(May 6, 2006) Warren Buffett and Charlie Munger explain why they are very enthusiastic about Berkshire's purchase of Israeli toolmaker ISCAR. They also discuss rising real estate prices, warn against speculative commodity bubbles, and tell investors not to let the markets "instruct" them.
After trailing the S&P for two straight years, Berkshire's relatively modest 6.4 percent gain in per-share book value topped the S&P's almost equally modest 4.9 percent increase in 2005. Buffett called it a "decent" year in which most of the operating subsidiaries "prospered." In his annual letter, Buffett reported that despite a record $2.5 billion loss from Hurricane Katrina, the insurance business "in its entirety did well," thanks to "stellar" results from GEICO.
READ 2005 LETTER (DATED FEB. 28, 2006)