The best part of the letter is Buffett’s lament that his record of beating the S&P 500 over five-year periods, which he has never before discussed publicly, as far as we can recall, is endangered:
“To date, we’ve never had a five-year period of underperformance, having managed 43 times to surpass the S&P over such a stretch… But the S&P has now had gains in each of the last four years, outpacing us over that period. If the market continues to advance in 2013, our streak of five-year wins will end.”The fact that a guy who, with the help of Charlie Munger’s key insight on the importance of buying good businesses rather than cheap stocks as well as the hard work over many years by a lot of smart managers who could have made themselves far richer working on their own, has compounded the net worth of a company 19.7% a year for 48 years (when you compound something nearly 20% a year for 48 years, it adds up to a lot…like, 586,817%—ed.) worries about a 43 period “streak” of five-year wins against the overall stock market, tells you everything you need to know about what it takes to create a track record like Warren Buffett (a flat-out competitive instinct that never quits—ed.)So don’t let the “Uncle Warren” veneer fool you. He set out to be the richest man in the world, and he made it, but not by sitting back and spouting homespun pearls of wisdom: it was by outworking—and outthinking—everybody else.And doing that every day, of every week, of every year.