(April 25, 1994) Buffett warns that excessive risks in the reinsurance business may not become evident until big problems arise years later, and calls derivatives a dangerous combination of "ignorance and borrowed money." He and Munger also tell investors why they don't need to do extraordinary things to get extraordinary results.
Berkshire's per-share book value increased by a "satisfactory but unexciting" 14.3 percent in 1993, topping the S&P's 10.1 percent gain. Berkshire's stock price, however, soared by 39 percent. In his annual letter, Buffett called newly-acquired Dexter Shoe "highly competitive" against foreign imports and urged investors to hold the stock of a good business "with the same tenacity that an owner would exhibit if he owned all of that business."READ 1993 LETTER (DATED MAR. 1, 1994)