My favorite part of the letter, improbably, is where Buffett explains why the listed operating expenses for Berkshire Hathaway’s Manufacturing, Service and Retailing group do not conform to Generally Accepted Accounting Principles (GAAP). I know, right? It’s just that Buffett’s evident belief that such matters can and should be explained lucidly is touching. And he succeeds. At least while reading the letter, even as unreconstructed an English major as I grasped his point about “the disparate nature of intangible assets: Some truly deplete over time while others never lose value.” He closes the section this way:
“And that ends today’s accounting lecture. Why is no one shouting ‘More, more’?”
You could read any section Buffett’s 24-page letter and come to the same conclusion. It’s approachable and well-researched (and notes where shareholders might obtain further info). Reading it, I felt like Buffett was in the same room explaining it to me simply without insulting my intelligence. The headers help make the document scannable, and each section includes its own summary. Masterfully done.