BERKSHIRE HATHAWAY INC.


波克夏海瑟崴股份有限公司

To the Shareholders of Berkshire Hathaway Inc.:

致所有股東:

Our gain in net worth during 1987 was $464 million, or

19.5%. Over the last 23 years (that is, since present management

took over), our per-share book value has grown from $19.46 to

$2,477.47, or at a rate of 23.1% compounded annually.

本公司在1978年的淨值增加了四億六千四百萬,較去年增加了19.5%,

而過去23年以來(自從現有經營階層接手後),每股淨值從19元成長到現

在的2,477美元,年複合成長率約為23.1%。

What counts, of course, is the rate of gain in per-share

business value, not book value. In many cases, a corporation's

book value and business value are almost totally unrelated. For

example, just before they went bankrupt, LTV and Baldwin-United

published yearend audits showing their book values to be $652

million and $397 million, respectively. Conversely, Belridge Oil

was sold to Shell in 1979 for $3.6 billion although its book

value was only $177 million.

真正重要的當然是企業每股實際價值,而非帳面價值的增加,在許多情

況下一家公司的帳面與其實際價值一點關連都沒有,舉例來說,LTV與

鮑德溫聯合公司就在宣佈破產之前的會計師簽證的年度報告還顯示,

帳面各有淨值六億與四億美金,但是另一個公司Belridge石油在1979年

以36億美元高價賣給殼牌石油之時,帳面淨值卻不到兩億。

At Berkshire, however, the two valuations have tracked

rather closely, with the growth rate in business value over the

last decade moderately outpacing the growth rate in book value.

This good news continued in 1987.

不過在波克夏兩者成長的趨勢倒是蠻相近的,過去十年公司的實際價值

成長率略高於帳面價值成長率,很高興這種好現象在今年也能持續維持。

Our premium of business value to book value has widened for

two simple reasons: We own some remarkable businesses and they

are run by even more remarkable managers.

我們企業價值對帳面價值的差距,因為以下二個簡單的原因又擴大了一點

,一是我們擁有優秀的企業,一是這些企業皆由最優秀的經理人在管理。

各位有理由對第二個原因表示意見,因為一家企業的總經理很少會告訴公司

股東說,你們所投資的公司是由一群笨蛋組成的經營階層來管理,而也就是

為了要避免露出馬腳,所以常常使得一些公司常常會出現相當詭異的財務報表

You have a right to question that second assertion. After

all, CEOs seldom tell their shareholders that they have assembled

a bunch of turkeys to run things. Their reluctance to do so

makes for some strange annual reports. Oftentimes, in his

shareholders' letter, a CEO will go on for pages detailing

corporate performance that is woefully inadequate. He will

nonetheless end with a warm paragraph describing his managerial

comrades as "our most precious asset." Such comments sometimes

make you wonder what the other assets can possibly be.

通常在致股東的報告中,CEO會花一大篇幅詳細描述過去企業的表現是如何

的不當,最後不可免俗地會以感性的語氣來形容其所帶領的公司幹部實在是

公司最珍貴的資產,這種形容有時會讓人搞不清楚那其他的資產到底又算是什麼?

At Berkshire, however, my appraisal of our operating

managers is, if anything, understated. To understand why, first

take a look at page 7, where we show the earnings (on an

historical-cost accounting basis) of our seven largest non-

financial units: Buffalo News, Fechheimer, Kirby, Nebraska

Furniture Mart, Scott Fetzer Manufacturing Group, See's Candies,

and World Book. In 1987, these seven business units had combined

operating earnings before interest and taxes of $180 million.

不過在波克夏,我個人對於管理幹部任何的稱讚都是很容易讓人理解的,

首先請看看第七頁,顯示本公司七個非金融業的主要企業-水牛城報紙、

費區海默西服、寇比吸塵器、內布拉斯加家具、史考特飛茲集團、喜斯糖果

與世界百科全書的獲利狀況(以歷史成本會計基礎),1987年這七家公司的

年度在扣除利息與所得稅前的獲利高達一億八千萬美元

By itself, this figure says nothing about economic

performance. To evaluate that, we must know how much total

capital - debt and equity - was needed to produce these earnings.

Debt plays an insignificant role at our seven units: Their net

interest expense in 1987 was only $2 million. Thus, pre-tax

earnings on the equity capital employed by these businesses

amounted to $178 million. And this equity - again on an

historical-cost basis - was only $175 million.

單獨這數字本身並不足以說明其特殊性,但若你知道他們利用多少資金就

達到這項成果時,你就知道他們是如何地了不起了,事實上這些公司的負債

比例都非常的低,去年的利息費用總共加起來也不過只有二百萬美元,所以

合計稅前獲利一億七千八百萬,而帳列的歷史投資股本竟只有一億七千五百萬!

If these seven business units had operated as a single

company, their 1987 after-tax earnings would have been

approximately $100 million - a return of about 57% on equity

capital. You'll seldom see such a percentage anywhere, let alone

at large, diversified companies with nominal leverage. Here's a

benchmark: In its 1988 Investor's Guide issue, Fortune reported

that among the 500 largest industrial companies and 500 largest

service companies, only six had averaged a return on equity of

over 30% during the previous decade. The best performer among

the 1000 was Commerce Clearing House at 40.2%.

若把這七家公司視作是單一個體公司,則稅後淨利約為一億美元,股東權益

投資報酬率更將高達57%,即使財務槓桿再高,你也很難在一般公司看到這

種比率,根據財星雜誌在1988年出版的投資人手冊,在全美五百大製造業與

五百大服務業中,只有六家公司過去十年的股東權益報酬率超過30%,最高

的一家也不過只有40.2%。

Of course, the returns that Berkshire earns from these seven

units are not as high as their underlying returns because, in

aggregate, we bought the businesses at a substantial premium to

underlying equity capital. Overall, these operations are carried

on our books at about $222 million above the historical

accounting values of the underlying assets. However, the

managers of the units should be judged by the returns they

achieve on the underlying assets; what we pay for a business does

not affect the amount of capital its manager has to work with.

(If, to become a shareholder and part owner of Commerce Clearing

House, you pay, say, six times book value, that does not change

CCH's return on equity.)

當然Berkshire真正從這些公司賺得的報酬並沒有那麼地高,因為當初買下

這些公司時,支付了相當的溢價才取得這些股份,經過統計我們在這些公司

原始投資超過其帳列的股權淨值的溢價金額約為二億二千二百萬美元,當然

要判斷這些公司經理人的績效應該是要看他們創造的盈餘是靠多少資產所產生的,

至於我們用多少錢買下這些公司與經理人的績效並無關聯,就算你用高於淨值

六倍的價錢買下一家公司,同樣也不會影響該公司的股東權益報酬率。

Three important inferences can be drawn from the figures I

have cited. First, the current business value of these seven

units is far above their historical book value and also far above

the value at which they are carried on Berkshire's balance sheet.

Second, because so little capital is required to run these

businesses, they can grow while concurrently making almost all of

their earnings available for deployment in new opportunities.

Third, these businesses are run by truly extraordinary managers.

The Blumkins, the Heldmans, Chuck Huggins, Stan Lipsey, and Ralph

Schey all meld unusual talent, energy and character to achieve

exceptional financial results.

以上所提數字代表著三項重要的指標,首先現在這七家企業的真正價值遠高於

其帳面淨值,同樣也遠高於Berkshire帳列的投資成本,第二因為經營這些事業

並不需要太多的資金,所以這些公司利用所賺取的盈餘便足以支應本身業務的發展,

第三這些事業都由非常能幹的經理人在經營,像是Blumkins家族、Heldmans、

Chuck Huggins、Stan Lipsey與Ralph Schey皆兼具才幹、精力與品格,

將旗下事業經營的有聲有色。


For good reasons, we had very high expectations when we

joined with these managers. In every case, however, our

experience has greatly exceeded those expectations. We have

received far more than we deserve, but we are willing to accept

such inequities. (We subscribe to the view Jack Benny expressed

upon receiving an acting award: "I don't deserve this, but then,

I have arthritis and I don't deserve that either.")

也因此當初這些明星經理人加入時,我們並抱持著極高的期待,事後證明得到的

結果遠高於預期,我們獲得遠高於我們所應得的,當然我們很樂意接受這樣不公平的對待,

我們借用傑克班尼在獲得最佳男主角時的感言:「我不應該得到這個獎項,

但同樣地我也不應該得到關節炎。」

Beyond the Sainted Seven, we have our other major unit,

insurance, which I believe also has a business value well above

the net assets employed in it. However, appraising the business

value of a property-casualty insurance company is a decidedly

imprecise process. The industry is volatile, reported earnings

oftentimes are seriously inaccurate, and recent changes in the

Tax Code will severely hurt future profitability. Despite these

problems, we like the business and it will almost certainly

remain our largest operation. Under Mike Goldberg's management,

the insurance business should treat us well over time.

除了這七個聖徒之外,我們還有一項主要的事業-保險,同樣地我也認為

它的價值遠高於其帳列的資產,只是要評估一家產物意外險公司的價值

就沒有辦法那麼明確了,這個產業變動很大,報表所列的獲利數字有時

會有很大的偏差,而且最近稅法修正對我們未來年度的獲利有很大的影響,

盡管如此保險事業仍會是我們經營事業的最大重心,在Mike Goldberg的管理之下,

保險事業的報酬仍可期待。

With managers like ours, my partner, Charlie Munger, and I

have little to do with operations. in fact, it is probably fair

to say that if we did more, less would be accomplished. We have

no corporate meetings, no corporate budgets, and no performance

reviews (though our managers, of course, oftentimes find such

procedures useful at their operating units). After all, what can

we tell the Blumkins about home furnishings, or the Heldmans

about uniforms?

有這些優秀的專業經理人,在事業的日常營運上,查理孟格跟我實在是

沒有什麼好費心思的地方,事實上,平心而論我們管的越多,可能只會把事情搞砸,

在Berkshire我們沒有企業會議,也沒有年度預算,更沒有績效考核

(當然各個企業單位因應自身所需,有自己的一套管理辦法) ,但總的來說,

我們實在沒有什麼可以告訴指導Blumkin如何去賣傢具事業或是指導

Heldman家族如何經營制服事業。

Our major contribution to the operations of our subsidiaries

is applause. But it is not the indiscriminate applause of a

Pollyanna. Rather it is informed applause based upon the two

long careers we have spent intensively observing business

performance and managerial behavior. Charlie and I have seen so

much of the ordinary in business that we can truly appreciate a

virtuoso performance. Only one response to the 1987 performance

of our operating managers is appropriate: sustained, deafening

applause.

我們對於這些所屬事業單位最重要的支援就是適時地給予掌聲,但這絕對不是在

做爛好人,相反地這是長久下來我們深入觀察這些企業的經營結果與管理當局的

作為所給予的正面肯定,我們兩個人這些年來看過太多平庸企業的表現,所以我們

是真正地珍惜他們藝術級的演出,對於1987年旗下子公司整體的表現,

我們只能報以熱烈的掌聲,而且是震耳欲聾的掌聲。

Sources of Reported Earnings

盈餘的來源

下表顯示Berkshire主要盈餘的來源,其中商譽的攤銷與購買法的會計調整數,

特別從各個企業挑出彙總成單獨一欄,事實上這樣的目的是為了讓旗下事業的

經營績效,不因我們買下他們而有所影響,在1983與1986年的年報中,

我已不只一次的解釋這樣的表達方式會比依照一般公認會計原則更符合

管理當局與投資者的需要,當然最後加總結算的數字,還是會與會計師

出具的財務報表上的盈餘數字完全一致。

The table on the following page shows the major sources of

Berkshire's reported earnings. In the table, amortization of

Goodwill and other major purchase-price accounting adjustments

are not charged against the specific businesses to which they

apply but, instead, are aggregated and shown separately. In

effect, this procedure presents the earnings of our businesses as

they would have been reported had we not purchased them. In

appendixes to my letters in the 1983 and 1986 annual reports, I

explained why this form of presentation seems to us to be more

useful to investors and managers than the standard GAAP

presentation, which makes purchase-price adjustments on a

business-by business basis. The total net earnings we show in

the table are, of course, identical to the GAAP figures in our

audited financial statements.


In the Business Segment Data on pages 36-38 and in the

Management's Discussion section on pages 40-44 you will find much

additional information about our businesses. In these sections

you will also find our segment earnings reported on a GAAP basis.

I urge you to read that material, as well as Charlie Munger's

letter to Wesco shareholders, describing the various businesses

of that subsidiary, which starts on page 45.

在後面的部門別資訊中,大家可以找到個別事業的詳細資訊,除此之外,

我也強烈建議大家一定要看查理寫給Wesco股東敘述其旗下事業情況的一封信




1987


Unit:US'000



Earnings Before Income Tax
After Income Tax


Percent
Total
Berkshire Share
Berkshire Share

Earnings from Operation






Insurance Group






Underwriting


(55,429)

(20,696)

Net Investment Income


152,483

136,658

Associated Retail Stores






Berkshire-Waumbec Textiles





Blue Chip Stamps-Parent






Buffalio News


39,410

21,304

Fechheimer


13,332

6,580

Illinois National Bank






Kirby


22,408

12,891

Mutual Savings and Loan





Nebraska Furniture Mart


16,837

7,554

Presion Steel






Scott Fetzer-Diversified


30,591

17,555

See's Candies


31,693

17,363

Wesco Financial Corporation-Parent


6,209

4,978

World Book


25,745

15,136

Amortization of Goodwill


(2,862)

(2,862)

Interest on Debt


(11,474)

(5,905)

Shareholder's Contribution


(4,938)

(2,963)

Other


16,914

7,152



0
280,919
 
214,745








Realized Securities Gain


27,319

19,807

Total Earnings-all entities

0
308,238
 
234,552





Gypsy Rose Lee在她晚年的一場生日宴會上宣佈:「我還是擁有去年所有的一切,

現在唯一的差別是全部都矮了兩吋。」

如同本表所示,在1987年幾乎我們所有的事業都又成長的一歲。

Gypsy Rose Lee announced on one of her later birthdays: "I

have everything I had last year; it's just that it's all two

inches lower." As the table shows, during 1987 almost all of our

businesses aged in a more upbeat way.

我們旗下這些事業實在是沒有什麼新的變化可以特別提出報告的,

所謂沒有消息就是好消息,劇烈的變動通常不會有特別好的績效,

當然這與大部分的投資人認為的剛好相反,大家通常將最高的本益比

給予那些擅長畫大餅的企業,這些美好的遠景會讓投資人不顧現實經營的情況,

而一昧幻想未來可能的獲利美夢,對於這種愛做夢的投資人來說,任何路邊的野花,

都會比鄰家的女孩來的具吸引力,不管後者是如何賢慧。

There's not a lot new to report about these businesses - and

that's good, not bad. Severe change and exceptional returns

usually don't mix. Most investors, of course, behave as if just

the opposite were true. That is, they usually confer the highest

price-earnings ratios on exotic-sounding businesses that hold out

the promise of feverish change. That prospect lets investors

fantasize about future profitability rather than face today's

business realities. For such investor-dreamers, any blind date

is preferable to one with the girl next door, no matter how

desirable she may be.

經驗顯示,能夠創造盈餘新高的企業,現在做生意的方式通常與其五年前

甚至十年前沒有多大的差異,當然管理當局絕對不能夠太過自滿,因為

企業總有不斷的機會可以改善本身的服務、產品線、製造能力等等,

且絕對必須要好好把握,不過一家公司若是為了改變而改變,反而可能

增加犯錯的機會,講的更深入一點,在一塊動盪不安的土地之上,是不太

可能建造一座固若金湯的城堡,而具有這樣穩定特質的企業卻是持續創造

高獲利的關鍵。

Experience, however, indicates that the best business

returns are usually achieved by companies that are doing

something quite similar today to what they were doing five or ten

years ago. That is no argument for managerial complacency.

Businesses always have opportunities to improve service, product

lines, manufacturing techniques, and the like, and obviously

these opportunities should be seized. But a business that

constantly encounters major change also encounters many chances

for major error. Furthermore, economic terrain that is forever

shifting violently is ground on which it is difficult to build a

fortress-like business franchise. Such a franchise is usually

the key to sustained high returns.

先前提到財星雜誌的研究,可以充分支持我的論點,在1977年到1986年間,

總計1,000家中只有25家能夠達到連續十年平均股東權益報酬率達到20%的標準,

且沒有一年低於15%的雙重標準,而這些優質企業同時也是股票市場上的寵兒,

在所有的25家中有24家的表現超越S&P500指數。

The Fortune study I mentioned earlier supports our view.

Only 25 of the 1,000 companies met two tests of economic

excellence - an average return on equity of over 20% in the ten

years, 1977 through 1986, and no year worse than 15%. These

business superstars were also stock market superstars: During the

decade, 24 of the 25 outperformed the S&P 500.

這些財富之星可能讓你大開眼界,首先相對於本身支付利息的能力,

他們所運用的財務槓桿極其有限,一家真正好的公司是不需要借錢的,

第二除了有一家是所謂的高科技公司,另外少數幾家屬於製藥業以外,

大多數的公司產業相當平凡普通,大部分現在銷售的產品或服務與十年前

大致相同,(雖然數量或是價格、或是兩者都有,比以前高很多),

這些公司的記錄顯示,充分運用現有產業地位,或是專注在單一領導的

產品品牌之上通常是創造企業暴利的不二法門。

The Fortune champs may surprise you in two respects. First,

most use very little leverage compared to their interest-paying

capacity. Really good businesses usually don't need to borrow.

Second, except for one company that is "high-tech" and several

others that manufacture ethical drugs, the companies are in

businesses that, on balance, seem rather mundane. Most sell non-

sexy products or services in much the same manner as they did ten

years ago (though in larger quantities now, or at higher prices,

or both). The record of these 25 companies confirms that making

the most of an already strong business franchise, or

concentrating on a single winning business theme, is what usually

produces exceptional economics.

事實上我們在Berkshire的經驗正是如此,我們的專業經理人所以能夠

締造優異的成績,所從事的業務相當平凡,但重點是把它們做到極致,

經理人致力於保護企業本身、控制成本,基於現有能力尋找新產品與

新市場來鞏固既有優勢,他們從不受外界誘惑,鉅細靡遺地專注於

企業之上,而其成績有目共睹。

Berkshire's experience has been similar. Our managers have

produced extraordinary results by doing rather ordinary things -

but doing them exceptionally well. Our managers protect their

franchises, they control costs, they search for new products and

markets that build on their existing strengths and they don't get

diverted. They work exceptionally hard at the details of their

businesses, and it shows.

以下是近況報導

Here's an update:

克裏思蒂小姐嫁給一位考古學家,她曾說︰「配偶最理想的職業就是考古學家,

因為妳越老,他就越有興趣」,事實上應該是商學院而非考古學系的學生,

需要多多研究B太太-這位NFM高齡94歲的負責人。

o Agatha Christie, whose husband was an archaeologist, said

that was the perfect profession for one's spouse: "The older you

become, the more interested they are in you." It is students of

business management, not archaeologists, who should be interested

in Mrs. B (Rose Blumkin), the 94-year-old chairman of Nebraska

Furniture Mart.

五十年以前B太太以五百塊美金創業,到如今NFM已是全美遠近馳名的傢具量販店,

但是B太太還是一樣從早到晚,一個禮拜工作七天,掌管採購、銷售與管理,

我很確定她現在正蓄勢待發,準備在未來的五到十年內,全力衝刺再創高峰,

也因此我已說服董事會取消一百歲強迫退休的年齡上限,(也該是時候了,

隨著時光的流逝,越來我越相信這個規定是該修改了)

Fifty years ago Mrs. B started the business with $500, and

today NFM is far and away the largest home furnishings store in

the country. Mrs. B continues to work seven days a week at the

job from the opening of each business day until the close. She

buys, she sells, she manages - and she runs rings around the

competition. It's clear to me that she's gathering speed and may

well reach her full potential in another five or ten years.

Therefore, I've persuaded the Board to scrap our mandatory

retirement-at-100 policy. (And it's about time: With every

passing year, this policy has seemed sillier to me.)

去年(1987年) NFM的銷貨淨額是一億四千多萬美元,較前一年度成長8%,

這是全美獨一無二的一家店,也是全美獨一無二的家族,B太太跟她三個兒子

擁有天生的生意頭腦、品格與衝勁,且分工合作,團結一致。

Net sales of NFM were $142.6 million in 1987, up 8% from

1986. There's nothing like this store in the country, and

there's nothing like the family Mrs. B has produced to carry on:

Her son Louie, and his three boys, Ron, Irv and Steve, possess

the business instincts, integrity and drive of Mrs. B. They work

as a team and, strong as each is individually, the whole is far

greater than the sum of the parts.

B太太家族的傑出表現,不但讓身為股東的我們受益良多,NFM的客戶們

更受惠更大,只要選擇NFM的產品據估計光是1987年就可省下至少三千萬美元,

換句話說若客戶到別處去買可能要貴上這麼多錢。

The superb job done by the Blumkins benefits us as owners,

but even more dramatically benefits NFM's customers. They saved

about $30 million in 1987 by buying from NFM. In other words,

the goods they bought would have cost that much more if purchased

elsewhere.

去年我接到一封無名氏所寫的相當有趣的信︰「很遺憾看到Berkshire第二季

的獲利下滑,想要提高 貴公司的獲利嗎? 有一個不錯的法子,去查查NFM

的產品售價,你會發現他們把一、兩成的獲利空間白白奉送給客戶,

算算一年一億四千萬的營業額,那可是二千八百萬的利潤,這個數字

實在是相當可觀,再看看別家傢具、地毯或是電器用品的價格,

你就會發現把價格調回來是再合理不過了

謝謝

一位競爭同業留」

You'll enjoy an anonymous letter I received last August:

"Sorry to see Berkshire profits fall in the second quarter. One

way you may gain back part of your lost. (sic) Check the pricing

at The Furniture Mart. You will find that they are leaving 10%

to 20% on the table. This additional profit on $140 million of

sells (sic) is $28 million. Not small change in anyone's pocket!

Check out other furniture, carpet, appliance and T.V. dealers.

Your raising prices to a reasonable profit will help. Thank you.

/signed/ A Competitor."


NFM will continue to grow and prosper by following Mrs. B's

maxim: "Sell cheap and tell the truth."

展望未來NFM在B太太「價格公道實在」的座右銘領導下,必將繼續成長茁壯。


o在全美相同規模(或甚至更大)的報紙中,水牛城報紙有兩個特點

第一、它在平時與假日的普及率最高(即訂戶數在該地區家戶數的比率),

第二是新聞比率最高(新聞版面佔總版面的比率)

o Among dominant papers of its size or larger, the Buffalo

News continues to be the national leader in two important ways:

(1) its weekday and Sunday penetration rate (the percentage of

households in the paper's primary market area that purchase it);

and (2) its "news-hole" percentage (the portion of the paper

devoted to news).

事實上一份報紙能夠同時擁有這兩項特色絕對不是巧合,因為新聞內容越豐富,

也就越能吸引更廣泛的讀者,從而提高普及率,當然除了量之外,新聞品質

也很重要,這不但代表要有好的報導與編輯,也代表要有即時性與關聯性,

為了讓報紙成為讀者們不可或缺的東西,它必須能夠馬上告訴讀者許多他們

想要知道的事情,而不是等讀者們都已知道後,事後報紙才刊登出來。

It may not be coincidence that one newspaper leads in both

categories: an exceptionally "newsrich" product makes for broad

audience appeal, which in turn leads to high penetration. Of

course, quantity must be matched by quality. This not only

means good reporting and good writing; it means freshness and

relevance. To be indispensable, a paper must promptly tell its

readers many things they want to know but won't otherwise learn

until much later, if ever.

以水牛城日報來說我們平均每24小時出七個版本,每次內容都會更新,

舉一個簡單的例子就足以讓人感到驚奇,光是每天的訃文就會更新七次,

也就是說每則新增的訃文會在報紙上連續刊登七個版。

At the News, we put out seven fresh editions every 24 hours,

each one extensively changed in content. Here's a small example

that may surprise you: We redo the obituary page in every edition

of the News, or seven times a day. Any obituary added runs

through the next six editions until the publishing cycle has been

completed.

當然一份新聞也必須要有有深度的全國與國際性新聞,但一份地區性的

報紙也必須及時並廣泛地報導社區動態,要把這點做好除了必須要有

足夠的空間,並加以有效地運用。

It's vital, of course, for a newspaper to cover national and

international news well and in depth. But it is also vital for

it to do what only a local newspaper can: promptly and

extensively chronicle the personally-important, otherwise-

unreported details of community life. Doing this job well

requires a very broad range of news - and that means lots of

space, intelligently used.

如同往年,去年(1987年)我們的新聞比大約是50%,若是我們把這比率

砍到一般40%的水準,我們一年約可省下四百萬美金的新聞成本,

但我們從來都不會考慮如此做,就算哪一天我們的獲利大幅縮減也是一樣。

Our news hole was about 50% in 1987, just as it has been

year after year. If we were to cut it to a more typical 40%, we

would save approximately $4 million annually in newsprint costs.

That interests us not at all - and it won't interest us even if,

for one reason or another, our profit margins should

significantly shrink.


基本上查理跟我都不太相信營業預算,像是「間接費用必須縮減,

因為預估營業收入不若以往」之類的說法,。如果有一天我們必須

降低新聞比率或是犧牲喜斯糖果的品質與服務,以提升疲弱不振的

獲利表現,或是相反地因為Berkshire太多錢以致現金花不完,

就去聘請經濟分析師、公關顧問等對公司一點幫助都沒有的人。

這些做法一點道理都沒有,我們完全不了解為何有些公司因為公司

賺太多錢就增加一些沒有用的人來消化預算,或是因為獲利不佳

就砍掉一些關鍵的人事,這種變來變去的方式既不符合人性也不符合商業原則,

我們的目標是不論如何都要做對Berkshire的客戶與員工有意義的事,

(你可能會問那公司專機又是怎麼一回事??嗯!我想有時一個人總會有忘了原則的時候)

Charlie and I do not believe in flexible operating budgets,

as in "Non-direct expenses can be X if revenues are Y, but must

be reduced if revenues are Y - 5%." Should we really cut our news

hole at the Buffalo News, or the quality of product and service

at See's, simply because profits are down during a given year or

quarter? Or, conversely, should we add a staff economist, a

corporate strategist, an institutional advertising campaign or

something else that does Berkshire no good simply because the

money currently is rolling in?


That makes no sense to us. We neither understand the adding

of unneeded people or activities because profits are booming, nor

the cutting of essential people or activities because

profitability is shrinking. That kind of yo-yo approach is

neither business-like nor humane. Our goal is to do what makes

sense for Berkshire's customers and employees at all times, and

never to add the unneeded. ("But what about the corporate jet?"

you rudely ask. Well, occasionally a man must rise above

principle.)

雖然水牛城新聞的營收最近幾年只有些微的成長,但在發行人Stan Lipsey

傑出的管理之下,獲利卻反而大幅成長,有好幾年我甚至錯誤地預測該報

的獲利會下滑,而同樣地今年我也不會讓大家失望,1988年不管是毛利

或者是獲利都會縮水,其中新聞印刷成本的飛漲是主要的原因。

Although the News' revenues have grown only moderately since

1984, superb management by Stan Lipsey, its publisher, has

produced excellent profit growth. For several years, I have

incorrectly predicted that profit margins at the News would fall.

This year I will not let vou down: Margins will, without

question, shrink in 1988 and profit may fall as well.

Skyrocketing newsprint costs will be the major cause.


o Fechheimer Bros. Company is another of our family

businesses - and, like the Blumkins, what a family. Three

generations of Heldmans have for decades consistently, built the

sales and profits of this manufacturer and distributor of

uniforms. In the year that Berkshire acquired its controlling

interest in Fechheimer - 1986 - profits were a record. The

Heldmans didn't slow down after that. Last year earnings

increased substantially and the outlook is good for 1988.

費區海默兄弟公司是我們旗下另一個家族企業,而就像Blumkins一樣

是個非常傑出的家族,Heldmans家族三代幾十年來,努力不懈地建立了

這家制服製造與銷售公司,而在Berkshire取得所有權的1986年,

該公司的獲利更創新高,此後Heldmans家族並未停下腳步,

去年(1987年)盈餘又大幅增加,而展望今年(1988年)前景更是看好。

在制服事業大概沒有什麼出奇的事,唯一的驚奇就是Heldmans家族,

Bob、George、Gary、Roger跟Fred,對於這行業熟的不能再熟,

同時也樂在其中,我們何其有幸能與他們一起合作共事。

There's nothing magic about the Uniform business; the only

magic is in the Heldmans. Bob, George, Gary, Roger and Fred know

the business inside and out, and they have fun running it. We

are fortunate to be in partnership with them.


o Chuck Huggins continues to set new records at See's, just as

he has ever since we put him in charge on the day of our purchase

some 16 years ago. In 1987, volume hit a new high at slightly

Under 25 million pounds. For the second year in a row, moreover,

same-store sales, measured in pounds, were virtually unchanged.

In case you are wondering, that represents improvement: In each

of the previous six years, same-store sales had fallen.

Chuck Huggins持續為喜斯糖果締造新猷,自從十六年前我們買下這家公司,

並請他主掌這項事業時,便一直是如此,在1987年糖果銷售量創下

近二千五百萬英鎊的新高,同時連續第二年單店平均營業額維持不墜,

你可能會覺得沒什麼了不起,事實上這已是相當大的改善,因為過去連續

六年數字都呈現下滑的趨勢。

Although we had a particularly strong 1986 Christmas season,

we racked up better store-for-store comparisons in the 1987

Christmas season than at any other time of the year. Thus, the

seasonal factor at See's becomes even more extreme. In 1987,

about 85% of our profit was earned during December.

雖然1986年的聖誕節特別旺,但1987年的記錄比86年還要好,

使得季節因素對喜斯糖果來說越來越重要,經統計去年一整年

約有85%的獲利是在十二月單月所創造的。

糖果店是個很好玩的地方,但對大部分的老闆來說就不那麼有趣了,

就我們所知,這幾年來除了喜斯賺大錢之外,其他糖果店的經營皆相當慘淡,

所以很明顯的喜斯搭的並不是順風車,它的表現是紮紮實實的。

Candy stores are fun to visit, but most have not been fun

for their owners. From what we can learn, practically no one

besides See's has made significant profits in recent years from

the operation of candy shops. Clearly, Chuck's record at See's

is not due to a rising industry tide. Rather, it is a one-of-a-

kind performance.

這項成就當然需要優秀的產品,這個倒不是問題,因為我們確實擁有,

但除此之外它還需要對客戶衷心的服務,Chuck可以說是百分之百地

為客戶設想,而他的態度更直接感染到公司上下所有的員工。

His achievement requires an excellent product - which we

have - but it also requires genuine affection for the customer.

Chuck is 100% customer-oriented, and his attitude sets the tone

for the rest of the See's organization.

以下是一個具體的例證,在喜斯我們通常會定期增添新的口味並刪除舊的

口味以維持大約一百種組合,去年我們淘汰了14種口味,結果其中有兩種

讓我們的客戶無法忘懷,而不斷地表達他們對我們這種舉動的不滿,

「願喜斯所有做出這種卑鄙決定的相關人士嘴巴流膿長瘡;願你們新的

巧克力糖在運送途中融化;願你們吃到酸掉的糖果;願你們的虧大錢;

我們正試圖尋求要求你們恢復供應原有口味的法院強制令」,

總計最後我們收到好幾百封的抱怨信。

Here's an example of Chuck in action: At See's we regularly

add new pieces of candy to our mix and also cull a few to keep

our product line at about 100 varieties. Last spring we selected

14 items for elimination. Two, it turned out, were badly missed

by our customers, who wasted no time in letting us know what they

thought of our judgment: "A pox on all in See's who participated

in the abominable decision...;" "May your new truffles melt in

transit, may they sour in people's mouths, may your costs go up

and your profits go down...;" "We are investigating the

possibility of obtaining a mandatory injunction requiring you to

supply...;" You get the picture. In all, we received many hundreds of

letters.

為此Chuck不但重新推出原來的口味,他還將危機化為轉機,所有來信

的客戶都得到完整且誠實的回覆,信上是這樣寫的︰「雖然我們做出錯誤的決定,

但值得慶幸的是最後得以以喜劇收場」,隨信還附贈一個特別的小禮物。

Chuck not only reintroduced the pieces, he turned this

miscue into an opportunity. Each person who had written got a

complete and honest explanation in return. Said Chuck's letter:

"Fortunately, when I make poor decisions, good things often

happen as a result...;" And with the letter went a special gift

certificate.


See's increased prices only slightly in the last two years.

In 1988 we have raised prices somewhat more, though still

moderately. To date, sales have been weak and it may be

difficult for See's to improve its earnings this year.

過去兩年喜斯糖果僅稍微地漲價,在今年(1988年)我們仍會繼續調漲價格

,幅度還算合理,只是截至目前為止銷售持續低迷,預計今年公司盈餘

將難再有繼續成長的可能性。

o World Book, Kirby, and the Scott Fetzer Manufacturing Group

are all under the management of Ralph Schey. And what a lucky

thing for us that they are. I told you last year that Scott

Fetzer performance in 1986 had far exceeded the expectations that

Charlie and I had at the time of our purchase. Results in 1987

were even better. Pre-tax earnings rose 10% while average

capital employed declined significantly.

世界百科全書、寇比吸塵器與史考特費茲製造集團皆由Ralph所領導,

很高興我們能做這樣的安排,去年我曾告訴各位史考特費茲集團在我們

買下公司的當年度-1986年的表現超乎預期,但去年1987年的表現更出色,

稅前獲利成長了10%,但所耗費的資金卻較前年大幅縮減。

Ralph's mastery of the 19 businesses for which he is

responsible is truly amazing, and he has also attracted some

outstanding managers to run them. We would love to find a few

additional units that could be put under Ralph's wing.

Ralph同時掌管19項事業的方式實在是令人歎為觀止,同時他也吸引了

一群優秀的經理人協助他經營事業,我們很樂意在多找一些事業交到Ralph旗下去經營。

The businesses of Scott Fetzer are too numerous to describe

in detail. Let's just update you on one of our favorites: At the

end of 1987, World Book introduced its most dramatically-revised

edition since 1962. The number of color photos was increased

from 14,000 to 24,000; over 6,000 articles were revised; 840 new

contributors were added. Charlie and I recommend this product to

you and your family, as we do World Book's products for younger

children, Childcraft and Early World of Learning.

由於史考特費茲的事業範圍過於繁雜,在此不便詳述,這裡謹就其中一項

我們的最愛-世界百科全書加以介紹,去年底世界百科全書推出自1962年

以來改版最多的最新版本,全套書中的彩色照片從14,000禎增加到24,000禎,

超過6,000篇文章從新編寫,840位作者參與;查理跟我衷心向您與您的家庭

推薦包含世界百科全書與兒童工藝等一系列的套書。

In 1987, World Book unit sales in the United States

increased for the fifth consecutive year. International sales

and profits also grew substantially. The outlook is good for

Scott Fetzer operations in aggregate, and for World Book in

particular.

在去年該套書在美國地區銷售量連續第五年成長,國外地區的銷量與獲利

亦大幅增加,史考特費茲集團前景看好,尤其世界百科全書更是如此。

Insurance Operations

保險事業營運

Shown below is an updated version of our usual table

presenting key figures for the insurance industry:

下表是我們慣用保險業主要指數的最近更新數字



Yearly Change in
Combined Ratio
Yearly Change in
GNP Deflators



Premiums Written

Incurred Loss

1981

3.8%
106.0%

6.5%
9.7%

1982

4.4%
109.8%

8.4%
6.4%

1983

4.6%
112.0%

6.8%
3.9%

1984

9.2%
117.9%

16.9%
3.8%

1985

22.1%
116.5%

16.1%
3.3%

1986
(Rev.)
22.2%
108.0%

13.5%
2.6%

1987
(Est.)
8.7%
104.7%

6.8%
3.0%






綜合比率代表所有保險成本(發生損失加上費用)佔保費收入的比率,一百

以下表示有承保的獲利,一百以上則有承保的損失,若考量保險公司利用

保費收入(浮存金)所賺取的投資收益列入計算,則107到111之間大約是

損益兩平點,當然這是不包含公司自有資金所運用的收益。

The combined ratio represents total insurance costs (losses

incurred plus expenses) compared to revenue from premiums: A

ratio below 100 indicates an underwriting profit, and one above

100 indicates a loss. When the investment income that an insurer

earns from holding on to policyholders' funds ("the float") is

taken into account, a combined ratio in the 107-111 range

typically produces an overall break-even result, exclusive of

earnings on the funds provided by shareholders.

保險事業的數字,若以上面那張簡表來說明,事實上並不會太複雜,

當同業平均保費收入年成長只在4%或5%徘徊,則當年承保損失一定會上升,

原因不在於車禍、火災、暴風等意外事件發生更頻繁,也不是因為一般

通貨膨脹的關係。主要的禍首在於今天社會與司法過度膨脹,法律訴訟費用暴增,

一方面是因為訴訟更頻繁,一方面是由於陪審團與法官傾向擴大保險單上的

保險理賠範圍,若這種亂象不能加以抑止,則保險公司每年至少要有10%以上的

保費收入年成長,才有辦法收支打平,即使在通貨膨脹相對溫和的狀況下也是如此。

The math of the insurance business, encapsulated by the

table, is not very complicated. In years when the industry's

annual gain in revenues (premiums) pokes along at 4% or 5%,

underwriting losses are sure to mount. That is not because auto

accidents, fires, windstorms and the like are occurring more

frequently, nor has it lately been the fault of general

inflation. Today, social and judicial inflation are the major

culprits; the cost of entering a courtroom has simply ballooned.

Part of the jump in cost arises from skyrocketing verdicts, and

part from the tendency of judges and juries to expand the

coverage of insurance policies beyond that contemplated by the

insurer when the policies were written. Seeing no let-up in

either trend, we continue to believe that the industry's revenues

must grow at about 10% annually for it to just hold its own in

terms of profitability, even though general inflation may be

running at a considerably lower rate.

過去三年來保費收入的大幅成長幾乎可以確定今年同業的績效都會相當不錯,

事實證明也是如此,不過接下來的情況可就不太妙了,根據Best's統計預估,

1988年的每季的成長率將由12.9%按季逐漸下滑至11.1%、5.7%、5.6%,

可以確定的是1988年的保費成長一定會低於10%的損益兩平點,很明顯的

好日子已經不多了。

The strong revenue gains of 1985-87 almost guaranteed the

industry an excellent underwriting performance in 1987 and,

indeed, it was a banner year. But the news soured as the

quarters rolled by: Best's estimates that year-over-year volume

increases were 12.9%, 11.1%, 5.7%, and 5.6%. In 1988, the

revenue gain is certain to be far below our 10% "equilibrium"

figure. Clearly, the party is over.

然而盈餘數字卻不會馬上滑落,這個產業具有遞延的現象,因為大部分的保單

都是一年期,所以對於損益的影響會在往後的一年之間陸續浮現,因此打個比方,

在party結束、酒吧關門之前,你還可以把手上的那杯喝完了再走,

假設往後幾年沒有發生什麼天災地變,我們預期1988年的同業平均綜合比率

將會微幅上揚,緊接下來的幾年則會大幅攀升。

However, earnings will not immediately sink. A lag factor

exists in this industry: Because most policies are written for a

one-year term, higher or lower insurance prices do not have their

full impact on earnings until many months after they go into

effect. Thus, to resume our metaphor, when the party ends and

the bar is closed, you are allowed to finish your drink. If

results are not hurt by a major natural catastrophe, we predict a

small climb for the industry's combined ratio in 1988, followed

by several years of larger increases.

保險業最近受到幾項不利的經濟因素所困而前景黯淡,數以百計的競爭對手、

進入障礙低、無法大幅差異化的產品特性,在這種類似商品型產業之中,

只有營運成本低的公司或是一些受到保護的利基產品才有可能有長期獲利

成長的機會。

The insurance industry is cursed with a set of dismal

economic characteristics that make for a poor long-term outlook:

hundreds of competitors, ease of entry, and a product that cannot

be differentiated in any meaningful way. In such a commodity-

like business, only a very low-cost operator or someone operating

in a protected, and usually small, niche can sustain high

profitability levels.

當產品供給短缺時,即使是商品化產業也能蓬勃發展,不過在保險業界,

這種好日子早就已經過去了,資本主義最諷刺的地方就是商品型產業大部分的

經理人都痛恨商品短缺不足,但偏偏這是唯一可能讓這些公司有獲利的機會,

當短缺出現時,經理人便會迫不及待地想要擴充產能,這無異是將源源不斷

流入現金的水龍頭關掉一樣,這就是過去三年保險公司經理人的最佳寫照,

再次驗證Disraeli的名言:「我們唯一從歷史得到的教訓就是我們從來無法

從歷史得到教訓!」

When shortages exist, however, even commodity businesses

flourish. The insurance industry enjoyed that kind of climate

for a while but it is now gone. One of the ironies of capitalism

is that most managers in commodity industries abhor shortage

conditions - even though those are the only circumstances

permitting them good returns. Whenever shortages appear, the

typical manager simply can't wait to expand capacity and thereby

plug the hole through which money is showering upon him. This is

precisely what insurance managers did in 1985-87, confirming

again Disraeli's observation: "What we learn from history is that

we do not learn from history."

在Berkshire,我們努力避免自己的公司成為商品化的企業,首先我們憑藉著

自己強大的資金實力,來凸顯我們產品的不同,但這種效果實在是有限,

尤其在個人險的部份,因為即使是其所投保的保險公司倒閉(事實上這種狀況還不少),

汽車險或或房屋險的購買者仍可獲得理賠,在商業險的部份也是如此,當情況好時,

許多大企業投保戶與保險掮客都不太關心保險業者的財務狀況,即使是比較複雜的案件,

頂多拖個三、五年,最後還是有辦法可以解決,

(眼不見為淨的結果,可能會讓你的口袋落空)

At Berkshire, we work to escape the industry's commodity

economics in two ways. First, we differentiate our product by our

financial strength, which exceeds that of all others in the

industry. This strength, however, is limited in its usefulness.

It means nothing in the personal insurance field: The buyer of

an auto or homeowners policy is going to get his claim paid even

if his insurer fails (as many have). It often means nothing in

the commercial insurance arena: When times are good, many major

corporate purchasers of insurance and their brokers pay scant

attention to the insurer's ability to perform under the more

adverse conditions that may exist, say, five years later when a

complicated claim is finally resolved. (Out of sight, out of mind

- and, later on, maybe out-of-pocket.)

不過一段期間保戶會偶爾想起富蘭克林所說的空沙包很難站的直挺,

並了解尋找一個可靠穩定的保險公司的重要性,這時我們發揮優勢的機會就來了,

當客戶認真想到往後五到十年,若是面對景氣不佳同時又碰上金融市場低迷,

再保業者倒閉頻繁等景象時,而懷疑保險公司是否仍有能力輕鬆地支付

一千萬美元理賠金時,那麼他可以挑選的保險公司其實是相當有限的,

在所有的沙包之中,Berkshire無疑是站得最直挺的一個。

Periodically, however, buyers remember Ben Franklin's

observation that it is hard for an empty sack to stand upright

and recognize their need to buy promises only from insurers that

have enduring financial strength. It is then that we have a

major competitive advantage. When a buyer really focuses on

whether a $10 million claim can be easily paid by his insurer

five or ten years down the road, and when he takes into account

the possibility that poor underwriting conditions may then

coincide with depressed financial markets and defaults by

reinsurer, he will find only a few companies he can trust.

Among those, Berkshire will lead the pack.


Our second method of differentiating ourselves is the total

indifference to volume that we maintain. In 1989, we will be

perfectly willing to write five times as much business as we

write in 1988 - or only one-fifth as much. We hope, of course,

that conditions will allow us large volume. But we cannot

control market prices. If they are unsatisfactory, we will

simply do very little business. No other major insurer acts with

equal restraint.

我們第二個方法是試著讓我們完全不理會簽發保單的數量,在下一個年度

我們很願意一口氣簽出比前一年多五倍的保單,但若是只能簽發五分之一

的保單也無所謂,當然情況若許可我們希望是越多越好,但我們實在是

無法掌握市場價格,若價格不理想,我們就會暫時退出市場少做一點生意,

在同業中再沒有其他任何一家保險公司有我們如此高的自制力。

Three conditions that prevail in insurance, but not in most

businesses, allow us our flexibility. First, market share is not

an important determinant of profitability: In this business, in

contrast to the newspaper or grocery businesses, the economic

rule is not survival of the fattest. Second, in many sectors of

insurance, including most of those in which we operate,

distribution channels are not proprietary and can be easily

entered: Small volume this year does not preclude huge volume

next year. Third, idle capacity - which in this industry largely

means people - does not result in intolerable costs. In a way

that industries such as printing or steel cannot, we can operate

at quarter-speed much of the time and still enjoy long-term

prosperity.

在保險業普遍存在的第三種情況,(這在其他產業並不多見)使得我們能保持

相當的彈性,第一市場佔有率並不絕對等於獲利率,不像新聞業或是零售業,

最後能夠存活的不一定是最肥的那個人,第二許多的保險類種,

其中也包含我們所從事的主要險種,銷售通路並非只有唯一管道,

所以進入障礙低,今年業績不多,不代表明年就一定會很少,第三閒置的產能,

在保險業來說主要是在於人力,這部份並不會造成太大的負擔,

在印刷或是鋼鐵業的話就不是如此,我們可以在保持慢速前進的同時,

隨時蓄勢待發準備向前衝刺。

We follow a price-based-on-exposure, not-on-competition

policy because it makes sense for our shareholders. But we're

happy to report that it is also pro-social. This policy means

that we are always available, given prices that we believe are

adequate, to write huge volumes of almost any type of property-

casualty insurance. Many other insurers follow an in-and-out

approach. When they are "out" - because of mounting losses,

capital inadequacy, or whatever - we are available. Of course,

when others are panting to do business we are also available -

but at such times we often find ourselves priced above the

market. In effect, we supply insurance buyers and brokers with a

large reservoir of standby capacity.

我們完全以價格為導向(而非競爭)來決定我們的風險部位,因為如此對於

股東投資者才有意義,但同時我們也很高興,因為這對社會同樣也有助益,

這個原則代表我們隨時準備就緒,只要市場價格合理,我們願意隨時進場

承接任何產物意外險的保單,配合許多保險同業遵循的進出策略,

當他們因為損失擴大、資本不足等原因退出市場時,我們隨時可以接替,

當然當一些同業進來殺價搶食市場時,雖然我們也願意繼續服務大眾,

但由於我們的報價高於市場價格,所以只好暫時退出觀望,基本上我們

扮演的是市場供需調節的角色。

One story from mid-1987 illustrates some consequences of our

pricing policy: One of the largest family-owned insurance

brokers in the country is headed by a fellow who has long been a

shareholder of Berkshire. This man handles a number of large

risks that are candidates for placement with our New York office.

Naturally, he does the best he can for his clients. And, just as

naturally, when the insurance market softened dramatically in

1987 he found prices at other insurers lower than we were willing

to offer. His reaction was, first, to place all of his business

elsewhere and, second, to buy more stock in Berkshire. Had we

been really competitive, he said, we would have gotten his

insurance business but he would not have bought our stock.

1987年中的一個事件可以充分說明我們的價格政策,在紐約有一家家族

經營的保險經紀公司是由一個Berkshire多年資深的老股東所領導,

這老兄手上有許多客戶是我們所想要交往的,但基於職業道德他仍然必須

為他的客戶爭取到最好的權益,所以當保險市場價格大幅滑落,

他發現我們的保費比起其他同業貴了許多時,他第一個反應就是趕快

把他客戶的保單從Berkshire轉移到別的保險公司,接下來第二的動作

就是買進更多Berkshire的股票,他說要是那一天Berkshire也一樣

以降價競爭作為因應,那麼他就會把生意給Berkshire做,但他可能

就會把Berkshire的股票賣光。

Berkshire's underwriting experience was excellent in 1987,

in part because of the lag factor discussed earlier. Our

combined ratio (on a statutory basis and excluding structured

settlements and financial reinsurance) was 105. Although the

ratio was somewhat less favorable than in 1986, when it was 103,

our profitability improved materially in 1987 because we had the

use of far more float. This trend will continue to run in our

favor: Our ratio of float to premium volume will increase very

significantly during the next few years. Thus, Berkshire's

insurance profits are quite likely to improve during 1988 and

1989, even though we expect our combined ratio to rise.

Berkshire 1987年的承保表現實在是好極了,一方面是因為先前提到的

遞延效應,我們的綜合比率是105(泛指一般保單,不包含私下協議與

金融再保部份),雖然這個數字比起1986年的103來說略微遜色,

但我們在1987年的獲利卻由於有更多的浮存金運用而大幅增進,

這種好現象將會持續保持,在往後幾年我們浮存金對保費收入的比例

還是繼續增加,所以展望Berkshire1988年與1989年的獲利仍將大幅成長,

即便綜合比率預估亦會增加。

Our insurance business has also made some important non-

financial gains during the last few years. Mike Goldberg, its

manager, has assembled a group of talented professionals to write

larger risks and unusual coverages. His operation is now well

equipped to handle the lines of business that will occasionally

offer us major opportunities.

我們的保險事業去年在非財務數字面亦有重大的斬獲,我們組織了一支

訓練有素的專業團隊,專門承保特殊鉅額的風險,他們已準備好幫助

我們處理任何可能遇到龐大的商機。

Our loss reserve development, detailed on pages 41-42, looks

better this year than it has previously. But we write lots of

"long-tail" business - that is, policies generating claims that

often take many years to resolve. Examples would be product

liability, or directors and officers liability coverages. With a

business mix like this, one year of reserve development tells you

very little.

有關損失準備提列的情況,詳附表,今年的狀況比前幾年好一點,

但由於我們簽下了許多長期的生意,許多理賠申請可以要花上好幾年才能解決,

就像是產品責任保險,或專業經理人責任險,在這種特殊的產業,

一年的損失準備其實無法是代表最後結果。

You should be very suspicious of any earnings figures

reported by insurers (including our own, as we have unfortunately

proved to you in the past). The record of the last decade shows

that a great many of our best-known insurers have reported

earnings to shareholders that later proved to be wildly

erroneous. In most cases, these errors were totally innocent:

The unpredictability of our legal system makes it impossible for

even the most conscientious insurer to come close to judging the

eventual cost of long-tail claims.

大家應該對保險公司的盈餘數字時時抱持懷疑的態度,(當然也包含我們公司本身,

事實證明確是如此) ,過去十年來的記錄顯示,有許多顯赫一時的保險公司

報告給股東亮麗的盈餘數字最後證明只不過是一場空,在大部分的情況下,

這種錯誤是無心的,我們詭譎多變的司法制度,使得就算是最有良知的保險公司

都無法準確預測這類長期保險的最終成本。

Nevertheless, auditors annually certify the numbers given

them by management and in their opinions unqualifiedly state that

these figures "present fairly" the financial position of their

clients. The auditors use this reassuring language even though

they know from long and painful experience that the numbers so

certified are likely to differ dramatically from the true

earnings of the period. Despite this history of error, investors

understandably rely upon auditors' opinions. After all, a

declaration saying that "the statements present fairly" hardly

sounds equivocal to the non-accountant.

但奇怪的是,會計師每年就是有辦法為就這些管理階層給的數字背書,

並出具無保留的意見表示這些數字允當表達該公司,也就是他們的客戶

的財務狀況,而事實上他們自己深知過去慘痛的經驗告訴他們,

這些經過驗證的數字與最後可能結算出來的可能會有天壤之別,

但卻還是仍然使用這種堅定的語言,而從另一方面來說,

就算是歷史殷鑑在前,投資人卻還是相當仰賴會計師的意見,

對於會計門外漢來說,他根本就不懂得「該財務報表允當表達」,

所代表的真正含意是什麼。

The wording in the auditor's standard opinion letter is

scheduled to change next year. The new language represents

improvement, but falls far short of describing the limitations of

a casualty-insurer audit. If it is to depict the true state of

affairs, we believe the standard opinion letter to shareholders

of a property-casualty company should read something like: "We

have relied upon representations of management in respect to the

liabilities shown for losses and loss adjustment expenses, the

estimate of which, in turn, very materially affects the earnings

and financial condition herein reported. We can express no

opinion about the accuracy of these figures. Subject to that

important reservation, in our opinion, etc."

會計師標準無保留意見查核報告的遣詞用語在明年將有重大改變,

新的用語有相當的改進,但還是很難充分說明產物意外險公司

在查核時所受到的限制,如果一個人想要描述一件事情的真相,

我們認為給產物意外險公司股東的標準無保留意見報告中應這樣寫︰

「我們仰賴管理當局提供損失準備與損失費用調整產生財務報表,

而這些估計數字事實上影響公司盈餘與財務狀況甚巨,受限於損失準備

的提列先天資訊的不足與我們必須提出的意見,我們完全無法

對這些數字的正確性表達看法,等等」

If lawsuits develop in respect to wildly inaccurate

financial statements (which they do), auditors will definitely

say something of that sort in court anyway. Why should they not

be forthright about their role and its limitations from the

outset?

假若有人對這種完全不正確的財務報表提出訴訟官司(事實上就有),

會計師一定會在法庭上做類似的辯解,那麼他們為什麼不一開始

就坦白地說明他們真實的角色與所受的限制呢??

We want to emphasize that we are not faulting auditors for

their inability to accurately assess loss reserves (and therefore

earnings). We fault them only for failing to publicly

acknowledge that they can't do this job.

我們想要強調的是我們並不是怪罪會計師沒有辦法準確地評估損失準備

(當然這會影響到最後的盈餘數字),我們無法原諒的是他們沒有公開地

承認做不到這一點。

From all appearances, the innocent mistakes that are

constantly made in reserving are accompanied by others that are

deliberate. Various charlatans have enriched themselves at the

expense of the investing public by exploiting, first, the

inability of auditors to evaluate reserve figures and, second,

the auditors' willingness to confidently certify those figures as

if they had the expertise to do so. We will continue to see such

chicanery in the future. Where "earnings" can be created by the

stroke of a pen, the dishonest will gather. For them, long-tail

insurance is heaven. The audit wording we suggest would at least

serve to put investors on guard against these predators.

從各種不同的角度來看,這種不斷在提列損失準備時所犯無心的錯誤,

往往也伴隨著許多故意的過失,許多騙徒就是看準會計師沒有能力

評估這些數字,同時又願意配合為這些數字背書,假裝好像他們真的

有這個能力,靠著這種方式來欺騙投資大眾賺大錢,在往後的日子

我們仍將看到這樣的騙局持續上演,只要大筆一揮,盈餘便可憑空生出,

前述我們建議的查核報告措詞,至少可以讓無知的投資人提高警覺避免

遭到這些掠食者的坑殺。

The taxes that insurance companies pay - which increased

materially, though on a delayed basis, upon enactment of the Tax

Reform Act of 1986 - took a further turn for the worse at the end

of 1987. We detailed the 1986 changes in last year's report. We

also commented on the irony of a statute that substantially

increased 1987 reported earnings for insurers even as it

materially reduced both their long-term earnings potential and

their business value. At Berkshire, the temporarily-helpful

"fresh start" adjustment inflated 1987 earnings by $8.2 million.

去年在年報中詳述剛通過的稅負改革法案,使得保險公司支付的稅負

以遞延漸進的形式大幅增加,這種情況在1987年更加惡化,諷刺的是

雖然這個法案大大地影響到保險公司長期的獲利與價值,卻讓保險公司

短期的盈餘數字格外亮麗,光是在Berkshire1987年的盈餘就增加了八百多萬美金。

In our opinion, the 1986 Act was the most important economic

event affecting the insurance industry over the past decade. The

1987 Bill further reduced the intercorporate dividends-received

credit from 80% to 70%, effective January 1, 1988, except for

cases in which the taxpayer owns at least 20% of an investee.

就我們個人的看法,1986年的法案是近十多年來保險業界最重要的經濟事件,

1987年的新法案進一步將企業間股利可扣抵的比率由80%減為70%,

除非被投資公司有超過20%的股權是由一般投資人所擁有。

Investors who have owned stocks or bonds through corporate

intermediaries other than qualified investment companies have

always been disadvantaged in comparison to those owning the same

securities directly. The penalty applying to indirect ownership

was greatly increased by the 1986 Tax Bill and, to a lesser

extent, by the 1987 Bill, particularly in instances where the

intermediary is an insurance company. We have no way of

offsetting this increased level of taxation. It simply means

that a given set of pre-tax investment returns will now translate

into much poorer after-tax results for our shareholders.

投資人透過中間企業法人(除了專業投資公司外)持有的股份或債券,

先天上本來就比直接持有這些有價證券要來的不利的多,尤其是在1986年

租稅改革法案通過後,這種租稅懲罰更為明顯,(雖然1987年的情況稍微好轉一點,

尤其是對保險公司來說),我們沒有任何方法可以規避這項增加的稅負成本,

簡而言之,現在同樣的稅前獲利,在扣除稅負成本後最後所得到的稅後淨利,

要比過去要來得少的多。

All in all, we expect to do well in the insurance business,

though our record is sure to be uneven. The immediate outlook is

for substantially lower volume but reasonable earnings

improvement. The decline in premium volume will accelerate after

our quota-share agreement with Fireman's Fund expires in 1989.

At some point, likely to be at least a few years away, we may see

some major opportunities, for which we are now much better

prepared than we were in 1985.

不論如何,我們的保險事業應該可以做的不錯,只是最後的成績可能無法

像過去那麼好,目前的展望是保費收入將減少,尤其是消防人員基金

在1989年到期後,但盈餘可略微改善,之後我們可能可以再遇到好機會,

不過那可能要好幾年以後,屆時我們應該可以作好更萬全的準備。


Marketable Securities - Permanent Holdings

有價證券-永恆的持股

每當查理跟我為Berkshire旗下的保險公司買進股票(扣除套利交易,

後面會再詳述),我們採取的態度就好像是我們買下的是一家私人企業一樣,

我們著重於這家公司的經濟前景、經營階層以及我們支付的價格,

我們從來就沒有考慮再把這些股份賣出,相反地只要能夠預期這家公司的價值

能夠穩定地增加,我們願意無限期地持有這些股份,在投資時我們從不把

自己當作是市場的分析師、總體經濟分析師或是證券分析師,而是企業的分析師。

Whenever Charlie and I buy common stocks for Berkshire's

insurance companies (leaving aside arbitrage purchases, discussed

later) we approach the transaction as if we were buying into a

private business. We look at the economic prospects of the

business, the people in charge of running it, and the price we

must pay. We do not have in mind any time or price for sale.

Indeed, we are willing to hold a stock indefinitely so long as we

expect the business to increase in intrinsic value at a

satisfactory rate. When investing, we view ourselves as business

analysts - not as market analysts, not as macroeconomic analysts,

and not even as security analysts.


我門的方式在交易熱絡的股票市場相當管用,因為市場三不五時就會

突然浮現令人垂涎三尺的投資機會,但這價格其實並不太重要,

因為就算是我們持有的股票停止交易很長一段時間我們也不在意,

就像是世界百科全書或是費區海默同樣沒有每天的報價,最後一點,

我們的經濟利益取決於我們所擁有的公司本身的經濟利益,

不管我們持有的是全部或者是部份股權都一樣。

Our approach makes an active trading market useful, since it

periodically presents us with mouth-watering opportunities. But

by no means is it essential: a prolonged suspension of trading in

the securities we hold would not bother us any more than does the

lack of daily quotations on World Book or Fechheimer.

Eventually, our economic fate will be determined by the economic

fate of the business we own, whether our ownership is partial or

total.

班哲明.葛拉漢是我的老師,也是我的朋友,很久以前講過一段有關

對於市場波動心態的談話,是我認為對於投資獲利最有幫助的一席話,

他說投資人可以試著將股票市場的波動當作是一位市場先生每天給你的報價,

他就像是一家私人企業的合夥人,不管怎樣,市場先生每天都會報個價格

要買下你的股份或是將手中股份賣給你。

Ben Graham, my friend and teacher, long ago described the

mental attitude toward market fluctuations that I believe to be

most conducive to investment success. He said that you should

imagine market quotations as coming from a remarkably

accommodating fellow named Mr. Market who is your partner in a

private business. Without fail, Mr. Market appears daily and

names a price at which he will either buy your interest or sell

you his.

即使是你們所共同擁有的合夥企業經營穩定變化不大,市場先生每天還是

會固定提出報價,同時市場先生有一個毛病,那就是他的情緒很不穩定,

當他高興時,往往只看到合夥企業好的一面,所以為了避免手中的股份被你買走,

他會提出一個很高的價格,甚至想要從你手中買下你擁有的股份;但有時候,

當他覺得沮喪時,眼中看到的只是這家企業的一堆問題,這時他會提出

一個非常低的報價要把股份賣給你,因為他很怕你會將手中的股份塞給他。

Even though the business that the two of you own may have

economic characteristics that are stable, Mr. Market's quotations

will be anything but. For, sad to say, the poor fellow has

incurable emotional problems. At times he feels euphoric and can

see only the favorable factors affecting the business. When in

that mood, he names a very high buy-sell price because he fears

that you will snap up his interest and rob him of imminent gains.

At other times he is depressed and can see nothing but trouble

ahead for both the business and the world. On these occasions he

will name a very low price, since he is terrified that you will

unload your interest on him.


市場先生還有一個很可愛的特點,那就是他不在乎受到冷落,若今天他

提出的報價不被接受,隔天他還是會上門重新報價,要不要交易完全由你自主,

所以在這種情況下,他的行為舉止越失措,你可能得到的好處也就越多。

Mr. Market has another endearing characteristic: He doesn't

mind being ignored. If his quotation is uninteresting to you

today, he will be back with a new one tomorrow. Transactions are

strictly at your option. Under these conditions, the more manic-

depressive his behavior, the better for you.


但就像辛蒂瑞拉參加的化妝舞會一樣,你務必注意午夜前的鐘響,

否則馬車將會變回南瓜,市場先生是來給你服務的,千萬不要受他的誘惑

反而被他所導引,你要利用的是他飽飽的口袋,而不是草包般的腦袋,

如果他有一天突然傻傻地出現在你面前,你可以選擇視而不見或好好地加以利用,

但是要是你佔不到他的便宜反而被他愚蠢的想法所吸引,則你的下場可能會很淒慘;

事實上若是你沒有把握能夠比市場先生更清楚地衡量企業的價值,

你最好不要跟他玩這樣的遊戲,就像是打牌一樣,若是你沒有辦法在30分鐘內

看出誰是肉腳,那麼那個肉腳很可能就是你!

But, like Cinderella at the ball, you must heed one warning

or everything will turn into pumpkins and mice: Mr. Market is

there to serve you, not to guide you. It is his pocketbook, not

his wisdom, that you will find useful. If he shows up some day

in a particularly foolish mood, you are free to either ignore him

or to take advantage of him, but it will be disastrous if you

fall under his influence. Indeed, if you aren't certain that you

understand and can value your business far better than Mr.

Market, you don't belong in the game. As they say in poker, "If

you've been in the game 30 minutes and you don't know who the

patsy is, you're the patsy."

葛拉漢的市場先生理論在現今的投資世界內或許顯得有些過時,

尤其是在那些大談市場效率理論、動態避險與beta值的專家學者眼中更是如此,

他們會對那些深奧的課題感到興趣是可以理解的,因為這對於渴望投資建議的追求者來說,

是相當具吸引力的,就像是沒有一位名醫可以單靠「吃兩顆阿斯匹寧」

這類簡單有效的建議成名致富的。

Ben's Mr. Market allegory may seem out-of-date in today's

investment world, in which most professionals and academicians

talk of efficient markets, dynamic hedging and betas. Their

interest in such matters is understandable, since techniques

shrouded in mystery clearly have value to the purveyor of

investment advice. After all, what witch doctor has ever

achieved fame and fortune by simply advising "Take two aspirins"?


這當然是股市祕籍存在的價值,但就我個人的看法,投資成功不是靠

晦澀難解的公式、電腦運算或是股票行情板上股票上下的跳動,

相反地投資人要能成功,惟有憑藉著優異的商業判斷同時避免自己的想法、

行為,受到容易煽動人心的市場情緒所影響,以我個人的經驗來說,

要能夠免除市場誘惑,最好的方法就是將葛拉漢的市場先生理論銘記在心。

The value of market esoterica to the consumer of investment

advice is a different story. In my opinion, investment success

will not be produced by arcane formulae, computer programs or

signals flashed by the price behavior of stocks and markets.

Rather an investor will succeed by coupling good business

judgment with an ability to insulate his thoughts and behavior

from the super-contagious emotions that swirl about the

marketplace. In my own efforts to stay insulated, I have found

it highly useful to keep Ben's Mr. Market concept firmly in mind.

追隨葛拉漢的教誨,查理跟我著眼的是投資組合本身的經營成果,

以此來判斷投資是否成功,而不是他們每天或是每年的股價變化,

短期間市場或許會忽略一家經營成功的企業,但最後這些公司終將

獲得市場的肯定,就像葛拉漢所說的:「短期而言,股票市場是一個投票機,

但長期來說,它卻是一個體重機」一家成功的公司是否很快地就被發現並不是重點,

重要的是只要這家公司的內在價值能夠以穩定地速度成長才是關鍵,

事實上越晚被發現有時好處更多,因為我們就有更多的機會以便宜的價格買進它的股份。

Following Ben's teachings, Charlie and I let our marketable

equities tell us by their operating results - not by their daily,

or even yearly, price quotations - whether our investments are

successful. The market may ignore business success for a while,

but eventually will confirm it. As Ben said: "In the short run,

the market is a voting machine but in the long run it is a

weighing machine." The speed at which a business's success is

recognized, furthermore, is not that important as long as the

company's intrinsic value is increasing at a satisfactory rate.

In fact, delayed recognition can be an advantage: It may give us

the chance to buy more of a good thing at a bargain price.


當然有時市場也會高估一家企業的價值,在這種情況下,我們會考慮把股份出售,

另外有時雖然公司股價合理或甚至略微低估,但若是我們發現有更被低估的

投資標的或是我們覺得比較熟悉了解的公司時,我們也會考慮出售股份。

Sometimes, of course, the market may judge a business to be

more valuable than the underlying facts would indicate it is. In

such a case, we will sell our holdings. Sometimes, also, we will

sell a security that is fairly valued or even undervalued because

we require funds for a still more undervalued investment or one

we believe we understand better.

然而我們必須強調的是我們不會因為被投資公司的股價上漲或是因為

我們已經持有一段時間,就把它們給處分掉,在華爾街名言中,

最可笑的莫過於是「賺錢的人是不會破產的」,我們很願意無限期的持有

一家公司的股份,只要這家公司所運用的資金可以產生令人滿意的報酬、

管理階層優秀能幹且正直,同時市場對於其股價沒有過度的高估。

We need to emphasize, however, that we do not sell holdings

just because they have appreciated or because we have held them

for a long time. (Of Wall Street maxims the most foolish may be

"You can't go broke taking a profit.") We are quite content to

hold any security indefinitely, so long as the prospective return

on equity capital of the underlying business is satisfactory,

management is competent and honest, and the market does not

overvalue the business.

但是這不包含我們保險公司所擁有的三家企業,即使它們的股價再怎麼漲,

我們也不會賣,事實上我們把這些投資與前面那些具控制權的公司一樣地看待,

它們不像是一般的商品可以賣來賣去,反而像是Berkshire企業的一部份,

不管市場先生提出再怎麼高的天價也一樣,只是在此我要加一條但書,

除非因為我們的保險公司發生鉅額虧損,必須出售部份的持股來彌補虧損,

當然我們會儘所能避免這種情況發生。

However, our insurance companies own three marketable common

stocks that we would not sell even though they became far

overpriced in the market. In effect, we view these investments

exactly like our successful controlled businesses - a permanent

part of Berkshire rather than merchandise to be disposed of once

Mr. Market offers us a sufficiently high price. To that, I will

add one qualifier: These stocks are held by our insurance

companies and we would, if absolutely necessary, sell portions of

our holdings to pay extraordinary insurance losses. We intend,

however, to manage our affairs so that sales are never required.

當然查理跟我決定要擁有並持有一家公司的股份,是同時綜合了個人想法

與財務方面的考量,對某些人來說,我們這樣的做法可能有點不合常規,

(查理跟我長期以來一直遵從奧美廣告創辦人�大衛奧美的建議,

在年輕時發展出你自己的特異風格,這樣子等你到老時,人們就不會覺得

你是個怪胎),的確,近年來在交易頻繁的華爾街,我們的態度看起來有些

特立獨行,在那個競技場內,所有的公司與股份,都不過是交易的籌碼而已。

A determination to have and to hold, which Charlie and I

share, obviously involves a mixture of personal and financial

considerations. To some, our stand may seem highly eccentric.

(Charlie and I have long followed David Oglivy's advice: "Develop

your eccentricities while you are young. That way, when you get

old, people won't think you're going ga-ga.") Certainly, in the

transaction-fixated Wall Street of recent years, our posture must

seem odd: To many in that arena, both companies and stocks are

seen only as raw material for trades.

但是我們的態度完全符合我們本身的人格特質,這就是我們想要過的生活,

邱吉爾曾經說過,我們很清楚我們要如何去塑造我們想要的模式,

因此我們寧願跟我們喜歡與推崇的對象往來,就算是因此,

會比跟一些我們討厭或是不喜歡的人打交道,少得到一些投資報酬也沒有關係,

我想我們是大概不可能再遇到像這三家主要的被投資公司組成份子一樣,

令我們所喜愛與推崇。

以下所列就是我們永恆的持股

Our attitude, however, fits our personalities and the way we

want to live our lives. Churchill once said, "You shape your

houses and then they shape you." We know the manner in which we

wish to be shaped. For that reason, we would rather achieve a

return of X while associating with people whom we strongly like

and admire than realize 110% of X by exchanging these

relationships for uninteresting or unpleasant ones. And we will

never find people we like and admire more than some of the main

participants at the three companies - our permanent holdings -

shown below:


No. of Shares Cost Market

------------- ---------- ----------

(000s omitted)

3,000,000 Capital Cities/ABC, Inc. ........... $517,500 $1,035,000

6,850,000 GEICO Corporation .................. 45,713 756,925

1,727,765 The Washington Post Company ........9,731 323,092


在這些公司上,我們實在看不出買下並控制一家企業或是購買部份股權

有什麼基本上的差異,每次我們都試著買進一些長期看好的公司,

我們的目標是以合理的價格買到績優的企業,而不是以便宜的價格買進平庸的公司,

查理跟我發現買到貨真價實的東西才是我們真正應該做的。

We really don't see many fundamental differences between the

purchase of a controlled business and the purchase of marketable

holdings such as these. In each case we try to buy into

businesses with favorable long-term economics. Our goal is to

find an outstanding business at a sensible price, not a mediocre

business at a bargain price. Charlie and I have found that

making silk purses out of silk is the best that we can do; with

sow's ears, we fail.


(It must be noted that your Chairman, always a quick study,

required only 20 years to recognize how important it was to buy

good businesses. In the interim, I searched for "bargains" - and

had the misfortune to find some. My punishment was an education

in the economics of short-line farm implement manufacturers,

third-place department stores, and New England textile

manufacturers.)

必須特別注意的是,本人雖然以反應快速著稱,不過卻花了二十年才明白

要買下好企業的重要性,剛開始我努力尋找便宜的貨色,不幸的是真的讓我找到了一些,

所得到的教訓是在農具機械、三流百貨公司與新英格蘭紡織工廠等經濟形態上上了一課。

Of course, Charlie and I may misread the fundamental

economics of a business. When that happens, we will encounter

problems whether that business is a wholly-owned subsidiary or a

marketable security, although it is usually far easier to exit

from the latter. (Indeed, businesses can be misread: Witness the

European reporter who, after being sent to this country to

profile Andrew Carnegie, cabled his editor, "My God, you'll never

believe the sort of money there is in running libraries.")

當然查理跟我確實會誤判一家企業的基礎競爭力,結果是我們面臨了一大堆問題與挑戰,

不管是買下全部或是部份的股權,當然後者要脫身相對容易一點,

(確實企業很可能會被誤判,一位歐洲記者被派駐到美國採訪卡內基,

發了一封電報給他的編輯主管說到,老天你一定不敢相信經營博物館竟然可以賺那麼多錢)

In making both control purchases and stock purchases, we try

to buy not only good businesses, but ones run by high-grade,

talented and likeable managers. If we make a mistake about the

managers we link up with, the controlled company offers a certain

advantage because we have the power to effect change. In

practice, however, this advantage is somewhat illusory:

Management changes, like marital changes, are painful, time-

consuming and chancy. In any event, at our three marketable-but

permanent holdings, this point is moot: With Tom Murphy and Dan

Burke at Cap Cities, Bill Snyder and Lou Simpson at GEICO, and

Kay Graham and Dick Simmons at The Washington Post, we simply

couldn't be in better hands.

在進行取得控制權或是部份股權投資時,我們不但試著去找一家好公司,

同時最好是能夠由品格才能兼具且為我們喜愛的管理者經營,如果是看錯了人,

在具控制權的情況下,我們還有機會發揮影響力來改變,事實上這種優勢有點不太實際,

因為更換管理階層,就像是結束婚姻關係一樣,過程是相當地費時痛苦且要看運氣,

不論如何,我們三家永恆的股權投資在這點是不太可能發生的,有Tom Murphy 和

Dan Burke 在資本城, Bill Snyder 和 Lou Simpson 在蓋可保險 Kay Graham 和

Dick Simmons 在華盛頓郵報,我們實在想不出有更有的接替人選。

我必須說明控制一家公司有二個主要的優點,首先當我們控制一家公司

我們便有分配資金與資源的權力,相較之下,若是部份股權投資則完全沒有說話的餘地,

這點非常重要,因為大部分的公司經營者,並不擅長於做資金分配,

之所以如此並不讓人訝異,因為大部分的老闆之所以能夠成功是靠著他們在行銷、

生產、工程、行政管理方面的專長。

I would say that the controlled company offers two main

advantages. First, when we control a company we get to allocate

capital, whereas we are likely to have little or nothing to say

about this process with marketable holdings. This point can be

important because the heads of many companies are not skilled in

capital allocation. Their inadequacy is not surprising. Most

bosses rise to the top because they have excelled in an area such

as marketing, production, engineering, administration or,

sometimes, institutional politics.

而一旦成為CEO之後,他們馬上必須面臨許多新的責任與挑戰,包括要做資金分配的決策,

這是一項他們以前從未面對艱鉅且重要的任務,打個比方,這就好像是一位

深具天分的音樂家,沒有安排讓他到卡內基音樂廳演奏,卻反而任命他為

聯邦準備理事會主席一般。

Once they become CEOs, they face new responsibilities. They

now must make capital allocation decisions, a critical job that

they may have never tackled and that is not easily mastered. To

stretch the point, it's as if the final step for a highly-

talented musician was not to perform at Carnegie Hall but,

instead, to be named Chairman of the Federal Reserve.

CEO缺乏資金分配的能力可不是一件小事,一家公司若是每年保留10%的盈餘在公司的話,

經過十年後,他所要掌管的資金等於增加了60%。

The lack of skill that many CEOs have at capital allocation

is no small matter: After ten years on the job, a CEO whose

company annually retains earnings equal to 10% of net worth will

have been responsible for the deployment of more than 60% of all

the capital at work in the business.

某些體認到自己缺乏這方面能力的CEO(當然也有很多不這樣認為),會轉向部屬、

管理顧問或是投資銀行家尋求建議,查理跟我時常觀察這種幫忙最後的結果,

總的來說,我們認為大多數的情況並不能解決問題,反而是讓問題變得更嚴重。

CEOs who recognize their lack of capital-allocation skills

(which not all do) will often try to compensate by turning to

their staffs, management consultants, or investment bankers.

Charlie and I have frequently observed the consequences of such

"help." On balance, we feel it is more likely to accentuate the

capital-allocation problem than to solve it.

結果你就會發現在美國企業一大堆不明智的資本分配決策一再重複的發生

(這也是為什麼你常常聽到組織重整再造的原因),然而在Berkshire我們算是

比較幸運,在一家我們不具控制權的股權投資方面,大部分的公司資金運用還算得當,

有的甚至還相當的傑出。

In the end, plenty of unintelligent capital allocation takes

place in corporate America. (That's why you hear so much about

"restructuring.") Berkshire, however, has been fortunate. At the

companies that are our major non-controlled holdings, capital has

generally been well-deployed and, in some cases, brilliantly so.

第二項優點是相較於部份投資,取得控制權的投資享有租稅上的優惠,

Berkshire身為一家控股公司,在投資部份股權時,必須吸收相當大的租稅成本,

相較之下,持有控制股權的投資則沒有這種情況,這種租稅弱勢發生在我們身上由來已久,

但過去幾年的稅法修訂,使得這種情形更雪上加霜,同樣的獲利,

若發生在我們持有80%以上股權的公司,要比其他部份股權投資的效益要高出50%以上。

The second advantage of a controlled company over a

marketable security has to do with taxes. Berkshire, as a

corporate holder, absorbs some significant tax costs through the

ownership of partial positions that we do not when our ownership

is 80%, or greater. Such tax disadvantages have long been with

us, but changes in the tax code caused them to increase

significantly during the past year. As a consequence, a given

business result can now deliver Berkshire financial results that

are as much as 50% better if they come from an 80%-or-greater

holding rather than from a lesser holding.

不過這種劣勢有時可以由另一項優勢所抵消掉,有時候股票市場讓我們可以

以不可思議的價格買到績優公司部份的股權,遠低於協議買下整家公司

取得控制權的平均價格,舉例來說,我們在1973年以每股5.63元買下

華盛頓郵報的股票,該公司在1987年的每股盈餘是10.3元,同樣地,

我們分別在1976、1979與1980年以每股6.67元的平均價格買下蓋可保險的部份股權,

到了去年其每股稅後的營業利益是9.01元,從這些情況看來,市場先生

實在是一位非常大方的好朋友。

The disadvantages of owning marketable securities are

sometimes offset by a huge advantage: Occasionally the stock

market offers us the chance to buy non-controlling pieces of

extraordinary businesses at truly ridiculous prices -

dramatically below those commanded in negotiated transactions

that transfer control. For example, we purchased our Washington

Post stock in 1973 at $5.63 per share, and per-share operating

earnings in 1987 after taxes were $10.30. Similarly, Our GEICO

stock was purchased in 1976, 1979 and 1980 at an average of $6.67

per share, and after-tax operating earnings per share last year

were $9.01. In cases such as these, Mr. Market has proven to be a

mighty good friend.

一個矛盾又有趣的會計現象,從上面的表你可以看到,我們在這三家公司

的股權投資市值超過20億,但是他們在1987年總共貢獻給Berkshire帳面

稅後盈餘卻只有一千一百萬美元。

An interesting accounting irony overlays a comparison of the

reported financial results of our controlled companies with those

of the permanent minority holdings listed above. As you can see,

those three stocks have a market value of over $2 billion. Yet

they produced only $11 million in reported after-tax earnings for

Berkshire in 1987.

會計原則規定我們必須在這些公司分配股利的時候才能認列利益,

這通常要比公司實際所賺的數字要少的多,以這三家公司合計,

1987年可以分配到的盈餘數字高達一億美元,另一方面,會計原則

規定這三家公司的股份若是有保險公司所持有,則其帳面價值應該要以

其市場價格列示,結果是一般公認會計原則要求我們在資產負債表上

秀出這些被投資事業的實際價值,卻不准讓我們在損益表是反應他們

實質的獲利能力。

Accounting rules dictate that we take into income only the

dividends these companies pay us - which are little more than

nominal - rather than our share of their earnings, which in 1987

amounted to well over $100 million. On the other hand,

accounting rules provide that the carrying value of these three

holdings - owned, as they are, by insurance companies - must be

recorded on our balance sheet at current market prices. The

result: GAAP accounting lets us reflect in our net worth the up-

to-date underlying values of the businesses we partially own, but

does not let us reflect their underlying earnings in our income

account.


In the case of our controlled companies, just the opposite

is true. Here, we show full earnings in our income account but

never change asset values on our balance sheet, no matter how

much the value of a business might have increased since we

purchased it.

在我們具有控制權的投資事業,情況卻剛好相反,我們可以在損益表上

充分表示其獲利狀況,但不管這些資產在我們買下之後,價值在無形間如何地增加,

我們也無法在資產負債表上做任何的變動。

Our mental approach to this accounting schizophrenia is to

ignore GAAP figures and to focus solely on the future earning

power of both our controlled and non-controlled businesses.

Using this approach, we establish our own ideas of business

value, keeping these independent from both the accounting values

shown on our books for controlled companies and the values placed

by a sometimes foolish market on our partially-owned companies.

It is this business value that we hope to increase at a

reasonable (or, preferably, unreasonable) rate in the years

ahead.

我們對於這種會計精神分裂症的調整心態方式就是不去理會一般公認會計原則

所編製的數字,而只專注於這些具控制權或者是部份股權的公司,其未來的獲利能力,

採用這種方法,我們依自己的概念建立一套企業價值的評價模式,它有別於會計帳上

所顯示的具控制權的帳面投資成本以及有的時候高的離譜的部份股權投資市值,

這才是我們真正想要在未來年度持續穩定增加的數字(當然若能以不合理的速度成長的話更好)。

Marketable Securities – Other

其他有價證券

除了上述的三家重要投資事業,我們的保險公司也持有大量的有價證券,

主要可以分為五個類型,分別為:

(1)長期股票投資(2)長期固定收益債券(3)中期固定收益債券(4)短期約當現金(5)短期套利交易


In addition to our three permanent common stock holdings, we

hold large quantities of marketable securities in our insurance

companies. In selecting these, we can choose among five major

categories: (1) long-term common stock investments, (2) medium-

term fixed-income securities, (3) long-term fixed income

securities, (4) short-term cash equivalents, and (5) short-term

arbitrage commitments.

對於這五種類型的交易,我們沒有特別的偏好,我們只是持續不斷地尋找

最高的稅後報酬預計的數學期望值,且僅限於我們認為了解熟悉的投資,

我們無意讓與短期的帳面盈餘好看,我們的目標是讓長期的淨值極大化。

We have no particular bias when it comes to choosing from

these categories. We just continuously search among them for the

highest after-tax returns as measured by "mathematical

expectation," limiting ourselves always to investment

alternatives we think we understand. Our criteria have nothing

to do with maximizing immediately reportable earnings; our goal,

rather, is to maximize eventual net worth.

首先談談普通股投資,1987年股市的表現精彩連連,但最後指數卻沒有太大的進展,

道瓊整個年度只漲了2.3%,你知道這就好像是在坐雲霄飛車一樣,

市場先生在十月以前爆跳如雷,但之後卻突然收斂了下來。

o Let's look first at common stocks. During 1987 the stock

market was an area of much excitement but little net movement:

The Dow advanced 2.3% for the year. You are aware, of course, of

the roller coaster ride that produced this minor change. Mr.

Market was on a manic rampage until October and then experienced

a sudden, massive seizure.

市場上有所謂專業的投資人,掌管著數以億萬計的資金,就是這些人造成市場的動盪,

他們不去研究企業下一步發展的方向,反而專研於其他基金經理人下一步的動向,

對他們來說,股票只不過是賭博交易的籌碼,就像是大富翁裡的棋子一樣。

We have "professional" investors, those who manage many

billions, to thank for most of this turmoil. Instead of focusing

on what businesses will do in the years ahead, many prestigious

money managers now focus on what they expect other money managers

to do in the days ahead. For them, stocks are merely tokens in a

game, like the thimble and flatiron in Monopoly.

他們的做法發展到極致,便形成所謂的投資組合保險,一個在1986到1987年間

廣為基金經理人所接受的一種策略,這種策略只不過是像投機者停損單一樣,

當投資組合或是類似指數期貨價格下跌時就必須處分持股,這種策略不管如此,

只要下跌到一定程度便會湧出一大堆賣單,根據一份研究報告顯示:

有高達600億到900億的股票投資在1987年十月中面臨一觸即發的險境。

An extreme example of what their attitude leads to is

"portfolio insurance," a money-management strategy that many

leading investment advisors embraced in 1986-1987. This strategy

- which is simply an exotically-labeled version of the small

speculator's stop-loss order dictates that ever increasing

portions of a stock portfolio, or their index-future equivalents,

be sold as prices decline. The strategy says nothing else

matters: A downtick of a given magnitude automatically produces a

huge sell order. According to the Brady Report, $60 billion to

$90 billion of equities were poised on this hair trigger in mid-

October of 1987.

若是你認為投資顧問是被請來投資的,那你就大錯特錯了,在買下一家農場後,

一個理性的主人會不會叫其不動產經紀人開始尋求可能的買主,只因為隔壁的農場

最近賣出的價格更低一些?或是你會不會一早起來就想要把你的房子賣掉,

只因為幾分鐘前你聽到隔壁的房子以比以前便宜的價格脫手。

If you've thought that investment advisors were hired to

invest, you may be bewildered by this technique. After buying a

farm, would a rational owner next order his real estate agent to

start selling off pieces of it whenever a neighboring property

was sold at a lower price? Or would you sell your house to

whatever bidder was available at 9:31 on some morning merely

because at 9:30 a similar house sold for less than it would have

brought on the previous day?

這樣的舉動正是投資組合風險理論告訴退休基金或是學術單位當他們持有福特

或是通用電氣部份股權時,應該要做的動作,因為這些公司的價值越被低估,

你就越應該趕快把他們處分掉,根據邏輯推論,這種方法還要求投資機構

在股價反彈時再把他們買回來,一想到有這麼多的資金,掌握在整天沈溺在

愛莉絲夢遊仙境般的經理人手中,也難怪股票市場會有如此不尋常的表現。

Moves like that, however, are what portfolio insurance tells

a pension fund or university to make when it owns a portion of

enterprises such as Ford or General Electric. The less these

companies are being valued at, says this approach, the more

vigorously they should be sold. As a "logical" corollary, the

approach commands the institutions to repurchase these companies

- I'm not making this up - once their prices have rebounded

significantly. Considering that huge sums are controlled by

managers following such Alice-in-Wonderland practices, is it any

surprise that markets sometimes behave in aberrational fashion?

然而許多評論家在觀察最近所發生的事時,歸納出一個不正確的結論,

他們喜歡說由於股票市場掌握在這些投資大戶手上,所以小額投資人

根本一點機會也沒有,這種結論實在是大大地錯誤,不管資金多寡,

這樣的市場絕對有利於任何投資者,只要他能夠堅持自己的投資理念,

事實上由手握重金的基金經理人所造成的市場波動,反而使得真正的

投資人有更好的機會可以去貫徹其明智的投資行動,只要他在面臨股市波動時,

不會因為財務或心理因素而被迫在不當的時機出脫手中持股,他就很難會受到傷害。

Many commentators, however, have drawn an incorrect

conclusion upon observing recent events: They are fond of saying

that the small investor has no chance in a market now dominated

by the erratic behavior of the big boys. This conclusion is dead

wrong: Such markets are ideal for any investor - small or large -

so long as he sticks to his investment knitting. Volatility

caused by money managers who speculate irrationally with huge

sums will offer the true investor more chances to make

intelligent investment moves. He can be hurt by such volatility

only if he is forced, by either financial or psychological

pressures, to sell at untoward times.

在Berkshire過去幾年,我們在股票市場實在沒有什麼可以發揮的地方,

在十月的那段期間,有幾支股票跌到相當吸引我們的價位,不過我們沒有

能夠在他們反彈之前買到夠多的股份,在1987年底除了永久的持股與

短期的套利之外,我們並沒有新增任何主要的股票投資組合(指5,000萬美元以上),

不過你大可以放心,一旦市場先生一定會給我們機會的時候,我們一定會好好把握住的。

At Berkshire, we have found little to do in stocks during

the past few years. During the break in October, a few stocks

fell to prices that interested us, but we were unable to make

meaningful purchases before they rebounded. At yearend 1987 we

had no major common stock investments (that is, over $50 million)

other than those we consider permanent or arbitrage holdings.

However, Mr. Market will offer us opportunities - you can be sure

of that - and, when he does, we will be willing and able to

participate.

至於我們主要的資金避風港-中期的免稅債券,在去年我已經解釋過其特點,

雖然在1987年間我們也有進出,但整個部位變化不大,總金額約在9億美元左右,

大部分的債券是屬於1986年稅務改革法案中祖父級的債券,不同於現在

保險公司新買進的債券,他們享有百分之百免稅的優惠。

o In the meantime, our major parking place for money is

medium-term tax-exempt bonds, whose limited virtues I explained

in last year's annual report. Though we both bought and sold

some of these bonds in 1987, our position changed little overall,

holding around $900 million. A large portion of our bonds are

"grandfathered" under the Tax Reform Act of 1986, which means

they are fully tax-exempt. Bonds currently purchased by

insurance companies are not.

當作短期約當現金的替代品,中期免稅債券的表現還算不錯,他們貢獻了不少

額外的投資報酬,且目前的價值也略高於我們當初投資的成本,但不管之後

他們的市價高或低,只要我們找到更好的投資機會,我們隨時都有可能把他們給處分掉。

As an alternative to short-term cash equivalents, our

medium-term tax-exempts have - so far served us well. They have

produced substantial extra income for us and are currently worth

a bit above our cost. Regardless of their market price, we are

ready to dispose of our bonds whenever something better comes

along.

我們持續避免去碰長期債券(也有可能因為沒有對中期免稅債券保持距離而犯下大錯),

債券沒有比他們表彰的貨幣來得好,在過去十年以即可預見的未來,

我們看不出我們會對美國債券有太大的興趣。

o We continue to have an aversion to long-term bonds (and may

be making a serious mistake by not disliking medium-term bonds as

well). Bonds are no better than the currency in which they are

denominated, and nothing we have seen in the past year - or past

decade - makes us enthusiastic about the long-term future of U.S.

currency.

我們鉅額的貿易逆差,使得我們必須面臨許多不同形式的支票帳單,

這包含外國人持有的美國政府與企業公債、銀行存款等,以驚人的速度累積成長,

一開始我們的政府所採取的方式,就像是慾望街車的角色布蘭奇所說的,

我總是依賴陌生人的同情心而活,當然本案的陌生人依靠的主要是債務人的可靠性,

雖然貶值的美元也讓他們必須付出高昂的代價。

Our enormous trade deficit is causing various forms of

"claim checks" - U.S. government and corporate bonds, bank

deposits, etc. - to pile up in the hands of foreigners at a

distressing rate. By default, our government has adopted an

approach to its finances patterned on that of Blanche DuBois, of

A Streetcar Named Desire, who said, "I have always depended on

the kindness of strangers." In this case, of course, the

"strangers" are relying on the integrity of our claim checks

although the plunging dollar has already made that proposition

expensive for them.

外國人對我們的信心可能有點所託非人,因為當要付的支票帳單持續的增加,

而債務人又能夠無限制地主導自己的購買能力時,美鈔發行人增加流通貨幣

來稀釋其貨幣價值的情況鐵定會發生,對於債務國政府來說,通貨膨脹這項武器

就好像是經濟戰爭中威力強大的氫彈一樣,很少有國家可以讓全世界充斥著

以自己貨幣計價的債券,不過由於我們國家過去不錯的財政記錄,使得我們能夠

打破這項限制,只是這樣的寬容使得我們通膨的壓力只會增加不會減少,

而一旦我們屈服於這樣的壓力,不只是持有美國債權的外國人遭殃,

連帶的我們也會受到影響。

The faith that foreigners are placing in us may be

misfounded. When the claim checks outstanding grow sufficiently

numerous and when the issuing party can unilaterally determine

their purchasing power, the pressure on the issuer to dilute

their value by inflating the currency becomes almost

irresistible. For the debtor government, the weapon of inflation

is the economic equivalent of the "H" bomb, and that is why very

few countries have been allowed to swamp the world with debt

denominated in their own currency. Our past, relatively good

record for fiscal integrity has let us break this rule, but the

generosity accorded us is likely to intensify, rather than

relieve, the eventual pressure on us to inflate. If we do

succumb to that pressure, it won't be just the foreign holders of

our claim checks who will suffer. It will be all of us as well.

當然在債務問題失控之前,美國政府也會試著採取一些方法來抑制貿易逆差,

(有關於這點,下滑的美元匯率或許會有幫助,只是同樣地它又會造成另一種傷害),

目前我們政府的做法跟亂世佳人裏郝思佳的態度差不多一樣,「明天再想辦法吧!」,

而幾乎無可避免的對於財政問題的處理耽擱將會造成通貨膨脹的後果。

Of course, the U.S. may take steps to stem our trade deficit

well before our position as a net debtor gets out of hand. (In

that respect, the falling dollar will help, though unfortunately

it will hurt in other ways.) Nevertheless, our government's

behavior in this test of its mettle is apt to be consistent with

its Scarlett O'Hara approach generally: "I'll think about it

tomorrow." And, almost inevitably, procrastination in facing up

to fiscal problems will have inflationary consequences.

只是這些後果發生的時點與影響我們實在無從去預測,不過無法去量化

或是鎖定這種風險不代表我們就可以忽視它的存在,當然我們的推論也許會不準確,

目前的利率水準或可彌補通貨膨脹所帶來的損失,只是我們對於長期的債券

仍報以持續的戒心。

Both the timing and the sweep of those consequences are

unpredictable. But our inability to quantify or time the risk

does not mean we should ignore it. While recognizing the

possibility that we may be wrong and that present interest rates

may adequately compensate for the inflationary risk, we retain a

general fear of long-term bonds.

然而我們仍願意把一部份資金擺在這上頭,如果在某些特定的有價證券上有特殊的利益,

就像是我在1984年年報中曾經提到我們在華盛頓公用電力系統債券上的投資,

在1987年我們又持續加碼投資,總計到年底我們持有的這類帳面未攤銷成本為2.4億美元債券,

市價約為3.16億美元,還外加每年三千四百萬美元的免稅利息收入。

We are, however, willing to invest a moderate portion of our

funds in this category if we think we have a significant edge in

a specific security. That willingness explains our holdings of

the Washington Public Power Supply Systems #1, #2 and #3 issues,

discussed in our 1984 report. We added to our WPPSS position

during 1987. At yearend, we had holdings with an amortized cost

of $240 million and a market value of $316 million, paying us

tax-exempt income of $34 million annually.


o We continued to do well in arbitrage last year, though - or

perhaps because - we operated on a very limited scale. We enter

into only a few arbitrage commitments each year and restrict

ourselves to large transactions that have been publicly

announced. We do not participate in situations in which green-

mailers are attempting to put a target company "in play."

我們持續在短期套利交易上有所斬獲,雖然我們從事的規模有限,每年我們限制

自己只專注在幾個少數已公開資訊的大型交易案,我們不介入那些已被投機套利客鎖定的個案。

We have practiced arbitrage on an opportunistic basis for

decades and, to date, our results have been quite good. Though

we've never made an exact calculation, I believe that overall we

have averaged annual pre-tax returns of at least 25% from

arbitrage. I'm quite sure we did better than that in 1987. But

it should be emphasized that a really bad experience or two -

such as many arbitrage operations suffered in late 1987 - could

change the figures dramatically.

我們從事機率套利已有好幾十年的經驗,到目前為止,我們的成果還算不錯,

雖然我們從來沒有仔細去算過,我相信我們在套利投資方面的稅前年報酬率應該有25%左右,

我確信1987年的成績甚至比以前好的多,但必須強調的是只要發生一、兩次

像今年其他幾個套利慘痛的經驗,就可能使得整個結果豬羊變色。

Our only $50 million-plus arbitrage position at yearend 1987

was 1,096,200 shares of Allegis, with a cost of $76 million and a

market value of $78 million.

今年我們新增5,000萬美元以上的套利案只有斥資7,600萬美元投資100萬股Allegis,

目前的市價約為7,800萬美元。

o We had two other large holdings at yearend that do not fit

precisely into any of our five categories. One was various

Texaco, Inc. bonds with short maturities, all purchased after

Texaco went into bankruptcy. Were it not for the extraordinarily

strong capital position of our insurance companies, it would be

inappropriate for us to buy defaulted bonds. At prices

prevailing after Texaco's bankruptcy filing, however, we regarded

these issues as by far the most attractive bond investment

available to us.

我們在年底還有其他二個主要的投資組合不在前述五個範圍之內,一項是Texaco短期債券,

全都是在它破產之後才買進,要不是因為我們旗下保險公司的財務實力雄厚,

我們實在不太適合去買這種已發生問題的債券,不過以這些債券在Texaco倒閉後的低廉價格,

這是目前我們可以找得到最吸引我們的投資標的。

On a worst-case basis with respect to the Pennzoil

litigation, we felt the bonds were likely to be worth about what

we paid for them. Given a sensible settlement, which seemed

likely, we expected the bonds to be worth considerably more. At

yearend our Texaco bonds were carried on our books at $104

million and had a market value of $119 million.

考量其所牽涉的訴訟案件,在最壞的情況之下,我們認為應該還是可以將投資成本回收,

而若是官司可以和解收場,我們預期債券的價值將會更高,截至年底Texaco債券

在我們帳面上的成本約為一億美元,目前的市值則約為1.2億美元。

By far our largest - and most publicized - investment in

1987 was a $700 million purchase of Salomon Inc 9% preferred

stock. This preferred is convertible after three years into

Salomon common stock at $38 per share and, if not converted, will

be redeemed ratably over five years beginning October 31, 1995.

From most standpoints, this commitment fits into the medium-term

fixed-income securities category. In addition, we have an

interesting conversion possibility.

在投資銀行業,我們當然沒有特殊的遠見能夠預知其未來發展的方向與獲利能力,

就產業特性而言,投資銀行業比起我們其他主要投資的行業更難預測,

這也是為什麼我們選擇以可轉換特別股的方式投資。

We, of course, have no special insights regarding the

direction or future profitability of investment banking. By

their nature, the economics of this industry are far less

predictable than those of most other industries in which we have

major Commitments. This unpredictability is one of the reasons

why our participation is in the form of a convertible preferred.


當然我們對於所羅門公司的CEO -John Gutfreund的能力與品格有不錯的印象,

查理與我都很尊崇且信賴他,我們是在1976年開始認識他,

當時他在協助GEICO汽車保險免於破產的命運時出了不少力,

之後我們看到他好幾次引導客戶免於愚蠢的交易,雖然這使得所羅門

因此損失許多顧問費收入,這種以客戶服務至上的表現在華爾街並不多見。

What we do have a strong feeling about is the ability and

integrity of John Gutfreund, CEO of Salomon Inc. Charlie and I

like, admire and trust John. We first got to know him in 1976

when he played a key role in GEICO's escape from near-bankruptcy.

Several times since, we have seen John steer clients away from

transactions that would have been unwise, but that the client

clearly wanted to make - even though his advice provided no fee

to Salomon and acquiescence would have delivered a large fee.

Such service-above-self behavior is far from automatic in Wall

Street.

如同查理在50頁上所陳述的理由,截至年底我們將在所羅門公司的投資價值

定在面額的98%,大約比我們的投資成本少1,400萬,

不過我們仍然相信這家公司在高品質資本籌募與市場創造營運,

將可為我們的投資創造不錯的盈餘,若果真如此,我們可轉換為股權的權利將會非常有價值。

For the reasons Charlie outlines on page 50, at yearend we

valued our Salomon investment at 98% of par, $14 million less

than our cost. However, we believe there is a reasonable

likelihood that a leading, high-quality capital-raising and

market-making operation can average good returns on equity. If

so, our conversion right will eventually prove to be valuable.


最後關於我們有價證券的投資再補充兩點,第一照例我還是給諸位一個提醒,

相較於去年底的持股內容,我們現在的投資組合又有變動,

而且在沒有知會大家的情況下,還會繼續變動。

Two further comments about our investments in marketable

securities are appropriate. First, we give you our usual

warning: Our holdings have changed since yearend and will

continue to do so without notice.

這二點跟前面也有相關,跟前幾年一樣,在1987年媒體不時在猜測我們進出的投資標的,

這些報導有時是真的,有時是半真半假,有時根本就不是事實,

有趣的是,我發現媒體的規模與聲譽和報導的真實性一點相關都沒有,

曾經有一家全美舉足輕重的媒體雜誌刊登一項完全錯誤的謠言,

另外一家出版業者則將一樁短期的套利投資誤當做是一項長期的投資,

(之所以沒有公佈名字,是因為古有名訓,遇到整桶整桶買墨水的人,

最好不要跟他發生爭吵)

The second comment is related: During 1987, as in some

earlier years, there was speculation in the press from time to

time about our purchase or sale of various securities. These

stories were sometimes true, sometimes partially true, and other

times completely untrue. Interestingly, there has been no

correlation between the size and prestige of the publication and

the accuracy of the report. One dead-wrong rumor was given

considerable prominence by a major national magazine, and another

leading publication misled its readers by writing about an

arbitrage position as if it were a long-term investment

commitment. (In not naming names, I am observing the old warning

that it's not wise to pick fights with people who buy ink by the

barrel.)


You should understand that we simply don't comment in any

way on rumors, whether they are true or false. If we were to

deny the incorrect reports and refuse comment on the correct

ones, we would in effect be commenting on all.

大家應該知道我們從來不會對任何的謠言加以評論,不管是真或是假,

因為若是我們否認不實的報導,或是拒絕對真實的事件發表評論,

都等於間接表達了我們的立場。

In a world in which big investment ideas are both limited

and valuable, we have no interest in telling potential

competitors what we are doing except to the extent required by

law. We certainly don't expect others to tell us of their

investment ideas. Nor would we expect a media company to

disclose news of acquisitions it was privately pursuing or a

journalist to tell his competitors about stories on which he is

working or sources he is using.

在現在這個社會,大型的投資機會相當的稀少且彌足珍貴,

除非法令特別要求,我們不可能向潛在的競爭對手透露我們的動向,

就像我們也不可能期待對手告訴我們他的想法,同樣地我們也不期待

媒體能夠揭露他們獨家採訪得到的購併消息,就像是一個記者不可能

向他的同業透露他正在努力追蹤的獨家新聞。

I find it uncomfortable when friends or acquaintances

mention that they are buying X because it has been reported -

incorrectly - that Berkshire is a buyer. However, I do not set

them straight. If they want to participate in whatever Berkshire

actually is buying, they can always purchase Berkshire stock.

But perhaps that is too simple. Usually, I suspect, they find it

more exciting to buy what is being talked about. Whether that

strategy is more profitable is another question.

我特別覺得很不高興,當我的朋友或是舊識告訴我說他們買進X公司的股票,

因為報紙錯誤地報導說Berkshire已經買進這家公司的股票,

不過後來我發現事情沒有那麼單純,他們會買的原因主要是因為這些股票實在太熱門,

至於是否能夠真正獲利則是另外一回事。

Financing

財務方面

Shortly after yearend, Berkshire sold two issues of

debentures, totaling $250 million. Both issues mature in 2018

and will be retired at an even pace through sinking fund

operations that begin in 1999. Our overall interest cost, after

allowing for expenses of issuance, is slightly over 10%. Salomon

was our investment banker, and its service was excellent.

在年度結束後不久,Berkshire發行了兩期的債券,總共的金額是2.5億美元,

到期日皆為2018年並且會從1999年開始慢慢分期由償債基金贖回,

包含發行成本在內,平均的資金成本約在10%上下,

負責這次發行債券的投資銀行就是所羅門,他們提供了絕佳的服務。

Despite our pessimistic views about inflation, our taste for

debt is quite limited. To be sure, it is likely that Berkshire

could improve its return on equity by moving to a much higher,

though still conventional, debt-to-business-value ratio. It's

even more likely that we could handle such a ratio, without

problems, under economic conditions far worse than any that have

prevailed since the early 1930s.

儘管我們對於通貨膨脹抱持悲觀的看法,我們對於舉債的興趣還是相當有限,

雖然可以肯定的是Berkshire可以靠提高舉債來增加投資報酬,

即使這樣做我們的負債比例還是相當的保守,

且就算如此我們很有信心應該可以應付比1930經濟大蕭條更壞的經濟環境。

But we do not wish it to be only likely that we can meet our

obligations; we wish that to be certain. Thus we adhere to

policies - both in regard to debt and all other matters - that

will allow us to achieve acceptable long-term results under

extraordinarily adverse conditions, rather than optimal results

under a normal range of conditions.

但我們還是不願意這種大概沒有問題的做法,我們要的是百分之百的確定,

因此我們堅持一項政策,那就是不管是舉債或是其他任何方面,

我們希望是能夠在最壞的情況下得到合理的結果,而不是預期在樂觀的情況下,

得到很好的利益。

Good business or investment decisions will eventually

produce quite satisfactory economic results, with no aid from

leverage. Therefore, it seems to us to be both foolish and

improper to risk what is important (including, necessarily, the

welfare of innocent bystanders such as policyholders and

employees) for some extra returns that are relatively

unimportant. This view is not the product of either our

advancing age or prosperity: Our opinions about debt have

remained constant.

只要是好公司或是好的投資決策,不靠投資槓桿,最後還是能夠得到令人滿意的結果,

因此我們認為為了一點額外的報酬,將重要的東西(也包含政策制定者與員工福祉)

暴露在不必要的風險之下是相當愚蠢且不適當的。

However, we are not phobic about borrowing. (We're far from

believing that there is no fate worse than debt.) We are willing

to borrow an amount that we believe - on a worst-case basis -

will pose no threat to Berkshire's well-being. Analyzing what

that amount might be, we can look to some important strengths

that would serve us well if major problems should engulf our

economy: Berkshire's earnings come from many diverse and well-

entrenched businesses; these businesses seldom require much

capital investment; what debt we have is structured well; and we

maintain major holdings of liquid assets. Clearly, we could be

comfortable with a higher debt-to-business-value ratio than we

now have.

當然我們不會畏懼借貸(我們還不至於認為借錢是萬惡不赦的),

我們還是願意在估計不會損及Berkshire利益的最壞情況下,進行舉債,

至於這個限度在哪裡,我們就必須評估自己本身的實力,

Berkshire的獲利來自於許多不同且紮實的產業,這些產業通常不需要額外大量的投資,

負債的部份也相當健全,同時我們還保有大量的流動資產,很明顯的,

我們大可以承擔比現在更高的負債比例。

One further aspect of our debt policy deserves comment:

Unlike many in the business world, we prefer to finance in

anticipation of need rather than in reaction to it. A business

obtains the best financial results possible by managing both

sides of its balance sheet well. This means obtaining the

highest-possible return on assets and the lowest-possible cost on

liabilities. It would be convenient if opportunities for

intelligent action on both fronts coincided. However, reason

tells us that just the opposite is likely to be the case: Tight

money conditions, which translate into high costs for

liabilities, will create the best opportunities for acquisitions,

and cheap money will cause assets to be bid to the sky. Our

conclusion: Action on the liability side should sometimes be

taken independent of any action on the asset side.

我們舉債政策還有一向特點值得說明,不像其他公司,

我們比較希望能夠預先準備而不是事後補救,一家公司若能夠

同時管好資產負債表的兩側,就會有不錯的成績,

這代表一方面要能夠將資產的報酬率提高,一方面要能夠將負債的資金成本降低,

若是兩邊都能碰巧的兼顧那就太好了,不過事實告訴我們,

通常情況正好相反,當資金吃緊時,代表負債的成本上升,

這正是對外購併的最好時機,因為便宜的資金有時會將競標的資產飆到天價,

我們的結論是,在舉債方面的動作,有時應該要跟購置資產方面的動作分開做。

Alas, what is "tight" and "cheap" money is far from clear at

any particular time. We have no ability to forecast interest

rates and - maintaining our usual open-minded spirit - believe

that no one else can. Therefore, we simply borrow when

conditions seem non-oppressive and hope that we will later find

intelligent expansion or acquisition opportunities, which - as we

have said - are most likely to pop up when conditions in the debt

market are clearly oppressive. Our basic principle is that if

you want to shoot rare, fast-moving elephants, you should always

carry a loaded gun.

當然何謂吃緊﹖何謂便宜的資金﹖很難有一個清楚的分野,

我們無法去預測利率的走向,所以我們隨時保持開放的心態,

隨機地在市場還沒有那麼悲觀時借錢,期望之後可以找到合適的購併或投資標的,

而通常如同我們先前所提到的,大概是會在債市情況悲觀時出現,

我們一個基本的原則就是,如果你想要獵捕那種罕見且移動迅速的大象,

那麼你的槍枝就要隨時上膛準備。

Our fund-first, buy-or-expand-later policy almost always

penalizes near-term earnings. For example, we are now earning

about 6 1/2% on the $250 million we recently raised at 10%, a

disparity that is currently costing us about $160,000 per week.

This negative spread is unimportant to us and will not cause us

to stretch for either acquisitions or higher-yielding short-term

instruments. If we find the right sort of business elephant

within the next five years or so, the wait will have been

worthwhile.

我們這種先準備資金,之後再買進擴張的政策,雖然會對我們短期間的盈餘造成影響,

例如我們之前取得10%成本的2.5億美元,現在大概只能賺得6.5%的收益,

中間的利差損失每個禮拜大概是16萬美元,這對我們來說,只是個小數目,

也不會迫使我們去從事一些短期高風險的投資,只要我們能在未來五年內

找到理想的目標獵物,這一切等待都是值得的。

Miscellaneous

其他事項


We hope to buy more businesses that are similar to the ones

we have, and we can use some help. If you have a business that

fits the following criteria, call me or, preferably, write.

我們希望能夠找到更多像我們現在擁有的企業,當然這需要一些幫助,

如同你知道有公司符合以下的條件,打電話或者最好是寫信給我。


(1)鉅額交易(每年稅後盈餘至少有一千萬美元)

(2)持續穩定獲利(我們對有遠景或具轉機的公司沒興趣)

(3)高股東報酬率(並且甚少舉債)

(4)具備管理階層(我們無法提供)

(5)簡單的企業(若牽涉到太多高科技,我們弄不懂)

(6)合理的價格(在價格不確定前,我們不希望浪費自己與對方太多時間)

我們不會進行敵意的購併,並承諾完全保密並儘快答覆是否感興趣

(通常不超過五分鐘) ,我們傾向採現金交易,除非我們所換得的

內含價值跟我們付出的一樣多,否則不考慮發行股份。

我們歡迎可能的賣方與那些過去與我們合作過的對象打聽,

對於那些好的公司與好的經營階層,我們可以提供一個好的歸屬。

另一方面我們也持續接到一些不符合我們條件的詢問,

包括新事業、轉機股、拍賣案以及最常見的仲介案

(那些說你們要是能過碰一下面,一定會感興趣之類的) 。

在此重申我們對這些一點興趣都沒有。

Here's what we're looking for:

(1) large purchases (at least $10 million of after-tax

earnings),

(2) demonstrated consistent earning power (future

projections are of little interest to us, nor are

"turnaround" situations),

(3) businesses earning good returns on equity while

employing little or no debt,

(4) management in place (we can't supply it),

(5) simple businesses (if there's lots of technology,

we won't understand it),

(6) an offering price (we don't want to waste our time

or that of the seller by talking, even preliminarily,

about a transaction when price is unknown).

We will not engage in unfriendly takeovers. We can promise

complete confidentiality and a very fast answer - customarily

within five minutes - as to whether we're interested. We prefer

to buy for cash, but will consider issuing stock when we receive

as much in intrinsic business value as we give. We invite

potential sellers to check us out by contacting people with whom

we have done business in the past. For the right business - and

the right people - we can provide a good home.


On the other hand, we frequently get approached about

acquisitions that don't come close to meeting our tests: new

ventures, turnarounds, auction-like sales, and the ever-popular

(among brokers) "I'm-sure-something-will-work-out-if-you-people-

get-to-know-each-other." None of these attracts us in the least.


Besides being interested in the purchases of entire

businesses as described above, we are also interested in the

negotiated purchase of large, but not controlling, blocks of

stock comparable to those we hold in Cap Cities and Salomon. We

have a special interest in purchasing convertible preferreds as a

long-term investment, as we did at Salomon.

除了以上買下整家公司的購併案外,我們也會考慮買進一大部份不具控制權的股份,

就像我們在資本城與所羅門這兩個Case一樣,尤其是我們對於像這次購買

所羅門一樣的可轉換特別股當作長期投資特別有興趣。


* * *

接下來是一點記憶回顧,大部分Berkshire的大股東是在1969年

清算巴菲特合夥事業時取得本公司股份的,這些合夥的夥伴可能

還記得當初在1962年,我曾經在巴菲特合夥事業所投資控制的

Dempster-一家幫浦與農用機具製造公司,面臨經營上重大的難題。

And now a bit of deja vu. Most of Berkshire's major

stockholders received their shares at yearend 1969 in a

liquidating distribution from Buffett Partnership, Ltd. Some of

these former partners will remember that in 1962 I encountered

severe managerial problems at Dempster Mill Manufacturing Co., a

pump and farm implement manufacturing company that BPL

controlled.

在當時我帶著我無法解決的問題去找查理,就像是現在一樣,

查理建議我在加州他有一位朋友叫Harry Bottle非常腳踏實地,

或許可以幫得上忙,我在當年四月去洛杉磯拜訪他,一個禮拜後,

他就被請到內布拉斯加州來管理Dempster,此後問題立刻獲得解決,

記得在1962年的年報中,我還特地將Harry封為年度風雲人物。

At that time, like now, I went to Charlie with problems that

were too tough for me to solve. Charlie suggested the solution

might lie in a California friend of his, Harry Bottle, whose

special knack was never forgetting the fundamental. I met Harry

in Los Angeles on April 17, 1962, and on April 23 he was in

Beatrice, Nebraska, running Dempster. Our problems disappeared

almost immediately. In my 1962 annual letter to partners, I

named Harry "Man of the Year."

24年後,場景搬到Berkshire 另外一家子公司K & W公司,

一家專門生產自動機具的小公司,過去這家公司做得還不錯,

不過到了1985-1986年卻突然發生狀況,盲目追求達不到的東西,

卻放棄現有可以做的產品,負責管理監督K & W的查理,

知道可以不必知會我,直接找到現年68歲的Harry,任命他為CEO,

然後就靜待結果出來,事實上他沒有等多久,到了1987年隔年,

K & W的獲利就創下新高,比1986年成長三倍,由於獲利提升,

該公司所需的資金也就跟著減少,該公司的應收及存貨水準減少了20%。

Fade to 24 years later: The scene is K & W Products, a small

Berkshire subsidiary that produces automotive compounds. For

years K & W did well, but in 1985-86 it stumbled badly, as it

pursued the unattainable to the neglect of the achievable.

Charlie, who oversees K & W, knew there was no need to consult

me. Instead, he called Harry, now 68 years old, made him CEO,

and sat back to await the inevitable. He didn't wait long. In

1987 K & W's profits set a record, up more than 300% from 1986.

And, as profits went up, capital employed went down: K & W's

investment in accounts receivable and inventories has decreased

20%.

所以要是在往後的十年、二十年,我們的被投資事業又發生問題時,

你就知道誰的電話又會響了。

If we run into another managerial problem ten or twenty

years down the road, you know whose phone will ring.


* * *


About 97.2% of all eligible shares participated in

Berkshire's 1987 shareholder-designated contributions program.

Contributions made through the program were $4.9 million, and

2,050 charities were recipients.

大約有97.2%的有效股權參與1987年的股東指定捐贈計劃,

總計約490萬美元捐出的款項分配給2,050家慈善機構

最近一項研究顯示約有50%的美國大公司的捐贈計畫是由董事會所決定,

這等於是由代表公司所有股東的一小群人來決定公司資金捐給他們所偏愛

的慈善機構,卻從來不會去管股東們的意見,(我很懷疑若情況剛好相反,

由股東們來決定這些董事口袋裏的錢要捐給誰時,他們會有什麼樣的反應),

當甲從乙的身上拿錢給丙時,若甲是立法者,則這個過程叫做課稅,

若甲是企業的主管或是經理人時,這就叫做是慈善,我們仍然堅信除非

是捐給那些很明顯對於公司有助益的單位時,應該要先徵詢股東們而非

僅僅是經理人或是董事的意見。

A recent survey reported that about 50% of major American

companies match charitable contributions made by directors

(sometimes by a factor of three to one). In effect, these

representatives of the owners direct funds to their favorite

charities, and never consult the owners as to their charitable

preferences. (I wonder how they would feel if the process were

reversed and shareholders could invade the directors' pockets for

charities favored by the shareholders.) When A takes money from B

to give to C and A is a legislator, the process is called

taxation. But when A is an officer or director of a corporation,

it is called philanthropy. We continue to believe that

contributions, aside from those with quite clear direct benefits

to the company, should reflect the charitable preferences of

owners rather than those of officers and directors.


我們敦促新加入的股東,仔細閱讀年報上有關股東捐贈計畫的詳細內容,

如果在未來年度內,你想要參加這類的計畫,我們強烈建議你將股份登記

在自己而不是受託人的名下,必須在1988年9月30日之前完成登記,

才有權利參與1988年的計畫。

We urge new shareholders to read the description of our

shareholder-designated contributions program that appears on

pages 54 and 55. If you wish to participate in future programs,

we strongly urge that you immediately make sure your shares are

registered in the name of the actual owner, not in "street" name

or nominee name. Shares not so registered on September 30, l988

will be ineligible for the 1988 program.


* * *

去年總共有450位股東參加年度股東會,總計提出了60個左右精彩的問題,

在許多公司股東會只是浪費時間,因為大多流於形式,不過我們的股東會

卻不一樣,股東們非常具有建設性且帶來了許多歡樂。

Last year we again had about 450 shareholders at our annual

meeting. The 60 or so questions they asked were, as always,

excellent. At many companies, the annual meeting is a waste of

time because exhibitionists turn it into a sideshow. Ours,

however, is different. It is informative for shareholders and

fun for us. (At Berkshire's meetings, the exhibitionists are on

the dais.)


This year our meeting will be on May 23, 1988 in Omaha, and

we hope that you come. The meeting provides the forum for you to

ask any owner-related questions you may have, and we will keep

answering until all (except those dealing with portfolio

activities or other proprietary information) have been dealt

with.

今年的股東會將在1988年5月23日在奧瑪哈舉行,我們希望你們都能來參加,

這個會議提供一個場所讓你能夠提出任何與股東有關的問題,我們會一直

回答到所有股東都滿意為止(除了那些想要知道投資組合明牌或是內線消息的人)

Last year we rented two buses - for $100 - to take

shareholders interested in the trip to the Furniture Mart. Your

actions demonstrated your good judgment: You snapped up about

$40,000 of bargains. Mrs. B regards this expense/sales ratio as

on the high side and attributes it to my chronic inattention to

costs and generally sloppy managerial practices. But, gracious

as always, she has offered me another chance and we will again

have buses available following the meeting. Mrs. B says you must

beat last year's sales figures, and I have told her she won't be

disappointed.

去年我們花了100元租兩台巴士載著有興趣的股東到傢具廣場,

大家的行動展現了明智的抉擇,總共買下了約4萬美元的東西,

B太太認為這樣的營業費用比例太高,認為這都是我個人長久以來

對於成本沒有概念、管理鬆散的緣故,不過還是一樣大方,

今年她再次給我機會,在會後還是會有巴士等著各位,B太太希望我

一定要打破去年的記錄,而我也已經答應她不會讓她失望。


華倫.巴菲特

董事會主席

1988年2月29日

Warren E. Buffett

Chairman of the Board

February 29, 1988

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