Warren Buffett is bullish on America, critical of Wall Street fees in annual shareholder letter

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last updated 27 February 2017

Billionaire Warren Buffett published his annual letter to Berkshire Hathaway shareholders on Saturday, predicting investors "will almost certainly do well" if they stick with a "collection of large, conservatively financed American businesses." The American economy "is virtually certain to be worth far more in the years ahead," he wrote, enthusing about American "economic dynamism":

One word sums up our country’s achievements: miraculous. From a standing start 240 years ago — a span of time less than triple my days on Earth — Americans have combined human ingenuity, a market system, a tide of talented and ambitious immigrants, and the rule of law to deliver abundance beyond any dreams of our forefathers. You need not be an economist to understand how well our system has worked. Just look around you. [Berkshire Hathaway]

The bottom line: When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients. Both large and small investors should stick with low-cost index funds. ... My calculation, admittedly very rough, is that the search by the elite for superior investment advice has caused it, in aggregate, to waste more than $100 billion over the past decade. Figure it out: Even a 1 percent fee on a few trillion dollars adds up. Of course, not every investor who put money in hedge funds ten years ago lagged S&P returns. But I believe my calculation of the aggregate shortfall is conservative. [Berkshire Hathaway]

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Bonnie Kristian was a deputy editor and acting editor-in-chief of TheWeek.com. She is a columnist at Christianity Today and author of Untrustworthy: The Knowledge Crisis Breaking Our Brains, Polluting Our Politics, and Corrupting Christian Community (forthcoming 2022) and A Flexible Faith: Rethinking What It Means to Follow Jesus Today (2018). Her writing has also appeared at Time Magazine, CNN, USA Today, Newsweek, the Los Angeles Times, and The American Conservative, among other outlets.

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