Billionaire Warren Buffett issued a clear inflation warning and slammed 'disgusting' money manager behavior in his annual letter to Berkshire Hathaway Inc. shareholders.
Buffett, one of the world's most successful investors, cautioned that "fiscal deficits have consequences."
"Our job is to manage Berkshire’s operations and finances in a manner that will achieve an acceptable result over time and that will preserve the company’s unmatched staying power when financial panics or severe worldwide recessions occur," he wrote of himself and 99-year-old Berkshire Hathaway vice chairman Charlie Munger. "Berkshire also offers some modest protection from runaway inflation, but this attribute is far from perfect."
"Huge and entrenched fiscal deficits have consequences," Buffett, 92, said.
But don't blame those deficits on Berkshire, he indicated.
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"During the decade ending in 2021, the United States Treasury received about $32.3 trillion in taxes while it spent $43.9 trillion," he wrote, saying Berkshire paid $32 billion in U.S. corporate income taxes during that time period.
"And that means – brace yourself – had there been roughly 1,000 taxpayers in the U.S. matching Berkshire’s payments, no other businesses nor any of the country’s 131 million households would have needed to pay any taxes to the federal government," Buffett said. "Not a dime."
The 92-year-old told investors to focus on the big picture over the long term, signaling that he has lost none of his confidence in the U.S. economy.
"I have been investing for 80 years – more than one-third of our country’s lifetime. Despite our citizens’ penchant – almost enthusiasm – for self-criticism and self-doubt, I have yet to see a time when it made sense to make a long-term bet against America," he said. "And I doubt very much that any reader of this letter will have a different experience in the future."
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The letter was accompanied by the Berkshire Hathaway year-end results, which Buffett said reflected a "good" year – including a record $30.8 billion operating profit. The company also posted a $22.8 billion annual net loss.
Notably, in a summary of the past year, Buffett issued what he said was an important warning, slamming "disgusting" behavior by money managers.
"Finally, an important warning: Even the operating earnings figure that we favor can easily be manipulated by managers who wish to do so. Such tampering is often thought of as sophisticated by CEOs, directors and their advisors. Reporters and analysts embrace its existence as well," he said.
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"That activity is disgusting. It requires no talent to manipulate numbers: Only a deep desire to deceive is required."
Buffett said that deception under the guise of "bold imaginative accounting" has "become one of the shames of capitalism."
Reuters contributed to this report.
