Buffett's State of the Biz

The Oracle of Omaha's annual letter to shareholders is remarkable both for its folksy touches (shopping tips for Berkshire Hathaway shareholders who will be visiting Omaha during the annual meeting in May) and its sound financial offerings ("compensation reform will only occur if the largest institutional shareholders – it would only take a few – demand a fresh look at the whole system").

Buffett's letter, released this afternoon, is also remarkable for its lack of hubris and presumption. He describes himself and his Los Angeles-based partner, Charlie Munger, as "extraordinarily lucky. We were born in America; had terrific parents who saw that we got good educations; have enjoyed wonderful families and great health; and came equipped with a "business" gene that allows us to prosper in a manner hugely disproportionate to other people who contribute as much or more to our society’s well-being. Moreover, we have long had jobs that we love, in which we are helped every day in countless ways by talented and cheerful associates. No wonder we tapdance to work."

Anyway, since Berkshire owns the Buffalo News - and since both Buffett and Munger read five newspapers each per day - he commiserated with us newspaper folk on the unhappy state of the industry.

When Charlie and I were young, the newspaper business was as easy a way to make huge returns as existed in America. As one not-too-bright publisher famously said, “I owe my fortune to two great American institutions: monopoly and nepotism.” No paper in a one-paper city, however bad the product or however inept the management, could avoid gushing profits. The industry’s staggering returns could be simply explained. For most of the 20th Century, newspapers were the primary source of information for the American public. Whether the subject was sports, finance, or politics, newspapers reigned supreme. Just as important, their ads were the easiest way to find job opportunities or to learn the price of groceries at your town’s supermarkets.