(May 3, 2003) Buffett issues what he calls a "wakeup call" that the ballooning and thoughtless use of risky derivatives could contribute to a future financial crisis. He also compares Berkshire's success to a snowball, specifies the one key trait he looks for in managers, tells why he doesn’t take a "performance fee," and defines "success" and "happiness."
As the dotcom bubble continued to deflate in 2002, Berkshire's 10.0 percent gain in per-share book value handily outperformed the S&P 500's 22.1 percent drop. In his annual letter, Buffett called it a "banner year." He also wrote at length about the dangers of derivatives, calling them "financial weapons of mass destruction." Berkshire's acquisition of MidAmerican Energy Holdings is detailed, and CEO David Sokol is called a "huge asset."READ 2002 LETTER (DATED FEB. 21, 2003)