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TheStreet Open House

Buffett Speaks: Highlights From His Annual Letter

OMAHA, Neb. -- Investors eagerly await Warren Buffett's letter to Berkshire Hathaway (BRK.A) (BRK.B) shareholders each year for its plain-spoken insight into the billionaire's financial strategy and economic predictions.

Buffett had plenty of good news to discuss Saturday, March 1, as he recounted the performance of his Omaha, Neb., based company with humor and wit. He also dispensed some investing advice.

Here's some of what Buffett had to say:

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Swing Both Ways When It Comes to Investing

Buffett said Berkshire likes to buy businesses outright, but also will invest large sums in stock or partial ownership of a company to increase its profit opportunities.

"Woody Allen stated the general idea when he said: 'The advantage of being bisexual is that it doubles your chances for a date on Saturday night.' Similarly, our appetite for either operating businesses or passive investments doubles our chances of finding sensible uses for our endless gusher of cash."

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Know Your Limitations

"You don't need to be an expert in order to achieve satisfactory investment returns. But if you aren't, you must recognize your limitations and follow a course certain to work reasonably well. Keep things simple and don't swing for the fences. When promised quick profits, respond with a quick 'no.'"

For investors who don't have the skills or time to estimate the value of investments, Buffett recommends making regular purchases of a low-cost stock index fund and resisting the urge to actively trade.

"So ignore the chatter, keep your costs minimal, and invest in stocks as you would in a farm."

___

Longevity

The 83-year-old Buffett devoted a section of his letter to praising Rose Blumkin and her Nebraska Furniture Mart home furnishings store, which Berkshire bought in 1983.

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