are going to elect suicide by lying in front of a 100-car， extraordinarily heavy train that can’t be stopped in less than a mile or more. Would you like to be the helpless engineer? This trauma happens about once a day in North America; it is far more common in Europe and will always be with us. Wage negotiations in the rail industry can end up in the hands of the President and Congress. Additionally， American railroads are required to carry many dangerous products every day that the industry would much rather avoid. The words “common carrier” define railroad responsibilities. Last year BNSF’s earnings declined more than I expected， as revenues fell. Though fuel costs also fell， wage increases， promulgated in Washington， were far beyond the country’s inflation goals. This differential may recur in future negotiations. Though BNSF carries more freight and spends more on capital expenditures than any of the five other major North American railroads， its profit margins have slipped relative to all five since our purchase. I believe that our vast service territory is second to none and that therefore our margin comparisons can and should improve. I am particularly proud of both BNSF’s contribution to the country and the people who work in sub-zero outdoor jobs in North Dakota and Montana winters to keep America’s commercial arteries open. Railroads don’t get much attention when they are working but， were they unavailable， the void would be noticed immediately throughout America. A century from now， BNSF will continue to be a major asset of the country and of Berkshire. You can count on that. Our second and even more severe earnings disappointment last year occurred at BHE. Most of its large electric-utility businesses， as well as its extensive gas pipelines， performed about as expected. But the regulatory climate in a few states has raised the specter of zero profitability or even bankruptcy (an actual outcome at California’s largest utility and a current threat in Hawaii). In such jurisdictions， it is difficult to project both earnings and asset values in what was once regarded as among the most stable industries in America. For more than a century， electric utilities raised huge sums to finance their growth through a state-by-state promise of a fixed return on equity (sometimes with a small bonus for superior performance). With this approach， massive investments were made for capacity that would likely be required a few years down the road. That forward-looking regulation reflected the reality that utilities build generating and transmission assets that often take many years to construct. BHE’s extensive multi-state transmission project in the West was initiated in 2006 and remains some years from completion. Eventually， it will serve 10 states comprising 30% of the acreage in the continental United States. With this model employed by both private and public-power systems， the lights stayed on， even if population growth or industrial demand exceeded expectations. The “margin of safety” approach seemed sensible to regulators， investors and the public. Now， the fixed-but-satisfactory-return pact has been broken in a few states， and investors are becoming apprehensive that such ruptures may spread. Climate change adds to their worries. Underground transmission may be required but who， a few decades ago， wanted to pay the staggering costs for such construction? At Berkshire， we have made a best estimate for the amount of losses that have occurred. These costs arose from forest fires， whose frequency and intensity have increased – and will likely continue to increase – if convective storms become more frequent. It will be many years until we know the final tally from BHE’s forest-fire losses and can intelligently make decisions about the desirability of future investments in vulnerable western states. It remains to be seen whether the regulatory environment will change elsewhere. Other electric utilities may face survival problems resembling those of Pacific Gas and Electric and Hawaiian Electric. A confiscatory resolution of our present problems would obviously be a negative for BHE， but both that company and Berkshire itself are structured to survive negative surprises. We regularly get these in our insurance business， where our basic product is risk assumption， and they will occur elsewhere. Berkshire can sustain financial surprises but we will not knowingly throw good money after bad. Whatever the case at Berkshire， the final result for the utility industry may be ominous: Certain utilities might no longer attract the savings of American citizens and will be forced to adopt the public-power model. Nebraska made this choice in the 1930s and there are many public-power operations throughout the country. Eventually， voters， taxpayers and users will decide which model they prefer. When the dust settles， America’s power needs and the consequent capital expenditure will be staggering. I did not anticipate or even consider the adverse developments in regulatory returns and， along with Berkshire’s two partners at BHE， I made a costly mistake in not doing so. Enough about problems: Our insurance business performed exceptionally well last year， setting records in sales， float and underwriting profits. Property-casualty insurance (“P/C”) provides the core of Berkshire’s well-being and growth. We have been in the business for 57 years and despite our nearly 5,000-fold increase in volume – from $17 million to $83 billion – we have much room to grow. Beyond that， we have learned – too often， painfully – a good deal about what types of insurance business and what sort of people to avoid. The most important lesson is that our underwriters can be thin， fat， male， female， young， old， foreign or domestic. But they can’t be optimists at the office， however desirable that quality may generally be in life. Surprises in the P/C business – which can occur decades after six-month or one-year policies have expired – are almost always negative. The industry’s accounting is designed to recognize this reality， but estimation mistakes can be huge. And when charlatans are involved， detection is often both slow and costly. Berkshire will always attempt to be accurate in its estimates of future loss payments but inflation – both monetary and the “legal” variety – is a wild card. I’ve told the story of our insurance operations so many times that I will simply direct newcomers to page 18. Here， I will only repeat that our position would not be what it is if Ajit Jain had not joined Berkshire in 1986. Before that lucky day – aside from an almost unbelievably wonderful experience with GEICO that began early in 1951 and will never end – I was largely wandering in the wilderness， as I struggled to build our insurance operation. Ajit’s achievements since joining Berkshire have been supported by a large cast of hugely-talented insurance executives in our various P/C operations. Their names and faces are unknown to most of the press and the public. Berkshire’s lineup of managers， however， is to P/C insurance what Cooperstown’s honorees are to baseball. Bertie， you can feel good about the fact that you own a piece of an incredible P/C operation that now operates worldwide with unmatched financial resources， reputation and talent. It carried the day in 2023. What is it with Omaha? Come to Berkshire’s annual gathering on May 4, 2024. On stage you will see the three managers who now bear the prime responsibilities for steering your company. What， you may wonder， do the three have in common? They certainly don’t look alike. Let’s dig deeper. Greg Abel， who runs all non-insurance operations for Berkshire – and in all respects is ready to be CEO of Berkshire tomorrow – was born and raised in Canada (he still plays hockey). In the 1990s， however， Greg lived for six years in Omaha just a few blocks away from me. During that period， I never met him. A decade or so earlier， Ajit Jain， who was born， raised and educated in India， lived with his family in Omaha only a mile or so from my home (where I’ve lived since 1958). Both Ajit and his wife， Tinku， have many Omaha friends， though it’s been more than three decades since they moved to New York (in order to be where much of the action in reinsurance takes place). Missing from the stage this year will be Charlie. He and I were both born in Omaha about two miles from where you will sit at our May get-together. In his first ten years， Charlie lived about a half-mile from where Berkshire has long maintained its office. Both Charlie and I spent our early years in Omaha public schools and were indelibly shaped by our Omaha childhood. We didn’t meet， however， until much later. (A footnote that may surprise you: Charlie lived under 15 of America’s 45 presidents. People refer to President Biden as #46, but that numbering counts Grover Cleveland as both #22 and #24 because his terms were not consecutive. America is a very young country.) Moving to the corporate level， Berkshire itself relocated in 1970 from its 81 years of residence in New England to settle in Omaha， leaving its troubles behind and blossoming in its new home. As a final punctuation point to the “Omaha Effect，” Bertie – yes that Bertie – spent her early formative years in a middle-class neighborhood in Omaha and， many decades later， emerged as one of the country’s great investors. You may be thinking that she put all of her money in Berkshire and then simply sat on it. But that’s not true. After starting a family in 1956, Bertie was active financially for 20 years: holding bonds， putting 1⁄3 of her funds in a publicly-held mutual fund and trading stocks with some frequency. Her potential remained unnoticed. Then， in 1980, when 46, and independent of any urgings from her brother， Bertie decided to make her move. Retaining only the mutual fund and Berkshire， she made no new trades during the next 43 years. During that period， she became very rich， even after making large philanthropic gifts (think nine figures). Millions of American investors could have followed her reasoning which involved only the common sense she had somehow absorbed as a child in Omaha. And， taking no chances， Bertie returns to Omaha every May to be re-energized. So what is going on? Is it Omaha’s water? Is it Omaha’s air? Is it some strange planetary phenomenon akin to that which has produced Jamaica’s sprinters， Kenya’s marathon runners， or Russia’s chess experts? Must we wait until AI someday yields the answer to this puzzle? Keep an open mind. Come to Omaha in May， inhale the air， drink the water and say “hi” to Bertie and her good-looking daughters. Who knows? There is no downside， and， in any event， you will have a good time and meet a huge crowd of friendly people. To top things off， we will have available the new 4th edition of Poor Charlie’s Almanack. Pick up a copy. Charlie’s wisdom will improve your life as it has mine. February 24, 2024 Warren E. Buffett Chairman of the Boardlg...
北美站
