(May 3, 1999) At the height of the internet bubble, Warren Buffett and Charlie Munger defend their decision not to buy "hot" tech stocks. They also criticize "corrupt" stock option accounting, dismiss the efficient market theory as "silly," and offer advice to new investors.
Berkshire's per-share book value exploded 48.3 percent higher in 1998 vs. the S&P's 28.6 percent gain. That was "more than satisfactory" but "not as good as it looks" because most of the gain came from issuing shares to help pay for its acquisitions of General Re and Executive Jet. In his annual letter, Buffett complained that a growing number of CEOs had come to believe that it was OK, even their duty, to manipulate earnings because they had the mistaken assumption that "their job at all times is to encourage the highest stock price possible."READ 1998 LETTER (DATED MAR. 1, 1999)