When they're sold, you pay tax on that.
The new law, greatly touted by President Donald Trump, lowered the tax rate paid by USA corporations from 35 per cent to 21 per cent, allowing many to undertake major new outlays and others to book significant fiscal gains.
In the letter, he added: "2017 was far from standard: A large portion of our gain did not come from anything we accomplished at Berkshire". "The remaining $29 billion was delivered to us in December when Congress rewrote the U.S. Tax Code", Buffett wrote.
"Were we to need the management structure I have just described on an immediate basis, our directors know my recommendations for both posts", he wrote, adding that all candidates now work for or are available to Berkshire. He called the gain "nonetheless real - rest assured of that". And he's found himself at odds with Trump on several policy issues.
Omaha-based legendary investor and Berkshire Hathaway (BRK)'s CEO Warren Buffett has taught his shareholders and the grand public another relevant lesson of value investing by not closing any substantial acquisition in 2017. "As a result, we sometimes have reported substantial realized gains for a period when our portfolio, overall, performed poorly (or the converse)". Berkshire, Buffett wrote, will still occasionally get opportunities to make large purchases at sensible prices. Known for his frugality, Buffett still uses a flip phone.
Buffett also discussed other means to deploy Berkshire's $116-billion cash stake, after saying in the letter he desired one or more "huge" acquisitions of non-insurance businesses. "But Charlie and I sleep well". Referring to Charles Munger, Berkshire's vice chairman, Buffett stated that "both of us believe it is insane to risk what you have and need in order to obtain what you don't". Private business owners don't buy in and out of their family's company every other week, the same attitude should be taken about our own portfolio's investments.
Buffett said Berkshire and its partners have been inundated with offers from companies and individuals who want to help with the health cost project, but it's too early to consider those because the group is still looking to hire an executive to lead the effort.
Buffett loves to talk about insurance, and the 2018 letter was no exception.
"It's really good for Berkshire, no doubt about it", he said.
"My guess at this time is that the insured losses arising from the hurricanes are $100 billion or so".
"Our unparalleled financial strength explains why other (property and casualty) insurers come to Berkshire - and only Berkshire" for reinsurance.
In 2014, Buffett said he plans to put 90 per cent of the money he leaves to his wife, Astrid, when he dies into an S&P 500 index fund, and 10 per cent in government bonds.
Ironically, he also said that investors need to be willing to look "foolish", ignore mob fears and enthusiasms.