Buffett warns investors that safe-looking bonds can be risky

In his much-awaited letter, always full of wisdoms and ideas on investment, the Oracle of Omaha warned that in any upcoming day, week or even year, stocks will be riskier - far riskier - than short-term USA bonds, warns Warren Buffett, the Oracle of Omaha.

However, Berkshire, whose earnings power is largely concentrated in the insurance business, also lost an estimated $3 billion ($2 billion, after taxes) after the three devastating hurricanes hit Texas, Florida and Puerto Rico in September.

The problem facing Berkshire, whose last major acquisition was a $32 billion deal to buy Precision Castparts in 2015, is that prices are not cheap and competition from other buyers, such as private equity firms, is stiff, says Pan.

In lieu of acquisitions, Berkshire purchased stocks for companies that it believed were undervalued. We will stick with our simple guideline: The less the prudence with which others conduct their affairs, the greater the prudence with which we must conduct our own. Van Damme is also board member of Anheuser-Busch Inbev and Restaurant Brands International.

"Performance comes, performance goes", Buffett wrote.

"Buffett doesn't dwell very long on the politics", Smead said.

It's brutal - for the hedge funds. "Fees never falter", he wrote.

Buffett supported Hillary Clinton, a Democrat, in the 2016 US presidential election.

Unlike some letters of years past, Buffett steered clear of commenting on the overall American economy, and he didn't wade into politics. And he's found himself at odds with Trump on several policy issues. We also hold it today after a million or so "partners" have joined us at Berkshire.

Speculation about Buffett's successor has swirled for years.

Edward Jones analyst Jim Shanahan said he expected Buffett to devote more of the letter to explaining his decision to promote and name the top two candidates to eventually succeed him as Berkshire's CEO.

The "Oracle of Omaha's" famed annual letter to Berkshire shareholders has become a favourite in the investor calendar but it has attracted heightened interest this year amid rumours that the 87-year-old would unveil plans to step down.

Berkshire made headlines in January when it teamed up with Amazon and J.P. Morgan Chase and announced that it plans to form an independent health care company with the goal of lowering medical-related costs for its employees.

"You and I are lucky to have Ajit and Greg working for us", Buffett wrote.

  • Wendy Palmer