Every February, a specific corner of the internet basically has a collective meltdown. It isn't because of a new iPhone or a Marvel trailer. It's because an elderly man in Omaha, Nebraska, just uploaded a PDF to a website that looks like it hasn't been updated since 1996. The Berkshire Hathaway letter to shareholders is, for lack of a better term, the annual "State of the Union" for people who actually care about how money works.
Warren Buffett writes it himself. No ghostwriters. No PR polish. Just the straight talk from a guy who has seen everything from the post-WWII boom to the crypto craze. If you think it’s just about balance sheets and insurance float, you're missing the point. It’s a masterclass in psychology.
Why the Berkshire Hathaway Letter to Shareholders Still Matters in 2026
The world changes fast, but humans don't. That’s the core thesis of almost every Berkshire Hathaway letter to shareholders. While everyone else is chasing the newest AI-driven "disruptor" or panic-selling because the Fed blinked, Buffett talks about stuff that doesn’t expire. We’re talking about things like "economic moats" and why having a massive pile of cash is better than a mediocre acquisition.
He’s been doing this since 1965.
Think about that timeline. He wrote through the stagflation of the 70s, the "greed is good" 80s, the dot-com bubble, and the 2008 crash. Each letter is a breadcrumb trail. When you read the Berkshire Hathaway letter to shareholders, you’re not just looking at how GEICO performed last quarter. You’re looking for his thoughts on whether America is still a good bet. (Spoiler: He always thinks it is.)
One thing people often get wrong is the tone. They expect a dry corporate report. What they get is more like a letter from a grumpy but brilliant uncle. He makes fun of himself. He admits when he overpaid for a company—like the Dexter Shoe disaster, which he famously called a "terrible mistake" in a previous letter. This honesty is why people trust the document more than any "Earnings Call" on CNBC.
The Secret Sauce: It's Not Just About Picking Stocks
If you're reading the Berkshire Hathaway letter to shareholders to find a hot stock tip, you’re gonna be disappointed. Berkshire isn't a hedge fund. It’s a massive conglomerate. Buffett doesn't care about "beating the market" next Tuesday. He cares about where the company will be in 2045.
The Concept of "The Float"
This is the boring part that is actually the most exciting part. Berkshire owns insurance companies like GEICO and National Indemnity. When you pay your car insurance, Berkshire keeps that money until you get into an accident. In the meantime, they get to invest it. That’s "the float." In recent letters, Buffett has obsessed over this. It’s basically free money to play with. Most CEOs have to borrow at 5% or 6%. Buffett gets it for less than zero.
The Power of Doing Nothing
One of the most profound things you’ll find in a Berkshire Hathaway letter to shareholders is the celebration of inactivity. Most fund managers feel like they have to trade every day to earn their fees. Buffett argues that the best thing to do is usually... nothing. Just sit there. Let the compound interest do the heavy lifting. He often quotes Pascal: "All of humanity's problems stem from man's inability to sit quietly in a room alone."
Charlie Munger’s Ghost and the New Era
The 2024 and 2025 letters felt different. They had to. Charlie Munger, Buffett’s longtime partner and the "Abominable No-Man," passed away just before he turned 100. For decades, the Berkshire Hathaway letter to shareholders was a two-man show. Charlie was the one who pushed Warren to buy "great businesses at fair prices" instead of "fair businesses at great prices."
Without Charlie, the letters have become a bit more reflective. They focus heavily on succession. Everyone wants to know if Greg Abel can keep the engine running. Buffett spent a lot of ink in the recent Berkshire Hathaway letter to shareholders assuring the world that the culture is "baked into the walls."
He’s trying to tell you that Berkshire is a system, not just a person.
What Most People Get Wrong About the Math
People look at the "Book Value" vs. "Market Value." Buffett has told us for years that Book Value is basically a useless metric now. Why? Because accounting rules don't show the real value of a brand like See’s Candies or the railroad (BNSF).
If Berkshire buys a company for $1 billion and it’s now worth $50 billion, the "book value" might still look small compared to its actual worth. This is why the Berkshire Hathaway letter to shareholders often focuses on "operating earnings." That’s the money the businesses actually make from selling stuff, ignoring the wild swings in the stock market.
The stock market is "Mr. Market." He’s a manic-depressive guy who shows up at your door every day offering to buy your house. Some days he offers a fortune. Some days he offers peanuts. Buffett’s advice? You don't have to answer the door.
How to Actually Read the Letter Without Falling Asleep
Don't start at the beginning. Seriously. The first few pages are usually a table showing the performance of Berkshire vs. the S&P 500. It’s okay, but the meat is further down.
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- Look for the "The Year in Review" section. This is where he explains why the railroad or the energy business had a bad year. Usually, it’s because of something boring like maintenance costs or regulatory shifts.
- Find the "The Next 100 Years" part. This is where he gets philosophical. He talks about the "American Tailwind."
- Pay attention to the share repurchases. If Berkshire is buying back its own stock, it means Buffett thinks the stock is cheap. If he’s sitting on $160 billion in cash and doing nothing, it means he thinks everything in the market is overpriced.
The Critics: Is Buffett Out of Touch?
Every few years, someone writes an article saying the Berkshire Hathaway letter to shareholders is irrelevant. They say he missed out on Nvidia or Big Tech. And yeah, he did. He’s the first to admit he doesn't understand some tech.
But look at Apple.
For years, he wouldn't touch tech. Then he realized Apple wasn't a tech company—it was a consumer products company with a "moat" the size of the Atlantic Ocean. People will give up their morning coffee before they give up their iPhone. That’s a Buffett business. The critics usually go quiet when the market crashes and Berkshire is the only thing still standing.
Actionable Insights for the Average Investor
You don't need to be a billionaire to use the logic found in the Berkshire Hathaway letter to shareholders. Here is how you can apply it to your own life starting today.
- Audit your "Circle of Competence." Stop buying stuff you don't understand. If you don't know how a company makes money, don't own it. It’s okay to say "I don't know."
- Check your "Float." Do you have a cash reserve that allows you to take advantage of opportunities when everyone else is panicking? If your money is all tied up, you can't play offense.
- Think in Decades. If you wouldn't be comfortable owning a stock for 10 years, don't own it for 10 minutes. This single rule would save most retail investors thousands in fees and bad decisions.
- Ignore the Noise. The "macro" doesn't matter as much as the "micro." Buffett doesn't care what the unemployment rate is in three months. He cares if people will still be using Duracell batteries in 2030.
Reading the Berkshire Hathaway letter to shareholders is about training your brain to ignore the "now" and focus on the "always." It's about realizing that the most important quality for an investor isn't IQ—it's temperament. You need to be able to stay calm when everyone else is losing their minds.
If you want to get serious, go to the Berkshire Hathaway website. Download the letters from the 1970s. Compare them to the one from last year. You’ll notice the principles haven't changed. The world got faster, the charts got shinier, but the way you build wealth remains exactly the same: buy great businesses, don't overpay, and stay the course.
Your Next Steps
- Read the most recent letter in full. Don't just read the summaries on Twitter (X). The nuance is in the full text.
- Review your own portfolio. Identify which of your holdings have a "moat." If they don't have one, ask yourself why you own them.
- Look at the cash-to-asset ratio. See how much cash you are holding versus your investments. Buffett usually keeps a significant "war chest." Do you have yours?
- Study the history of "The Float." Understanding how Berkshire uses insurance premiums is the key to understanding the entire company structure.