From the 2018 letter to the shareholders
Our advice? Focus on operating earnings, paying little attention to gains or losses of any variety.
- It is likely that – over time – Berkshire will be a significant repurchaser of its shares, transactions that will take place at prices above book value but below our estimate of intrinsic value. The math of such purchases is simple: Each transaction makes per-share intrinsic value go up, while per-share book value goes down. That combination causes the book-value scorecard to become increasingly out of touch with economic reality.
Focus on the Forest – Forget the Trees