2021 Letter to Shareholders

To the Shareholders of Berkshire Hathaway Inc.

In 2021, Berkshire earned a record $90 billion. Our operating businesses—railroads, utilities, insurance, and consumer products—generated $27 billion in after-tax earnings. These results demonstrate once again the power of owning a diversified collection of essential businesses.

"The most important decision you can make is to be a permanent owner of American businesses. Those who do so will prosper; those who don't will underperform."

The Patience Principle

In 2021, markets swung wildly. COVID variants emerged, interest rates moved, and geopolitical tensions flared. Through all of this noise, Berkshire's businesses kept operating, keep earning, keep growing.

The lesson is simple: ignore the noise, focus on the businesses. Every dollar we retained in 2021 has been reinvested at attractive returns. The compounding machine keeps running.

Our $144 billion cash position may seem excessive to some. It's not. Cash is oxygen—it gives us the ability to act when opportunities arise. And opportunities always arise. The question is whether you'll be able to seize them.

Our Major Holdings

Apple continues to exceed our expectations. The company has become the most valuable in the world because it has become the most essential. Users cannot imagine leaving the Apple ecosystem, and they pay premium prices for the privilege.

Every iPhone is a portal to Apple's services—App Store, Apple Music, iCloud, Apple TV+. These services have extraordinary margins and generate recurring revenue that grows regardless of new device sales.

The Railroad

BNSF Railway and our utilities delivered solid results in 2021, demonstrating the resilience of essential infrastructure. When the economy moves, our trains move. When people need electricity, our utilities provide it.

These are not exciting businesses, but they are essential businesses, and that is exactly what we want to own.

What We've Learned

After 61 years of investing, Charlie and I have learned some lessons:

1. Patience pays — Compounding works, but it requires time. Our best investments often took years to realize their potential.
2. Business quality matters more than price paid — A wonderful business at a fair price beats a fair business at a wonderful price.
3. Cash is oxygen — It gives you optionality, and optionality has real value.
4. America creates miracles — Our entire success is built on the American economic system.

Looking Forward

We do not know what 2022 will bring. We do know that Berkshire will be ready:

1. Our businesses will perform — Essential services will continue to be essential
2. Our capital will find homes — We will deploy cash when opportunities appear
3. Our culture will endure — The Berkshire way will continue
4. America will create wealth — We will participate in that creation

Warren E. Buffett February 2022