Key Quotes from 1977 Shareholder Letter

1. "Most companies define 'record' earnings as a new high in earnings per share. Since businesses customarily add from year to year to their equity base, we find nothing particularly noteworthy in a management performance combining, say, a 10% increase in equity capital and a 5% increase in earnings per share. After all, even a totally dormant savings account will produce steadily rising interest earnings each year because of compounding."

2. "We estimate that costs involved in the insurance areas in which we operate rise at close to 1% per month. This is due to continuous monetary inflation affecting the cost of repairing humans and property, as well as 'social inflation'..."

3. "We try to buy businesses where we can understand why they are making money... We want to be sure that the businesses we understand are indeed making money and that they will continue to do so."

4. "In the insurance business... there are no important advantages from trademarks, patents, location, corporate longevity, raw material sources, etc., and very little consumer differentiation to produce insulation from competition."

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Source: Full Letter