If there is such a thing as essential reading for a businessperson, Warren Buffett’s annual letters to the shareholders of Berkshire Hathaway would certainly be at the top of the list.
His letter this year, released in late February, is no exception.
Buffett begins by talking about why he will no longer uses Berkshire’s book value per share as a benchmark for valuation, abandoning a long routine of opening his annual letter by talking about that metric.
He then announces big news at Berkshire-that managerial duties of the company have been handed to a pair of his long-time lieutenants. “These moves were overdue,” Buffett wrote. “Berkshire is now far better managed than when I alone was supervising operations.”
Buffett next digs into a unique way to conceptualize Berkshire, which has morphed from an insurance-focused holding company into a sprawling conglomerate that ranks fifth on the S&P 500 by market capitalization.
Finally, before getting into the weeds of Berkshire’s operations, Buffett shares his philosophy on stock buybacks-a timely topic for bank executives and directors given the excess capital on many bank balance sheets.
The letter is available for download on Berkshire’s homepage.
How Everything Changed
by Morgan Housel
Few writers create work of lasting value. But in the world of business, investing and behavioral finance, one such writer today is Morgan Housel.
Housel is a partner at Collaborative Fund, a $250 million venture capital fund that invests in companies focused on accomplishing social good while also making money.
He has a large following on social media, with nearly 87,000 Twitter followers. He travels the world giving presentations, most recently in India and Mexico. And his approach to writing and looking askew at topics has had an unmistakable influence on even traditional giants of financial journalism.
Housel’s magnum opus to date, “How This All Happened,” succinctly and compellingly connects the dots between where the United States economy is right now and where it was seven decades ago, as soldiers returned home from World War II. It is one of the most insightful things you will read this year.
You can find it, along with more of Housel’s work, on Collaborative Fund’s website.
Here’s the Deal
by John B. McCoy
If you want to know what may happen to banking in the future, it’s helpful to know what happened in the past. Much of this ground is covered in the recently published book, “Here’s the Deal,” by John B. McCoy, CEO of Bank One Corp. from 1984 to 1999.
The book tells the story of the McCoy family banking dynasty. It covers three generations of McCoys-the author, his father and grandfather-who spent six and a half decades transforming City National Bank, the third biggest bank in Columbus, Ohio, into Bank One, the sixth biggest bank in America before it was ultimately acquired by JPMorgan Chase & Co. in 2004.
McCoy infuses the book with lessons on growth, innovation and culture, all of which Bank One excelled at with his family at the helm.
McCoy’s book, “Here’s the Deal,” is available on Amazon.com.
FDIC’s 2018 Annual Report
The FDIC’s annual report provides the most comprehensive overview of the banking industry in the United States in any given year. This year’s report is particularly interesting, as it’s the first under new Chairman Jelena McWilliams.
If nothing else, bankers would be well-served to read McWilliams’ three-page “Message from the Chairman,” where she lays out the institution’s priorities in the coming years, including encouraging de novo formations, reducing the compliance burden on community banks and increasing transparency in the regulatory process.
You can access the report on the FDIC’s website.
by the Federal Reserve Bank of St. Louis
There are a handful of indispensable resources that economists and policymakers use on a weekly, if not daily, basis to figure out what’s going on in the world around them. At the top of this list is an online database maintained by the Federal Reserve Bank of St. Louis.
Known affectionately by the acronym FRED-for “Federal Reserve Economic Data”-the website has earned little short of a cult following in the economic community. It aggregates data from 87 sources and makes the data available for free through an easy-to-use interface.
All told, FRED houses 528,000 U.S. and international datasets, covering a wide range of topics, including banking, employment, inflation and demographics. Better yet, in addition to making the data freely available to download, it also presents the data in downloadable charts.
You can access FRED on the website of the Federal Reserve Bank of St. Louis.