投資。
No. of Sh. Company Cost Market
---------- ------- ---------- ----------
(000s omitted)
289,700 Affiliated Publications, Inc. ........... $ 2,821 $ 8,800
112,545 Amerada Hess ............................ 2,861 5,487
246,450 American Broadcasting Companies, Inc. ... 6,082 9,673
5,730,114 GEICO Corp. (Common Stock) .............. 28,288 68,045
328,700 General Foods, Inc. ..................... 11,437 11,053
1,007,500 Handy & Harman .......................... 21,825 38,537
711,180 Interpublic Group of Companies, Inc. .... 4,531 23,736
1,211,834 Kaiser Aluminum & Chemical Corp. ........ 20,629 23,328
282,500 Media General, Inc. ..................... 4,545 7,345
391,400 Ogilvy & Mather International ........... 3,709 7,828
953,750 SAFECO Corporation ...................... 23,867 35,527
1,868,000 The Washington Post Company ............. 10,628 39,241
771,900 F. W. Woolworth Company ................. 15,515 19,394
---------- ----------
Total ................................... $156,738 $297,994
All Other Holdings ...................... 28,675 38,686
---------- ----------
Total Equities .......................... $185,413 $336,680
======== =======
We currently believe that equity markets in 1980 are likely to evolve in a
manner that will result in an underperformance by our portfolio for the first
time in recent years. We very much like the companies in which we have
major investments, and plan no changes to try to attune ourselves to the
markets of a specific year.
目前我們認為1980年的股票市場將會是近幾年來我們投資組合頭一次的表現不如市
場大盤，我們相當喜愛目前這些我們擁有主要持股的公司，同時在未來的幾年內，也
沒有計畫主動調整目前的投資組合。
Since we have covered our philosophy regarding equities extensively in
recent annual reports, a more extended discussion of bond investments may
be appropriate for this one, particularly in light of what has happened since
yearend. An extraordinary amount of money has been lost by the insurance
industry in the bond area - notwithstanding the accounting convention that
allows insurance companies to carry their bond investments at amortized
cost, regardless of impaired market value. Actually, that very accounting
convention may have contributed in a major way to the losses; had
management been forced to recognize market values, its attention might
have been focused much earlier on the dangers of a very long-term bond
contract.
過去幾年的年報，談的主要是股票投資哲學，現在我想應該換個話題，談談債券投資，
尤其是去年底以來發生了那麼多的事。整個保險業界，因投資債券而蒙受了相當龐大
的損失，雖然依照會計原則，允許保險公司以攤銷成本而非已嚴重受損的市場價值來
記錄其債券投資，事實上，這種會計方法反而是導致更大損失的元兇，因為當初若是
保險公司被迫以市場價格來認列損失，那他們或許就會早一點注意到問題的嚴重性。
Ironically, many insurance companies have decided that a one-year
auto policy is inappropriate during a time of inflation, and six-month policies
have been brought in as replacements. “How,” say many of the insurance
managers, “can we be expected to look forward twelve months and estimate
such imponderables as hospital costs, auto parts prices, etc.?” But, having
decided that one year is too long a period for which to set a fixed price for
insurance in an inflationary world, they then have turned around, taken the
proceeds from the sale of that six-month policy, and sold the money at a
fixed price for thirty or forty years.
更諷刺的是，某些產物保險公司有鑑於通貨膨脹高漲，決定將原本一年期的保單縮短
為半年為期，因為他們認為實在是無法去衡量未來的十二個月內，醫療成本、汽車零
件價格會是多少? 然而荒謬的是，他們在收到保費之後，一轉身卻將剛收到的保費，
拿去購買以三、四十年為期的固定利率債券。
The very long-term bond contract has been the last major fixed price
contract of extended duration still regularly initiated in an inflation-ridden
world. The buyer of money to be used between 1980 and 2020 has been
able to obtain a firm price now for each year of its use while the buyer of auto
insurance, medical services, newsprint, office space - or just about any other
product or service - would be greeted with laughter if he were to request a
firm price now to apply through 1985. For in virtually all other areas of
commerce, parties to long-term contracts now either index prices in some
manner, or insist on the right to review the situation every year or so.
長期的債券是目前通貨膨脹高漲的環境下唯一還存在的長期固定價格合約，合約的買
家可以輕易地鎖定1980年到2020年，每年使用這筆錢固定必須支付的價格，相較
之下，其他諸如汽車保險、醫療服務、新聞資訊、辦公空間或是其他任何產品服務，
如果他要求在未來五年內給予一個固定報價時，肯定會被別人笑掉大牙，在其他商業
領域中，只要是簽訂長期，合約的任何一方，通常都會要求適時反應價格或是堅持每
年必須重新審議合約。
A cultural lag has prevailed in the bond area. The buyers (borrowers)
and middlemen (underwriters) of money hardly could be expected to raise
the question of whether it all made sense, and the sellers (lenders) slept
through an economic and contractual revolution.
然而在債券的領域卻存在有文化落差，不必指望買家(借款人)以及仲介(承銷商)會提出
合理性的懷疑，至於賣家(債權人)即便歷經經濟與合約變革，卻依舊渾然不覺。
For the last few years our insurance companies have not been a net
purchaser of any straight long-term bonds (those without conversion rights
or other attributes offering profit possibilities). There have been some
purchases in the straight bond area, of course, but they have been offset by
sales or maturities. Even prior to this period, we never would buy thirty or
forty-year bonds; instead we tried to concentrate in the straight bond area on
shorter issues with sinking funds and on issues that seemed relatively
undervalued because of bond market inefficiencies.
最近這幾年來，我們的保險公司幾乎未增加一般長期債券方面的部位(Straight
long-term Bond)(即不含轉換權或可提供額外獲利可能性的債券)，即使有買進也是
為了彌補先前到期或出售的部位，而在此之前，我們也從未投資那些長達三、四十年
的債券，頂多是那些較短期且備有償債基金或是因市場缺乏效率而使得價格被低估的
債券。
However, the mild degree of caution that we exercised was an improper
response to the world unfolding about us. You do not adequately protect
yourself by being half awake while others are sleeping. It was a mistake to
buy fifteen-year bonds, and yet we did; we made an even more serious
mistake in not selling them (at losses, if necessary) when our present views
began to crystallize. (Naturally, those views are much clearer and definite in
retrospect; it would be fair for you to ask why we weren’t writing about this
subject last year.)
然而，雖然較之同業我們稍具警覺心，卻仍是不夠的。「雖然半夢半醒，比起熟睡要
好得多，但卻不能保證你不會被熊吃掉。」若說買進四十年期的債券是個大錯，那麼
投資十五年期的也好不到那裏去，很遺憾的是，我們屬於後者，更慘的是，我們未能
適時地忍痛賣掉，而眼睜睜的看著它們的價值日益縮水。(當然，事後回想起來，會覺
得真是笨得可以，而或許你會認為要是去年我就看透這點就好了)。。
Of course, we must hold significant amounts of bonds or other fixed
dollar obligations in conjunction with our insurance operations. In the last
several years our net fixed dollar commitments have been limited to the
purchase of convertible bonds. We believe that the conversion options
obtained, in effect, give that portion of the bond portfolio a far shorter
average life than implied by the maturity terms of the issues (i.e., at an
appropriate time of our choosing, we can terminate the bond contract by
conversion into stock).
當然基於保險營運所需，我們必須持有大量的債券或固定收益部位，但最近幾年我們
在固定收益方面的投資多屬具轉換權的債券，也由於具有轉換權，使得這些債券實際
發行的時間比其票面的到期日要短得多，因為在到期前，依合約規定我們可以要求轉
換為股份。
This bond policy has given us significantly lower unrealized losses than
those experienced by the great majority of property and casualty insurance
companies. We also have been helped by our strong preference for equities
in recent years that has kept our overall bond segment relatively low.
Nevertheless, we are taking our lumps in bonds and feel that, in a sense, our
mistakes should be viewed less charitably than the mistakes of those who
went about their business unmindful of the developing problems.
這樣的規定使得我們實際的損失要比一些產險或意外險的同業來的輕了許多。另外由
於對於股票投資的特別偏好，也讓我們在債券投資的部位相對偏低。盡管如此，在債
券方面我們還是跌了一跤，而且比起那些從來不管問題發生的同業，我們犯得錯實在
是不應該。
Harking back to our textile experience, we should have realized the
futility of trying to be very clever (via sinking funds and other special type
issues) in an area where the tide was running heavily against us.
回顧我們在紡織業的經驗，我們早該知道逆流而上(買進備有償債基金或其他特種債
券) 的結果肯定是徒勞無功。
We have severe doubts as to whether a very long-term fixed-interest
bond, denominated in dollars, remains an appropriate business contract in a
world where the value of dollars seems almost certain to shrink by the day.
Those dollars, as well as paper creations of other governments, simply may
have too many structural weaknesses to appropriately serve as a unit of long
term commercial reference. If so, really long bonds may turn out to be
obsolete instruments and insurers who have bought those maturities of 2010
or 2020 could have major and continuing problems on their hands. We,
likewise, will be unhappy with our fifteen-year bonds and will annually pay a
price in terms of earning power that reflects that mistake.
我們實在很懷疑，為什麼長期固定利率的債券還能在市場上存在，當我們確信美金的
購買力幾乎每天都在變小，這些美元，也包含政府發行的任何貨幣，實在是很難作為
長期的商業指標，同理長期的債券終將會淪為壁紙，而那些買進2010年或2020年
才到期債券將會變成投資人手中的燙手山芋，而我們同樣地也會對這些十五年期的債
券，而且每年都必須為這個錯誤付出購買力下滑的代價。
Some of our convertible bonds appear exceptionally attractive to us,
and have the same sort of earnings retention factor (applicable to the stock
into which they may be converted) that prevails in our conventional equity
portfolio. We expect to make money in these bonds (we already have, in a
few cases) and have hopes that our profits in this area may offset losses in
straight bonds.
在這其中，部份的可轉換債券(經由潛在的轉換權利)，有著跟我們股票投資組合一樣
的吸引力，我們預計可從中賺不少錢(而事實上，有些個案已開始獲利)，同時亦期盼
這部份的獲利能彌補我們在一般債券上的損失。
And, of course, there is the possibility that our present analysis is much
too negative. The chances for very low rates of inflation are not nil.
Inflation is man-made; perhaps it can be man-mastered. The threat which
alarms us may also alarm legislators and other powerful groups, prompting
some appropriate response.
當然，我們對債券的看法也有可能保守了些，通膨降低的機率也不是沒有，畢竟通貨
膨漲多是人為因素所造成的，也或許有一天人們真能有效地控制它，立法當局及有力
團體應該也已注意到這個警訊，進而採取必要的措施。
Furthermore, present interest rates incorporate much higher inflation
projections than those of a year or two ago. Such rates may prove adequate
or more than adequate to protect bond buyers. We even may miss large
profits from a major rebound in bond prices. However, our unwillingness to
fix a price now for a pound of See’s candy or a yard of Berkshire cloth to be
delivered in 2010 or 2020 makes us equally unwilling to buy bonds which set
a price on money now for use in those years. Overall, we opt for Polonius
(slightly restated): “Neither a short-term borrower nor a long-term lender
be.”
此外，現今的利率已反應較高的預期通貨膨脹率，使得新發行的債券對投資者較有保
障，這甚至將使我們可能錯過債券價格反彈而獲利的機會，然而就像我們不願意以一
個固定的價格預先出售西元2010年或2020年一磅喜斯糖果或一呎Berkshire生產
的布料一樣，我們也不願意以一個固定的價格預先出售我們未來四十年金錢的使用
權，我們傾向莎士比亞筆下的Polonius 的看法(稍微經過改編): 「不要作一個短期的
借錢者，也不要當長期的借款人」。
Banking
銀行業
This will be the last year that we can report on the Illinois National Bank
and Trust Company as a subsidiary of Berkshire Hathaway. Therefore, it is
particularly pleasant to report that, under Gene Abegg’s and Pete Jeffrey’s
management, the bank broke all previous records and earned approximately
2.3% on average assets last year, a level again over three times that achieved
by the average major bank, and more than double that of banks regarded as
outstanding. The record is simply extraordinary, and the shareholders of
Berkshire Hathaway owe a standing ovation to Gene Abegg for the
performance this year and every year since our purchase in 1969.
這將會是我們最後一次報告Illinois National Bank的狀況，而我們也很開心的向各
位宣佈在Gene Abegg及Pete Jeffrey優秀的領導下，這家銀行的獲利打破歷年來的
記錄，去年的資產報酬率高達2.3%，約是同業平均的三倍，對於如此優異的表現，實
在值得所有Berkshire的股東再度給予Gene Abegg熱烈的掌聲，感謝他們自1969
年成為Berkshire一員以來所作的貢獻。
As you know, the Bank Holding Company Act of 1969 requires that we
divest the bank by December 31, 1980. For some years we have expected to
comply by effecting a spin-off during 1980. However, the Federal Reserve
Board has taken the firm position that if the bank is spun off, no officer or
director of Berkshire Hathaway can be an officer or director of the spun-off
bank or bank holding company, even in a case such as ours in which one
individual would own over 40% of both companies.
而如同各位所知，1969年通過的銀行控股公司法要求我們必須在1980年結束以前
將這家銀行處份掉，事實上我們曾試圖以分割(spin-off)的方式處理，但聯邦準備局
卻堅持若要如此，則Berkshire不能有任何一位董事或經理人在分割後的銀行擔任任
何職務，即使依照我們這個個案，沒有任何一個人同時擁有兩家公司40% 以上的股
份也一樣。
Under these conditions, we are investigating the possible sale of
between 80% and 100% of the stock of the bank. We will be most choosy
about any purchaser, and our selection will not be based solely on price.
The bank and its management have treated us exceptionally well and, if we
have to sell, we want to be sure that they are treated equally as well. A
spin-off still is a possibility if a fair price along with a proper purchaser
cannot be obtained by early fall.
在這種情況下，我們只能探詢出售該公司80%-100% 股權的可能性，但請相信，我
們絕對會嚴格挑選買主，而且價格也不是惟一考量的重點，這家銀行與其經營階層待
我們實在不薄，所以即使要賣，我們也要確定能以相同態度回報之。當然如果我們無
法在秋天以前以合理的價格找到合適的買主，最後還是有可能以分割的方式解決。
However, you should be aware that we do not expect to be able to fully,
or even in very large part, replace the earning power represented by the bank
from the proceeds of the sale of the bank. You simply can’t buy high quality
businesses at the sort of price/earnings multiple likely to prevail on our bank
sale.
同時大家必須明瞭，我們經由出售這家銀行所得的資金將來如果再轉投資，其為
Berkshire創造盈餘的能力可能永遠無法與前者比擬。因此同等優質的產業實在是很
難以如此低的本益比取得。
Financial Reporting
財務報告
During 1979, NASDAQ trading was initiated in the stock of Berkshire
Hathaway. This means that the stock now is quoted on the Over-the-Counter
page of the Wall Street journal under “Additional OTC Quotes”. Prior to such
listing, the Wall Street journal and the Dow-Jones news ticker would not
report our earnings, even though such earnings were one hundred or more
times the level of some companies whose reports they regularly picked up.
1979年Berkshire在那斯達克上市，這表示在每天的華爾街日報證券版將可以看得
到Berkshire的報價，在此之前，不管是華爾街日報或是道瓊工業指數都沒有報導我
們經營情況，即使我們的獲利數百倍於它們常常提及的一些公司。
Now, however, the Dow-Jones news ticker reports our quarterly
earnings promptly after we release them and, in addition, both the ticker and
the Wall Street journal report our annual earnings. This solves a
dissemination problem that had bothered us.
現在當我們按季公佈獲利狀況後，華爾街日報將會立即報導相關訊息，這將幫我們一
舉解決了長期困擾著我們發佈消息的難題。
In some ways, our shareholder group is a rather unusual one, and this
affects our manner of reporting to you. For example, at the end of each year
about 98% of the shares outstanding are held by people who also were
shareholders at the beginning of the year. Therefore, in our annual report
we build upon what we have told you in previous years instead of restating a
lot of material. You get more useful information this way, and we don’t get
bored.
在某些方面，我們的股東是相當特別的一群，這影響著我撰寫年報的方式。舉例來說，
每年結束，約有98% 股份的股東會保留他們在Berkshire的持股，因此每年年報的
撰寫皆延續前一年度，避免一再重複敘述相同的東西，從而大家可獲得一些有用的訊
息，而我也不會覺得厭煩。
Furthermore, perhaps 90% of our shares are owned by investors for
whom Berkshire is their largest security holding, very often far and away the
largest. Many of these owners are willing to spend a significant amount of
time with the annual report, and we attempt to provide them with the same
information we would find useful if the roles were reversed.
此外，約有90% 股份的股東其最大的股票投資就是Berkshire，所以有許多股東願意
花相當的時間在研讀每年年報之上，而我們也努力設身處地的提供所有我們認為有用
的資訊給全體股東。
In contrast, we include no narrative with our quarterly reports. Our
owners and managers both have very long time-horizons in regard to this
business, and it is difficult to say anything new or meaningful each quarter
about events of long-term significance.
相較之下，我們並未花太多時間對每季季報加以著墨，因為所有股東與經營者，皆以
長期的眼光來看待這份事業，所以並不是每季都有新的或有重大的事需要報告。
But when you do receive a communication from us, it will come from the
fellow you are paying to run the business. Your Chairman has a firm belief
that owners are entitled to hear directly from the CEO as to what is going on
and how he evaluates the business, currently and prospectively. You would
demand that in a private company; you should expect no less in a public
company. A once-a-year report of stewardship should not be turned over
to a staff specialist or public relations consultant who is unlikely to be in a
position to talk frankly on a manager-to-owner basis. We feel that you, as
owners, are entitled to the same sort of reporting by your manager as we feel
is owed to us at Berkshire Hathaway by managers of our business units.
Obviously, the degree of detail must be different, particularly where
information would be useful to a business competitor or the like. But the
general scope, balance, and level of candor should be similar. We don’t
expect a public relations document when our operating managers tell us
what is going on, and we don’t feel you should receive such a document.
當然當各位果真收到某些訊息時，是因為各位付費聘請的董事長-也就是我本人認為
一個股東-亦即是公司老闆，應該從經理人那邊聽到有關公司的狀況以及其評估此事
的看法。你在一般事業所要求的待遇，在Berkshire這家公開公司一點也不會少。我
們認為一年一度的年報，絕對不應該只是交給底下員工或公關顧問處理便了事，而是
應該以經理人向老闆報告的方式去作才對，也就是像我們希望旗下被投資公司應該跟
我們報告的一樣。當然，詳細的程度不一樣，以免競爭者窺視，但大方向與誠摯的態
度卻並無二致。
In large part, companies obtain the shareholder constituency that they
seek and deserve. If they focus their thinking and communications on
short-term results or short-term stock market consequences they will, in
large part, attract shareholders who focus on the same factors. And if they
are cynical in their treatment of investors, eventually that cynicism is highly
likely to be returned by the investment community.
而事實上，一家公司往往會吸引同類型的人成為其股東，若公司注重的是短期的成果
或是股價的波動，則具有這種特色的投資人便會自動上門成為其股東，而若公司對其
股東採取輕蔑的態度，最後投資大眾亦會以相同的態度回報之。
Phil Fisher, a respected investor and author, once likened the policies of
the corporation in attracting shareholders to those of a restaurant attracting
potential customers. A restaurant could seek a given clientele - patrons of
fast foods, elegant dining, Oriental food, etc. - and eventually obtain an
appropriate group of devotees. If the job were expertly done, that clientele,
pleased with the service, menu, and price level offered, would return
consistently. But the restaurant could not change its character constantly
and end up with a happy and stable clientele. If the business vacillated
between French cuisine and take-out chicken, the result would be a revolving
door of confused and dissatisfied customers.
費雪(Phil Fisher)一位令人尊敬的投資專家與作者，曾比喻一家公司吸引股東的方
式，就好比餐廳招攬客戶的方法一樣，餐廳可標榜其特色，如便利的速食店、優雅的
西餐廳或特別的東方食物等，以吸引同一性質的客戶群，若服務好、菜色佳、價錢公
道，相信客戶會一再上門。然而餐廳卻不能時常變換其所強調的特色，一下是法國美
食、一下又是外帶披薩，最後反而可能導致顧客的忿怒與失望。。
So it is with corporations and the shareholder constituency they seek.
You can’t be all things to all men, simultaneously seeking different owners
whose primary interests run from high current yield to long-term capital
growth to stock market pyrotechnics, etc.
同樣的，一家公司亦不可能同時迎合所有投資大眾的口味，有的要高股利報酬、有的
要長期資本成長，有的又要短期股價爆炸性成長。
The reasoning of managements that seek large trading activity in their
shares puzzles us. In effect, such managements are saying that they want a
good many of the existing clientele continually to desert them in favor of new
ones - because you can’t add lots of new owners (with new expectations)
without losing lots of former owners.
所以我們對於一些公司總是希望自家公司的股票保持高週轉率感到疑惑不解，感覺上
這些公司好像希望原有的股東趕快厭倦而琵琶別抱、另結新歡，以使得新的股東能夠
抱著新希望、新幻想趕快加入。。
We much prefer owners who like our service and menu and who return
year after year. It would be hard to find a better group to sit in the Berkshire
Hathaway shareholder “seats” than those already occupying them. So we
hope to continue to have a very low turnover among our owners, reflecting a
constituency that understands our operation, approves of our policies, and
shares our expectations. And we hope to deliver on those expectations.
相反的，我們希望原有股東一直喜歡我們的服務、我們的菜單，而且常常來光顧，我
們很難找到比原來的股東更好的新股東來加入我們的行列，因此我們期待公司的股份
保持極低的週轉率，這表示我們的股東了解並認同公司經營的方向與期待的未來。
Prospects
未來前景
Last year we said that we expected operating earnings in dollars to
improve but return on equity to decrease. This turned out to be correct.
Our forecast for 1980 is the same. If we are wrong, it will be on the
downside. In other words, we are virtually certain that our operating
earnings expressed as a percentage of the new equity base of approximately
$236 million, valuing securities at cost, will decline from the 18.6% attained
in 1979. There is also a fair chance that operating earnings in aggregate
dollars will fall short of 1979; the outcome depends partly upon the date of
disposition of the bank, partly upon the degree of slippage in insurance
underwriting profitability, and partly upon the severity of earnings problems
in the savings and loan industry.
去年我曾說過公司的盈餘會成長但股東權益報酬率可能會下降，結果正如我所預期，
展望1980年亦是如此，而若我預測錯誤，那表示可能會更慘。換句話說，我們幾乎
可以肯定的說，公司營業利益除以期初股東權益2.36億美元(股票投資以原始成本計)
所得的報酬率將會比1979年的18.6%下滑，甚至營業利益本身也有可能會比去年減
少，其結果取決於何時正式處份銀行、保險業核保獲利的好壞以及儲貸業虧損的嚴重
性。
We continue to feel very good about our insurance equity investments.
Over a period of years, we expect to develop very large and growing amounts
of underlying earning power attributable to our fractional ownership of these
companies. In most cases they are splendid businesses, splendidly
managed, purchased at highly attractive prices.
我們對保險事業持有的股票投資依然非常看好，在往後的數年內，我們預期這些部份
股權投資將會持續為母公司累積獲利，大部份的個案皆屬績優公司且由優秀的人才所
管理，而投資的成本更是價美物廉。
Your company is run on the principle of centralization of financial
decisions at the top (the very top, it might be added), and rather extreme
delegation of operating authority to a number of key managers at the
individual company or business unit level. We could just field a basketball
team with our corporate headquarters group (which utilizes only about 1500
square feet of space).
本公司有關財務決策一向是屬於中央集權，且決策集中於最高當局。但在營運方面卻
是極端授權予集團子公司或事業體的專業經理人，我們的集團總部佔地僅1,500平方
呎，約合42坪左右)總共只有十二人，剛好可以組一隻籃球隊。
This approach produces an occasional major mistake that might have
been eliminated or minimized through closer operating controls. But it also
eliminates large layers of costs and dramatically speeds decision-making.
Because everyone has a great deal to do, a very great deal gets done. Most
important of all, it enables us to attract and retain some extraordinarily
talented individuals - people who simply can’t be hired in the normal course
of events - who find working for Berkshire to be almost identical to running
their own show.
也因此在管理上難免會出點差錯，但另一方面扁平化的組織卻能大幅降低成本並加速
決策時程。因為每個人都有很多事可做，所以大家就可以完成很多事。更重要的是這
使得我們能請到最優秀的人才來為我們工作，這是一般企業無法作到的，因為這些人
就像是在經營自己的事業般盡情發揮。
We have placed much trust in them - and their achievements have far
exceeded that trust.
我們對他們寄與相當的厚望，然而他們的表現卻遠遠超出我們的預期。
Warren E. Buffett, Chairman
March 3, 1980
華倫．巴菲特
董事會主席
1980年3月3日
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