(April 30, 2005) Buffett warns of "pretty serious consequences" as house prices soar. He also reminds investors they don't get the benefit of a "degree of difficulty" adjustment, recalls how he first became interested in investing when he was a child, and explains why a good public school system is a lot like virginity, as Munger attacks "stupid and dishonorable" accountants for contributing to the growth of dangerous derivatives.
For a second year, Berkshire's per-share book value underperformed the S&P 500, but not by much. It was up 10.5 percent vs. the benchmark index's 10.9 percent gain. In his annual letter, Buffett wrote he "struck out" on several potential multi-billion dollar acquisitions, on top of finding only a few attractive stocks to buy. As a result, Berkshire ended the year with $43 billion in cash, "not a happy position."READ 2004 LETTER (DATED FEB. 28, 2005)