BERKSHIRE HATHAWAY INC.
Berkshire海瑟崴股份有限公司
To the Shareholders of Berkshire Hathaway Inc.:
致Berkshire公司全體股東:
You may remember the wildly upbeat message of last year’s report:
nothing much was in the works but our experience had been that
something big popped up occasionally. This carefully-crafted corporate
strategy paid off in 1985. Later sections of this report discuss (a) our
purchase of a major position in Capital Cities/ABC, (b) our acquisition of
Scott & Fetzer, (c) our entry into a large, extended term participation in the
insurance business of Fireman’s Fund, and (d) our sale of our stock in
General Foods.
各位可能還記得去年年報最後所提到的爆炸性消息，平時在表面上我們雖然沒有什麼
動作，但經驗顯示偶爾也會有一些大卡司出現，這種低調的企業策略終於在1985年
有了結果，在今年報告的後半部，我們將會討論到(a)在資本城/ABC的重大投資部位
(b們對Scott & Fetzer公司的購併(c)與消防人員保險基金的合作計畫(d)我們出脫通
用食品的持股部位。
Our gain in net worth during the year was $613.6 million, or 48.2%. It
is fitting that the visit of Halley’s Comet coincided with this percentage gain:
neither will be seen again in my lifetime. Our gain in per-share book value
over the last twenty-one years (that is, since present management took
over) has been from $19.46 to $1643.71, or 23.2% compounded annually,
another percentage that will not be repeated.
去年Berkshire的淨值增加了六億一千萬美金，約當增加48.2%，這比率就好比是哈
雷慧星造訪一般，在我這輩子中大概再也看不到了，二十一年來我們每股淨值從19.46
美元增加到1,643.71美元，約為23.2%年複合成長率，這又是一項不可能再重現的
比率。
Two factors make anything approaching this rate of gain unachievable
in the future. One factor probably transitory - is a stock market that offers
very little opportunity compared to the markets that prevailed throughout
much of the 1964-1984 period. Today we cannot find
significantly-undervalued equities to purchase for our insurance company
portfolios. The current situation is 180 degrees removed from that
existing about a decade ago, when the only question was which bargain to
choose.
有兩個因素讓這種比率在未來難以持續，一種因素屬於暫時性-即與過去二十年相
較，現在股市中缺乏合適的投資機會，如今我們已無法為我們的保險事業投資組合找
到價值低估的股票，這種情況與十年前有180度的轉變，當時惟一的問題是該挑那一
個便宜貨。
This change in the market also has negative implications for our
present portfolio. In our 1974 annual report I could say: “We consider
several of our major holdings to have great potential for significantly
increased values in future years.” I can’t say that now. It’s true that our
insurance companies currently hold major positions in companies with
exceptional underlying economics and outstanding managements, just as
they did in 1974. But current market prices generously appraise these
attributes, whereas they were ignored in 1974. Today’s valuations mean
that our insurance companies have no chance for future portfolio gains on
the scale of those achieved in the past.
市場的轉變也對我們現有的投資組合產生不利的影響，在1974年的年報中，我可以
說「我們認為在投資組合中有幾支重要個股具有大幅成長的潛力」，但現在這樣的話
我們卻說不出口，雖然我們保險公司的主要投資組合中，有許多公司如同過去一樣擁
有優秀經營團隊以及競爭優勢，但目前市場上的股價已充份反應這項特點，這代表今
後我們保險公司的投資績效再也無法像過去那樣優異。
The second negative factor, far more telling, is our size. Our equity
capital is more than twenty times what it was only ten years ago. And an
iron law of business is that growth eventually dampens exceptional
economics. just look at the records of high-return companies once they
have amassed even $1 billion of equity capital. None that I know of has
managed subsequently, over a ten-year period, to keep on earning 20% or
more on equity while reinvesting all or substantially all of its earnings.
Instead, to sustain their high returns, such companies have needed to shed
a lot of capital by way of either dividends or repurchases of stock. Their
shareholders would have been far better off if all earnings could have been
reinvested at the fat returns earned by these exceptional businesses. But
the companies simply couldn’t turn up enough high-return opportunities to
make that possible.
第二項負面因素更顯而易見，那就是我們的規模，目前我們在股市投入的資金是十年
前的20倍，而市場的鐵則是成長終將拖累競爭的優勢，看看那些高報酬率的公司，
一旦當他們掌控的資金超過十億美金，沒有一家在往後的十年能夠靠再投資維持20%
以上的報酬率，頂多僅能依賴大量配息或買回自家股份來維持，理論上轉投資能為股
東帶來更大的利益，但實際上公司就是很難找到理想的投資機會。
Their problem is our problem. Last year I told you that we needed
profits of $3.9 billion over the ten years then coming up to earn 15%
annually. The comparable figure for the ten years now ahead is $5.7
billion, a 48% increase that corresponds - as it must mathematically - to
the growth in our capital base during 1985. (Here’s a little perspective:
leaving aside oil companies, only about 15 U.S. businesses have managed
to earn over $5.7 billion during the past ten years.)
而我們的問題就跟他們一樣，去年我告訴各位往後十年我們大約要賺到39億美金，
才能有15%的年平均成長，今年同樣的門檻將提高到57億美金(根據統計:扣除石油
公司不算，只有15家公司在過去十年能夠賺到57億)。
Charlie Munger, my partner in managing Berkshire, and I are
reasonably optimistic about Berkshire’s ability to earn returns superior to
those earned by corporate America generally, and you will benefit from the
company’s retention of all earnings as long as those returns are
forthcoming. We have several things going for us: (1) we don’t have to
worry about quarterly or annual figures but, instead, can focus on whatever
actions will maximize long-term value; (2) we can expand the business into
any areas that make sense - our scope is not circumscribed by history,
structure, or concept; and (3) we love our work. All of these help. Even so,
we will also need a full measure of good fortune to average our hoped-for
15% - far more good fortune than was required for our past 23.2%.
我跟Charlie-經營Berkshire事業的合夥人，對於Berkshire能夠保持比一般美國企
業更佳的獲利能力持樂觀的態度，而只要獲利持續身為股東的你也能保證因此受惠，
我們擁有幾項優勢，(1)我們不必去擔心每季或每年的帳面獲利數字，相反地只要將注
意力集中在使長遠的價值極大化即可(2)我們可以將事業版圖擴大到任何有利可圖的
產業之上，而且完全不受經驗、組織或觀念所限(3)我們熱愛我們的工作，這些都是關
鍵因素，但即便如此我們仍必須要大賺一筆(比過去達到23.2%的那些投資還要更多)
才有辦法使我們的平均報酬率維持在15%的水準。
We need to mention one further item in the investment equation that
could affect recent purchasers of our stock. Historically, Berkshire shares
have sold modestly below intrinsic business value. With the price there,
purchasers could be certain (as long as they did not experience a widening
of this discount) that their personal investment experience would at least
equal the financial experience of the business. But recently the discount
has disappeared, and occasionally a modest premium has prevailed.
另外我還必須特別提到一項投資項目，是與最近購買本公司股票的投資人有密切相關
的，過去一直以來，Berkshire的股票的市價約略低於其實質價值，在這樣的水準下，
投資人可以確定(只要折價的幅度不再繼續擴大)其個人的投資經驗與該公司本身的表
現將維持一致，但到了最近，這種折價的狀況卻不再，有時甚至還發生溢價。
The elimination of the discount means that Berkshire’s market value
increased even faster than business value (which, itself, grew at a pleasing
pace). That was good news for any owner holding while that move took
place, but it is bad news for the new or prospective owner. If the financial
experience of new owners of Berkshire is merely to match the future
financial experience of the company, any premium of market value over
intrinsic business value that they pay must be maintained.
折價情況的消失代表著Berkshire的市值增加的幅度高於其實質價值增長的速度(雖
然後者的表現也不錯)，當然這對於在此現象發生前便持有股份的人算是好消息，但對
於新進者，或即將加入者卻是不利的，而若想要使後者的投資經驗與公司的表現一致，
則這種溢價現象就必須一直維持。
Management cannot determine market prices, although it can, by its
disclosures and policies, encourage rational behavior by market participants.
My own preference, as perhaps you’d guess, is for a market price that
consistently approximates business value. Given that relationship, all
owners prosper precisely as the business prospers during their period of
ownership. Wild swings in market prices far above and below business
value do not change the final gains for owners in aggregate; in the end,
investor gains must equal business gains. But long periods of substantial
undervaluation and/or overvaluation will cause the gains of the business to
be inequitably distributed among various owners, with the investment
result of any given owner largely depending upon how lucky, shrewd, or
foolish he happens to be.
然而管理當局卻無法控制股價，當然他可對外公佈公司政策與現況，促使市場參與者
的行為理性一點，然而我個人偏好(可能你也猜得到)期望公司股價的表現儘量與其企
業本身價值接近，惟有維持這種關係，所有公司的股東在其擁有所有權的期間皆能與
公司共存共榮，股價劇幅的波動並無法使整體的股東受惠，到頭來所有股東的獲利總
和必定與公司的獲利一致，但公司的股價長時間偏離實質價值(不管是高估或低估)都
將使得企業的獲利不平均的分配到各個股東之間，而其結果好壞完全取決於每個股東
本身的運氣與EQ。
Over the long term there has been a more consistent relationship
between Berkshire’s market value and business value than has existed for
any other publicly-traded equity with which I am familiar. This is a tribute
to you. Because you have been rational, interested, and
investment-oriented, the market price for Berkshire stock has almost
always been sensible. This unusual result has been achieved by a
shareholder group with unusual demographics: virtually all of our
shareholders are individuals, not institutions. No other public company
our size can claim the same.
長久以來，Berkshire本身的市場價值與實質價值一直存在著一種穩定的關係，這是
在所有我熟悉的上市公司中少見的，我想這都要歸功於所有Berkshire的股東，因為
大家都很理性、專注、以投資為導向，所以Berkshire的股價一直都很合理，這不凡
的結果是靠一群不凡的股東來完成，幾乎我們所有的股東都是個人而非法人機構，沒
有一家上市公司能夠像我們一樣。
You might think that institutions, with their large staffs of highly-paid
and experienced investment professionals, would be a force for stability
and reason in financial markets. They are not: stocks heavily owned and
constantly monitored by institutions have often been among the most
inappropriately valued.
或許你會認為法人機構，擁有高薪的職員與經驗豐富的專業人員會成為金融市場穩定
與理性的力量，那你就大錯特錯了，那些法人持股比重較重且持續受關注的的股票，
其股價通常都不合理。
Ben Graham told a story 40 years ago that illustrates why investment
professionals behave as they do: An oil prospector, moving to his heavenly
reward, was met by St. Peter with bad news. “You’re qualified for
residence”, said St. Peter, “but, as you can see, the compound reserved for
oil men is packed. There’s no way to squeeze you in.” After thinking a
moment, the prospector asked if he might say just four words to the
present occupants. That seemed harmless to St. Peter, so the prospector
cupped his hands and yelled, “Oil discovered in hell.” Immediately the gate
to the compound opened and all of the oil men marched out to head for the
nether regions. Impressed, St. Peter invited the prospector to move in and
make himself comfortable. The prospector paused. “No,” he said, “I think
I’ll go along with the rest of the boys. There might be some truth to that
rumor after all.”
我的老師葛拉罕四十年前曾講過一個故事，說明為何專業的投資人員會是如此，一個
老石油開發商蒙主寵召，在天堂的門口遇到了聖彼得，聖彼得告訴他一個好消息跟一
個壞消息，好消息是他有資格進入天堂，但壞消息卻是天堂裏已沒有位置可以容納額
外的石油開發商，老石油開發商想了一下，跟聖彼得說只要讓他跟現有住戶講一句話
就好，聖彼得覺得沒什麼大礙就答應了，只見老石油開發商對內大喊:「地獄裏發現石
油了」，不一會兒，只見天堂的門打開，所有的石油開發商爭先恐後地往地獄奔去，
聖彼得大開眼界地對老開發商說:「厲害!厲害!現在你可以進去了」，但只見老開發商
頓了一下後，說到:「不! 我還是跟他們一起去比較妥當，傳言有可能是真的。」
Sources of Reported Earnings
盈餘報告
The table on the next page shows the major sources of Berkshire’s
reported earnings. These numbers, along with far more detailed
sub-segment numbers, are the ones that Charlie and I focus upon. We do
not find consolidated figures an aid in either managing or evaluating
Berkshire and, in fact, never prepare them for internal use.
下表顯示Berkshire帳列盈餘的主要來源，這些數字加上一些更詳細的各部門資訊是
Charlie跟我注意的重點，反而我們不認為合併的總數對於管理與評量Berkshire有
什麼幫助，事實上我們內部本身從來不會用到。
Segment information is equally essential for investors wanting to know
what is going on in a multi-line business. Corporate managers always
have insisted upon such information before making acquisition decisions
but, until a few years ago, seldom made it available to investors faced with
acquisition and disposition decisions of their own. Instead, when owners
wishing to understand the economic realities of their business asked for
data, managers usually gave them a
we-can’t-tell-you-what-is-going-on-because-it-would-hurt-the-compan
y answer. Ultimately the SEC ordered disclosure of segment data and
management began supplying real answers. The change in their behavior
recalls an insight of Al Capone: “You can get much further with a kind word
and a gun than you can with a kind word alone.”
部門資訊對於想要了解一家多角化公司的投資人來說相當重要，企業經理人在購併一
家公司時通常也會堅持這一點，但最近這幾年對於要決定買進賣出股權的投資人而
言，卻要不到類似的資訊，相反的當股東想要了解公司的經營情況而跟管理階層要這
樣的資訊時，他們通常以可能危害公司利益來回應，直到最後證券主管機關下令公司
須揭露時，大家才心甘情願一五一十的報告出來，這種態度的轉變讓我想起Al
Capone的比喻:「拿著一隻槍好好的說」的效果，會比光是「好好的說」要來得好的
多。
In the table, amortization of Goodwill is not charged against the specific
businesses but, for reasons outlined in the Appendix to my letter in the
1983 annual report, is aggregated as a separate item. (A compendium of
the 1977-1984 letters is available upon request.) In the Business Segment
Data and Management’s Discussion sections on pages 39-41 and 49-55,
much additional information regarding our businesses is provided,
including Goodwill and Goodwill Amortization figures for each of the
segments. I urge you to read those sections as well as Charlie Munger’s
letter to Wesco shareholders, which starts on page 56.
下表商譽的攤銷以單一欄位另行列示(理由詳我1983年的附錄)，同時我也強力推薦
各位看看查理每年寫給Wesco股東的年報，裡頭有該公司旗下事業的詳細介紹。
(000s omitted)
-----------------------------------------
Berkshire's Share
of Net Earnings
(after taxes and
Pre-Tax Earnings minority interests)
------------------- -------------------
1985 1984 1985 1984
-------- -------- -------- --------
Operating Earnings:
Insurance Group:
Underwriting ................ $(44,230) $(48,060) $(23,569) $(25,955)
Net Investment Income ....... 95,217 68,903 79,716 62,059
Associated Retail Stores ...... 270 (1,072) 134 (579)
Blue Chip Stamps .............. 5,763 (1,843) 2,813 (899)
Buffalo News .................. 29,921 27,328 14,580 13,317
Mutual Savings and Loan ....... 2,622 1,456 4,016 3,151
Nebraska Furniture Mart ....... 12,686 14,511 5,181 5,917
Precision Steel ............... 3,896 4,092 1,477 1,696
See’s Candies ................. 28,989 26,644 14,558 13,380
Textiles ...................... (2,395) 418 (1,324) 226
Wesco Financial ............... 9,500 9,777 4,191 4,828
Amortization of Goodwill ...... (1,475) (1,434) (1,475) (1,434)
Interest on Debt .............. (14,415) (14,734) (7,288) (7,452)
Shareholder-Designated
Contributions .............. (4,006) (3,179) (2,164) (1,716)
Other ......................... 3,106 4,932 2,102 3,475
-------- -------- -------- --------
Operating Earnings .............. 125,449 87,739 92,948 70,014
Special General Foods Distribution 4,127 8,111 3,779 7,294
Special Washington Post
Distribution ................. 14,877 --- 13,851 ---
Sales of Securities ............. 468,903 104,699 325,237 71,587
-------- -------- -------- --------
Total Earnings - all entities ... $613,356 $200,549 $435,815 $148,895
======== ======== ======== ========
Our 1985 results include unusually large earnings from the sale of
securities. This fact, in itself, does not mean that we had a particularly
good year (though, of course, we did). Security profits in a given year bear
similarities to a college graduation ceremony in which the knowledge
gained over four years is recognized on a day when nothing further is
learned. We may hold a stock for a decade or more, and during that period
it may grow quite consistently in both business and market value. In the
year in which we finally sell it there may be no increase in value, or there
may even be a decrease. But all growth in value since purchase will be
reflected in the accounting earnings of the year of sale. (If the stock owned
is in our insurance subsidiaries, however, any gain or loss in market value
will be reflected in net worth annually.) Thus, reported capital gains or
losses in any given year are meaningless as a measure of how well we have
done in the current year.
雖然在1985年的盈餘中，出售證券收益的比例特別高，但事實上並不代表今年就是
豐收的一年(雖然事實上的確是)，出售證券收益就好像大學生的畢業典禮一樣，四年
來所學的知識在一朝正式被認可，而事實上在當天你可能一點長進都沒有，我們可能
持有一支股票長達十年之久，而在這期間其價值與股價可能以穩定的步調增長，反而
在我們真正出售的那一年其價值可能一點也沒變，或甚至是減少，不過所有的帳面利
益卻全反應在出售的那一年，(但是如果這支股票是由我們的保險子公司持有，其市價
的變動將會按期反應在帳面之上) ，總而言之，帳列出售損益是沒有什麼意義的，它
根本無法反應我們在當年度的實際表現。
A large portion of the realized gain in 1985 ($338 million pre-tax out
of a total of $488 million) came about through the sale of our General
Foods shares. We held most of these shares since 1980, when we had
purchased them at a price far below what we felt was their per/share
business value. Year by year, the managerial efforts of Jim Ferguson and
Phil Smith substantially increased General Foods’ business value and, last
fall, Philip Morris made an offer for the company that reflected the increase.
We thus benefited from four factors: a bargain purchase price, a business
with fine underlying economics, an able management concentrating on the
interests of shareholders, and a buyer willing to pay full business value.
While that last factor is the only one that produces reported earnings, we
consider identification of the first three to be the key to building value for
Berkshire shareholders. In selecting common stocks, we devote our
attention to attractive purchases, not to the possibility of attractive sales.
1985年出售證券收益的金額達到4.88億美元，其中大部份(約3.4億美金)是緣於我
們出售通用食品的股票，我們從1980年開始便持有這些股份，當初以遠低於我們認
為合理的每股企業價值價位買進，年復一年，Jim與Phil等管理階層的優異表現大幅
提升該公司的價值，一直到去年秋天，Philip Morris對該公司提出購併的要求，使其
價值一夕之間顯現出來，我們因四項因素而大大受惠(1)便宜的買進價格(2)一家優秀的
公司(3)一群能幹且注重股東權益的管理階層(4)願意出高價的買主，雖然最後一項因素
是這項獲利能夠一舉浮現的關鍵因素，但我們卻認為前三項才是能為Berkshire股東
創造最大利益的根本原因。在選擇股票時，我們專注於如何漂亮的買進，而完全不考
慮逢高出脫的可能性。
We have again reported substantial income from special distributions,
this year from Washington Post and General Foods. (The General Foods
transactions obviously took place well before the Philip Morris offer.)
Distributions of this kind occur when we sell a portion of our shares in a
company back to it simultaneously with its purchase of shares from other
shareholders. The number of shares we sell is contractually set so as to
leave our percentage ownership in the company precisely the same after the
sale as before. Such a transaction is quite properly regarded by the IRS as
substantially equivalent to a dividend since we, as a shareholder, receive
cash while maintaining an unchanged ownership interest. This tax
treatment benefits us because corporate taxpayers, unlike individual
taxpayers, incur much lower taxes on dividend income than on income
from long-term capital gains. (This difference will be widened further if the
House-passed tax bill becomes law: under its provisions, capital gains
realized by corporations will be taxed at the same rate as ordinary income.)
However, accounting rules are unclear as to proper treatment for
shareholder reporting. To conform with last year’s treatment, we have
shown these transactions as capital gains.
今年我們又再度從被投資公司收到特別的股利，這次是華盛頓郵報以及通用食品，(通
用的這筆交易是發生在Philip Morris提出併購要求之前) ，這種特別股利的發生係由
於公司在買回我們手中的股份的同時也從其他股東那裏買回等比例的股份，合約中並
明訂我們在該公司所佔的股權比例在買賣交易的前後維持不變，這類交易被IRS認定
為類似股利的發放，因為身為一位股東即使在收到現金之後，在該公司的股權比例仍
維持不變。這對我們來說較為有利，因為美國稅法規定法人納稅義務人(不像個人) ，
對於股利的所得稅遠低於長期投資的資本利得稅(若國會通過的法案正式成為法律，其
中的差異將會再擴大，相關條款規定企業實現的資本利得所適用稅率與一般所得相
同) ，然而會計原則對於這類交易在財務報表上應如何處理卻無統一看法，為與去年
作法一致，在財務上我們仍將之視為資本利得。
Though we have not sought out such transactions, we have agreed to
them on several occasions when managements initiated the idea. In each
case we have felt that non-selling shareholders (all of whom had an
opportunity to sell at the same price we received) benefited because the
companies made their repurchases at prices below intrinsic business value.
The tax advantages we receive and our wish to cooperate with
managements that are increasing values for all shareholders have
sometimes led us to sell - but only to the extent that our proportional
share of the business was undiminished.
雖然我們不刻意促成這類交易案，但當管理當局主動提出這樣的想法時，我們通常站
在支持的立場，雖然每次我們都覺得選擇不賣的股東(當然大家都有權利以我們收到的
價格出售)將因公司以低於實質價值的價格買回而受惠，但稅負上的優惠以及我們寄望
與增進所有股東權益的管理階層維持合作的態度，使得我們不得不接受股份賣回，但
只有在我們的持股比例未減損的大前提之下進行。
At this point we usually turn to a discussion of some of our major
business units. Before doing so, however, we should first look at a failure
at one of our smaller businesses. Our Vice Chairman, Charlie Munger, has
always emphasized the study of mistakes rather than successes, both in
business and other aspects of life. He does so in the spirit of the man who
said: “All I want to know is where I’m going to die so I’ll never go there.”
You’ll immediately see why we make a good team: Charlie likes to study
errors and I have generated ample material for him, particularly in our
textile and insurance businesses.
通常到這裏接下來要談的是我們的主要事業經營概況，但在開始之前，先看看我們所
屬事業的一項失敗，我們的副主席Charlie Munger，總是強調研究事業與人生各方
面的失敗要比研究成功要重要的多，他這樣的精神正如有人說:「我總是想要知道以後
我會怎麼死，然後儘量去避免這件事發生。」而你可能也看得出，我們兩個可說是合
作無間，他喜歡研究錯誤，而我總是能夠確保他有足夠的題材去作研究，尤其是在紡
織與保險事業方面。
Shutdown of Textile Business
關閉紡織事業
In July we decided to close our textile operation, and by yearend this
unpleasant job was largely completed. The history of this business is
instructive.
七月份我們決定關閉在紡織事業的營運，而到年底之前這項不太愉快的工作也大致告
一段落，回顧紡織產業的歷史深具啟發性。
When Buffett Partnership, Ltd., an investment partnership of which I
was general partner, bought control of Berkshire Hathaway 21 years ago, it
had an accounting net worth of $22 million, all devoted to the textile
business. The company’s intrinsic business value, however, was
considerably less because the textile assets were unable to earn returns
commensurate with their accounting value. Indeed, during the previous
nine years (the period in which Berkshire and Hathaway operated as a
merged company) aggregate sales of $530 million had produced an
aggregate loss of $10 million. Profits had been reported from time to time
but the net effect was always one step forward, two steps back.
當巴菲特合夥事業(當時由我本人擔任該合夥事業的執行合夥人)在二十一年前買下
Berkshire紡織公司的控制權時，公司的帳面價值約為二仟二百萬美元，全部集中在
紡織事業，然而當時由於公司無法賺得與帳面價值相稱的報酬，其實質價值其實遠低
於此數，事實上，在此之前九年，(即Berkshire與Hathaway兩家合併經營期間)合
計總營收達五億多美元，但卻發生一仟萬美金的虧損，雖然時有獲利，但總是進一步、
退兩步。
At the time we made our purchase, southern textile plants - largely
non-union - were believed to have an important competitive advantage.
Most northern textile operations had closed and many people thought we
would liquidate our business as well.
在我們買下該公司的當時，南方的紡織工廠由於不具工會組織而被公認為較具競爭優
勢，大部份北方的工廠皆已結束營運，而當時許多人認為我們也應該將該公司清算。
We felt, however, that the business would be run much better by a
long-time employee whom. we immediately selected to be president, Ken
Chace. In this respect we were 100% correct: Ken and his recent successor,
Garry Morrison, have been excellent managers, every bit the equal of
managers at our more profitable businesses.
然而我們覺得公司若能有一位長期穩定的管理者，營運或可改善，所以當時我們馬上
選中Ken Chase接手，有關這點我們倒是作對了，Ken跟後來接替他的Garry作得
非常好，一點也不輸給我們其他獲利更好的事業經營者。
In early 1967 cash generated by the textile operation was used to fund
our entry into insurance via the purchase of National Indemnity Company.
Some of the money came from earnings and some from reduced investment
in textile inventories, receivables, and fixed assets. This pullback proved
wise: although much improved by Ken’s management, the textile business
never became a good earner, not even in cyclical upturns.
在1967年初我們利用紡織事業產生的大量現金進軍保險事業買下National
Indemnity，一部份資金來自於盈餘，一部份則來自於減少紡織事業的存貨、應收帳
款與固定資產的投資，這次撤退的決策事後證明完全正確，即使由於Ken的管理營運
大為改善，但紡織事業從未賺到什麼錢，即使是在景氣高峰的時候也一樣。
Further diversification for Berkshire followed, and gradually the textile
operation’s depressing effect on our overall return diminished as the
business became a progressively smaller portion of the corporation. We
remained in the business for reasons that I stated in the 1978 annual report
(and summarized at other times also): “(1) our textile businesses are very
important employers in their communities, (2) management has been
straightforward in reporting on problems and energetic in attacking them,
(3) labor has been cooperative and understanding in facing our common
problems, and (4) the business should average modest cash returns relative
to investment.” I further said, “As long as these conditions prevail - and we
expect that they will - we intend to continue to support our textile business
despite more attractive alternative uses for capital.”
Berkshire後來持續多角化，使得紡織業不佳的績效對於公司整體的影響越來越輕
微，而我們之所以繼續留在紡織業的原因，我早在1978年便曾提過(後來也曾陸續提
到)：(1)該公司為當地非常重要的雇主；(2)管理當局坦誠面對困境並努力解決問題；
(3)勞工體認困境並極力配合；(4)尚能產生穩定現金收入。後來我還強調只要這些情況
持續不變(我們也預期不會變)，即使有更多更好的投資機會，我們仍會支持紡織事業
堅持下去。
It turned out that I was very wrong about (4). Though 1979 was
moderately profitable, the business thereafter consumed major amounts of
cash. By mid-1985 it became clear, even to me, that this condition was
almost sure to continue. Could we have found a buyer who would continue
operations, I would have certainly preferred to sell the business rather than
liquidate it, even if that meant somewhat lower proceeds for us. But the
economics that were finally obvious to me were also obvious to others, and
interest was nil.
但事實證明第四點是錯的，雖然隔年1979年紡織業的獲利狀況還不錯，但之後卻耗
用大量的資金，直到1985年中情況變得再明顯不過，若我們能夠找到合適的買主，
即使賤價出售我們也不願意看到該事業被清算，但我們清楚這點，表示別人更清楚，
沒有人會有興趣。
I won’t close down businesses of sub-normal profitability merely to
add a fraction of a point to our corporate rate of return. However, I also
feel it inappropriate for even an exceptionally profitable company to fund
an operation once it appears to have unending losses in prospect. Adam
Smith would disagree with my first proposition, and Karl Marx would
disagree with my second; the middle ground is the only position that leaves
me comfortable.
我們不會因為想要將企業的獲利數字增加一個百分點，便結束比較不賺錢的事業，但
同時我們也覺得只因公司非常賺錢便無條件去支持一項完全不具前景的投資的作法更
不妥當，亞當史密斯一定不贊同我第一項的看法，然而卡爾馬克斯卻又會反對我第二
項見解，採行中庸之道是惟一能讓我感到安心的作法。
I should reemphasize that Ken and Garry have been resourceful,
energetic and imaginative in attempting to make our textile operation a
success. Trying to achieve sustainable profitability, they reworked product
lines, machinery configurations and distribution arrangements. We also
made a major acquisition, Waumbec Mills, with the expectation of
important synergy (a term widely used in business to explain an acquisition
that otherwise makes no sense). But in the end nothing worked and I
should be faulted for not quitting sooner. A recent Business Week article
stated that 250 textile mills have closed since 1980. Their owners were
not privy to any information that was unknown to me; they simply
processed it more objectively. I ignored Comte’s advice - “the intellect
should be the servant of the heart, but not its slave” - and believed what I
preferred to believe.
我必須還要再強調一次，Ken與Garry兩個人都極具幹勁與創意，努力地想要使我們
的紡織事業經營成功，為了使公司微持穩定獲利，他們重新規劃產品線、生產流程與
通路商配置，同時也大手筆併購了同業Waumbec，期望能夠發揮合併綜效(這是一個
企業合併廣泛應用的名詞，用來解釋一些想不出有其他任何意義的購併案) ，但結果
到最後一點用也沒有，而這一切都因我沒有及早結束這項事業，最近商業週刊有一篇
文章提到1980年以來一共有250家紡織業結束營運，這些工廠的老闆所收到的所有
資訊我全都明瞭，只是他們能夠更客觀地看待事情，我忽略了Comte的建議:「智者
應該是心靈的僕人，而非它的奴隸」，相信你所相信的。
The domestic textile industry operates in a commodity business,
competing in a world market in which substantial excess capacity exists.
Much of the trouble we experienced was attributable, both directly and
indirectly, to competition from foreign countries whose workers are paid a
small fraction of the U.S. minimum wage. But that in no way means that
our labor force deserves any blame for our closing. In fact, in comparison
with employees of American industry generally, our workers were poorly
paid, as has been the case throughout the textile business. In contract
negotiations, union leaders and members were sensitive to our
disadvantageous cost position and did not push for unrealistic wage
increases or unproductive work practices. To the contrary, they tried just
as hard as we did to keep us competitive. Even during our liquidation
period they performed superbly. (Ironically, we would have been better off
financially if our union had behaved unreasonably some years ago; we then
would have recognized the impossible future that we faced, promptly
closed down, and avoided significant future losses.)
國內的紡織業所面臨的是全球產能過剩的商品化產品的激烈競爭，我們所面臨的問題
主要歸因於直接或者是間接來自於國外低勞力成本的競爭。但關廠絕對不是本國勞工
的錯，事實上比起美國其他產業的勞工來說，紡織業的員工薪資水準低得可憐，在勞
資協議時，工會的幹部與成員充份體認到整個產業所面臨的困境，從未作出不合理的
調薪要求或不符生產效益的訴求，相反地，大家都努力的想要維持競爭力，而即使到
了公司最後清算的時刻，他們仍極力配合，而諷刺的是，要是工會表現的過份一點，
使我們早一點體認到這行不具前景而立刻關廠，或許我們的損失可能會少一點。
Over the years, we had the option of making large capital expenditures
in the textile operation that would have allowed us to somewhat reduce
variable costs. Each proposal to do so looked like an immediate winner.
Measured by standard return-on-investment tests, in fact, these proposals
usually promised greater economic benefits than would have resulted from
comparable expenditures in our highly-profitable candy and newspaper
businesses.
長久以來，我們一再面臨是否該投入大量的資本支出以降低變動成本的抉擇，每次提
出的企劃案看起來都穩賺不賠，以標準的投資報酬率來看，甚至比起我們高獲利的糖
果與新聞事業還好的許多。
But the promised benefits from these textile investments were illusory.
Many of our competitors, both domestic and foreign, were stepping up to
the same kind of expenditures and, once enough companies did so, their
reduced costs became the baseline for reduced prices industrywide.
Viewed individually, each company’s capital investment decision appeared
cost-effective and rational; viewed collectively, the decisions neutralized
each other and were irrational (just as happens when each person watching
a parade decides he can see a little better if he stands on tiptoes). After
each round of investment, all the players had more money in the game and
returns remained anemic.
但這預期的報酬最後都證明只是一種幻象，因為我們許多競爭者，不論是國內或者是
國外，全都勇於投入相同的資本支出，使得降低的成本被迫全數反應在售價之上，在
個別公司看來，每家公司的資本支出計劃看起來都再合理不過，但若整體觀之，其效
益卻完全被抵銷掉而變得很不合理，就好比每個去看遊行隊伍的觀眾，以為自己只要
蹎一蹎腳就可以看得更清楚一樣，每多投入一回合，所有的競爭者投注的金額就越高，
但投資報酬卻每況愈下。
Thus, we faced a miserable choice: huge capital investment would
have helped to keep our textile business alive, but would have left us with
terrible returns on ever-growing amounts of capital. After the investment,
moreover, the foreign competition would still have retained a major,
continuing advantage in labor costs. A refusal to invest, however, would
make us increasingly non-competitive, even measured against domestic
textile manufacturers. I always thought myself in the position described by
Woody Allen in one of his movies: “More than any other time in history,
mankind faces a crossroads. One path leads to despair and utter
hopelessness, the other to total extinction. Let us pray we have the
wisdom to choose correctly.”
最後的結果是我們面對一個悲慘的抉擇，大筆的資本支出雖然可以令我們的紡織事業
得以存活，但其相對的投資報酬卻是少得可憐，每次投入一筆資金，依然還是要面對
國外低成本的強力競爭，若不再繼續投資，將使我們更不具競爭力，即使是與國內同
業相比，我總覺得自己就好像伍迪愛倫在他某一部電影中所形容的:「比起歷史上的任
何一刻，此時人類面臨抉擇的路口，一條通往絕望的深淵，而另一條則通往毀滅，請
大家一起祈禱讓我們有足夠的智慧去作正確的決定」。
For an understanding of how the to-invest-or-not-to-invest dilemma
plays out in a commodity business, it is instructive to look at Burlington
Industries, by far the largest U.S. textile company both 21 years ago and
now. In 1964 Burlington had sales of $1.2 billion against our $50 million.
It had strengths in both distribution and production that we could never
hope to match and also, of course, had an earnings record far superior to
ours. Its stock sold at 60 at the end of 1964; ours was 13.
想要對在商品化產業是否應繼續投資作決定，看看Burlington工業-20年來全美最
大的紡織公司，1964年該公司的營業額約為12億美元(Berkshire則約5,000萬)，
他們在行銷與生產上擁有我們無法比擬的優勢，當然盈餘數字也比我們要好看得多，
當時它的股價為60塊(Berkshire則約13塊) 。
Burlington made a decision to stick to the textile business, and in
1985 had sales of about $2.8 billion. During the 1964-85 period, the
company made capital expenditures of about $3 billion, far more than any
other U.S. textile company and more than $200-per-share on that $60
stock. A very large part of the expenditures, I am sure, was devoted to
cost improvement and expansion. Given Burlington’s basic commitment to
stay in textiles, I would also surmise that the company’s capital decisions
were quite rational.
之後Burlington決定固守紡織本業，直到1985年營業額達28億美金，在此20年
間該公司總計投入約30億美金的資本支出，這數字遠比其它同業高出許多，換算每
股投入約200美元，而我相信大部份的花費都用於降低成本與擴張之上，就該公司決
定固守本業的決定而言，這種投資決策絕對是合理的。
Nevertheless, Burlington has lost sales volume in real dollars and has
far lower returns on sales and equity now than 20 years ago. Split 2-for-1
in 1965, the stock now sells at 34 -- on an adjusted basis, just a little over
its $60 price in 1964. Meanwhile, the CPI has more than tripled.
Therefore, each share commands about one-third the purchasing power it
did at the end of 1964. Regular dividends have been paid but they, too,
have shrunk significantly in purchasing power.
但儘管如此，比起20年前該公司現在的實際銷售數字與投資報酬卻是大不如前，該
公司現在的股價是34元，若考慮1965年每二股配一股計算在內，大約略高於當年
的60元，而在此同時，消費者物價指數卻早已增加三倍，因此每股大約僅剩下當初
三分之一的購買力，雖然每年有固定的盈餘發放，但其購買力同樣受到嚴重的減損。
This devastating outcome for the shareholders indicates what can
happen when much brain power and energy are applied to a faulty premise.
The situation is suggestive of Samuel Johnson’s horse: “A horse that can
count to ten is a remarkable horse - not a remarkable mathematician.”
Likewise, a textile company that allocates capital brilliantly within its
industry is a remarkable textile company - but not a remarkable business.
這個對股東來說最悲慘的結局，說明了花費大量人力物力在錯誤的產業所可能導致的
後果，這種情況有如山謬傑克森的那匹馬，一隻能數到10的馬是隻了不起的馬，卻
不是了不起的數學家，同樣的一家能夠合理運用資金的紡織公司是一家了不起的紡織
公司，但卻不是什麼了不起的企業。
My conclusion from my own experiences and from much observation
of other businesses is that a good managerial record (measured by
economic returns) is far more a function of what business boat you get into
than it is of how effectively you row (though intelligence and effort help
considerably, of course, in any business, good or bad). Some years ago I
wrote: “When a management with a reputation for brilliance tackles a
business with a reputation for poor fundamental economics, it is the
reputation of the business that remains intact.” Nothing has since changed
my point of view on that matter. Should you find yourself in a
chronically-leaking boat, energy devoted to changing vessels is likely to be
more productive than energy devoted to patching leaks.
從個人的經驗與觀察得到一個結論，那就是一項優異的記錄背後(從投資報酬率的角度
來衡量)你划的是一條怎樣的船更勝於你怎樣去划(雖然不管一家公司好或壞，努力與
才能同樣重要) ，幾年前我曾說當一個以管理著名的專家遇到一家不具前景的公司
時，通常是後者會佔上風，如今我的看法一點也不變，當你遇到一艘總是會漏水的破
船，與其不斷白費力氣去補破洞，還不如把精力放在如何換條好船之上。
* * *
There is an investment postscript in our textile saga. Some investors
weight book value heavily in their stock-buying decisions (as I, in my early
years, did myself). And some economists and academicians believe
replacement values are of considerable importance in calculating an
appropriate price level for the stock market as a whole. Those of both
persuasions would have received an education at the auction we held in
early 1986 to dispose of our textile machinery.
有關我們在紡織業投資的”輝煌歷史” 還有一段後話，有些投資人在買賣股票時把帳面
價值看得很重(就像早期我的作風一樣)，也有些經濟學者相信重置價值在計算一家公
司的股價相當重要的參考依據，關於這兩種說法在經過拍賣紡織機器設備後，可讓我
好好地上了一課。
The equipment sold (including some disposed of in the few months
prior to the auction) took up about 750,000 square feet of factory space in
New Bedford and was eminently usable. It originally cost us about $13
million, including $2 million spent in 1980-84, and had a current book
value of $866,000 (after accelerated depreciation). Though no sane
management would have made the investment, the equipment could have
been replaced new for perhaps $30-$50 million.
賣掉的設備(包括部份先前已處分的)滿滿一工廠全為堪用品，原始成本為1,300萬美
金(包括近幾年投入的二百萬) ，經過加速攤提折舊後，帳面價值86萬，雖然沒有人
會笨到再繼續投資，但要買一套全新的設備也要花三、五千萬美金。
Gross proceeds from our sale of this equipment came to $163,122.
Allowing for necessary pre- and post-sale costs, our net was less than zero.
Relatively modern looms that we bought for $5,000 apiece in 1981 found
no takers at $50. We finally sold them for scrap at $26 each, a sum less
than removal costs.
但你知道嗎?整廠機器處分只收到16萬，扣除掉處份所耗費的成本，最後一毛也不剩，
我們在幾年前買5,000塊一隻的紡紗開價50元都沒人要，最後以幾近下腳價格的26
塊賣掉，連付搬運的工資都不夠。
Ponder this: the economic goodwill attributable to two paper routes
in Buffalo - or a single See’s candy store - considerably exceeds the
proceeds we received from this massive collection of tangible assets that
not too many years ago, under different competitive conditions, was able to
employ over 1,000 people.
想想看二家水牛城報攤或一家喜斯糖果店舖所能發揮的經濟價值還比它高，而這些有
形資產在幾年之前，不同的經濟環境之下，卻能一口氣僱用上千個人。
Three Very Good Businesses (and a Few Thoughts About Incentive
Compensation)
三家優良企業(以及我對獎勵報酬的一些看法)
When I was 12, I lived with my grandfather for about four months. A
grocer by trade, he was also working on a book and each night he dictated
a few pages to me. The title - brace yourself - was “How to Run a Grocery
Store and a Few Things I Have Learned About Fishing”. My grandfather was
sure that interest in these two subjects was universal and that the world
awaited his views. You may conclude from this section’s title and contents
that I was overexposed to Grandpa’s literary style (and personality).
記得12歲時我和爺爺一起住了大概有四個月，那時他開了一家雜貨店，且用心寫了
一本書，每晚還指定幾頁要我讀，書名不蓋你，叫「如何經營一家雜貨店與我從釣魚
上學到的一些事」，我爺爺以為所有人對於這兩件事一定都會感興趣，且全世界一定
都會看重他的想法，看完下面這一段後，你一定會覺得我的寫作風格與內容(也包含個
性)完全承襲了我爺爺。
I am merging the discussion of Nebraska Furniture Mart, See’s Candy
Shops, and Buffalo Evening News here because the economic strengths,
weaknesses, and prospects of these businesses have changed little since I
reported to you a year ago. The shortness of this discussion, however, is
in no way meant to minimize the importance of these businesses to us: in
1985 they earned an aggregate of $72 million pre-tax. Fifteen years ago,
before we had acquired any of them, their aggregate earnings were about
$8 million pre-tax.
我把Nebraska家具店、喜斯糖果店與水牛城報紙擺在一起談是因為我認為這幾家企
業的競爭優勢、弱點與產業前景跟我一年前報告的一樣，一點都沒有改變，簡短的敘
述不代表它們佔我們公司的重要性有絲毫的減損，1985年合計稅前淨利為7,200萬
美元，在十五年前還未買下它們之前，此數字為800萬美元。
While an increase in earnings from $8 million to $72 million sounds
terrific - and usually is - you should not automatically assume that to be
the case. You must first make sure that earnings were not severely
depressed in the base year. If they were instead substantial in relation to
capital employed, an even more important point must be examined: how
much additional capital was required to produce the additional earnings?
從800萬到7,200萬，看起來好像很驚人(事實上也是) ，但你千萬不要以為本來就
是這麼回事，首先你必須確定基期沒有被低估，還要考慮所投入的資金，以及增加盈
餘所需再投入的資金，如果必須再投入，那麼你應該要更進一步搞清楚，到底需要再
投入多少的資金。
In both respects, our group of three scores well. First, earnings 15
years ago were excellent compared to capital then employed in the
businesses. Second, although annual earnings are now $64 million greater,
the businesses require only about $40 million more in invested capital to
operate than was the case then.
關於這幾點，這三家公司完全經得起考驗，首先，十五年前它們相對於其所耗用的資
本，所產生的盈餘頗為可觀，其次，雖然每年增加了6,000多萬盈餘，但其額外投入
的資本卻不過只有4,000萬美金而已。
The dramatic growth in earning power of these three businesses,
accompanied by their need for only minor amounts of capital, illustrates
very well the power of economic goodwill during an inflationary period (a
phenomenon explained in detail in the 1983 annual report). The financial
characteristics of these businesses have allowed us to use a very large
portion of the earnings they generate elsewhere. Corporate America,
however, has had a different experience: in order to increase earnings
significantly, most companies have needed to increase capital significantly
also. The average American business has required about $5 of additional
capital to generate an additional $1 of annual pre-tax earnings. That
business, therefore, would have required over $300 million in additional
capital from its owners in order to achieve an earnings performance equal
to our group of three.
公司運用少數額外資金便能大幅提高獲利能力的原因在於高通膨時代品牌商譽所能發
揮的魔力，(我們在1983年報中有詳細解釋) ，這些公司的特性使得我們可以將他們
所賺到的盈餘用在別的用途之上，然而一般的美國企業就不是這麼一回事，想要大幅
提高獲利相對地往往也要再投入大量的資金，平均要每投入五塊錢每年才能增加一塊
錢的獲利，等於要額外投入三億美元，才能達到我們這三家公司的獲利水準。
When returns on capital are ordinary, an
earn-more-by-putting-up-more record is no great managerial achievement.
You can get the same result personally while operating from your rocking
chair. just quadruple the capital you commit to a savings account and you
will quadruple your earnings. You would hardly expect hosannas for that
particular accomplishment. Yet, retirement announcements regularly sing
the praises of CEOs who have, say, quadrupled earnings of their widget
company during their reign - with no one examining whether this gain was
attributable simply to many years of retained earnings and the workings of
compound interest.
當資本報酬率平平，這種大堆頭式的賺錢方式根本就沒什麼了不起，換成你坐在搖椅
上也能輕鬆達到這樣的成績，好比只要把你存在銀行戶頭裏的錢加倍，一樣可以賺到
加倍的利息，沒有人會對這樣的成果報以掌聲，但通常我們在某位資深主管的退休儀
式上歌頌他在任內將公司的盈餘數字提高數倍，卻一點也不會去看看這些事實上是因
為公司每年所累積盈餘與複利所產生的效果。
If the widget company consistently earned a superior return on capital
throughout the period, or if capital employed only doubled during the
CEO’s reign, the praise for him may be well deserved. But if return on
capital was lackluster and capital employed increased in pace with earnings,
applause should be withheld. A savings account in which interest was
reinvested would achieve the same year-by-year increase in earnings - and,
at only 8% interest, would quadruple its annual earnings in 18 years.
當然若那家公司在此期間以有限的資金賺取極高的報酬或是只增加一點資金便創造更
多的盈餘，則他所得到的掌聲是名符其實，但若報酬率平平或只是用更多的資金堆積
出來的結果，那麼就應該把掌聲收回，因為只要把存在銀行所賺的8%利息再繼續存
著，18年後你的利息收入自動加倍。
The power of this simple math is often ignored by companies to the
detriment of their shareholders. Many corporate compensation plans
reward managers handsomely for earnings increases produced solely, or in
large part, by retained earnings - i.e., earnings withheld from owners. For
example, ten-year, fixed-price stock options are granted routinely, often by
companies whose dividends are only a small percentage of earnings.
這種簡單的算術問題常常被公司所忽略而損及股東的權益，因為許多公司的獎勵計劃
隨隨便便大方的犒賞公司主管，事實上公司的盈餘增加有許多只是單純地因為盈餘累
積所產生的效果，例如給予十年固定價格的認股權，將使得公司分配盈餘的能力大大
縮減。
An example will illustrate the inequities possible under such
circumstances. Let’s suppose that you had a $100,000 savings account
earning 8% interest and “managed” by a trustee who could decide each year
what portion of the interest you were to be paid in cash. Interest not paid
out would be “retained earnings” added to the savings account to
compound. And let’s suppose that your trustee, in his superior wisdom,
set the “pay-out ratio” at one-quarter of the annual earnings.
有一個例子可以用來說明這其間的不合理性，假設你在銀行有年利率8%定存十萬元交
由一位信託人士來保管，由他來決定你每年實際要領多少利息出來，未領出的利息則
繼續存在銀行利滾利，再假設我們偉大的信託人將實領利息的比例定為四分之一。
Under these assumptions, your account would be worth $179,084 at
the end of ten years. Additionally, your annual earnings would have
increased about 70% from $8,000 to $13,515 under this inspired
management. And, finally, your “dividends” would have increased
commensurately, rising regularly from $2,000 in the first year to $3,378 in
the tenth year. Each year, when your manager’s public relations firm
prepared his annual report to you, all of the charts would have had lines
marching skyward.
最後讓我來看看十年之後你會得到什麼，十年後你的戶頭會有179,084，此外在信託
人的精心安排下，你每年所賺的利息會從8,000增加到13,515，實領的利息也從
2,000增加到3,378，而最重要的是當每年你的信託人送交的你的年度報告時，你會
發現圖表中每一項數字都是一飛沖天。
Now, just for fun, let’s push our scenario one notch further and give
your trustee-manager a ten-year fixed-price option on part of your
“business” (i.e., your savings account) based on its fair value in the first year.
With such an option, your manager would reap a substantial profit at your
expense - just from having held on to most of your earnings. If he were
both Machiavellian and a bit of a mathematician, your manager might also
have cut the pay-out ratio once he was firmly entrenched.
現在讓我們再作進一步假設，你與信託人簽訂的信託合約中有一項附予受託人以目前
淨值為基準，十年固定價格的認股權約定，到最後發現你的信託人會從你的口袋中大
撈一筆，而且你會發現一旦取得你的信任，詭計多端的他就會大幅降低利息付現的比
例。
This scenario is not as farfetched as you might think. Many stock
options in the corporate world have worked in exactly that fashion: they
have gained in value simply because management retained earnings, not
because it did well with the capital in its hands.
而你不要以為這跟你一點關係都沒有，在現實社會中這樣的情況比比皆是，這些公司
主管只因公司盈餘累積而非將公司資金管理得當便大撈一票。
Managers actually apply a double standard to options. Leaving aside
warrants (which deliver the issuing corporation immediate and substantial
compensation), I believe it is fair to say that nowhere in the business world
are ten-year fixed-price options on all or a portion of a business granted to
outsiders. Ten months, in fact, would be regarded as extreme. It would
be particularly unthinkable for managers to grant a long-term option on a
business that was regularly adding to its capital. Any outsider wanting to
secure such an option would be required to pay fully for capital added
during the option period.
而事實上，公司主管對於選擇權(扣除附認股權可讓公司立即取得對價)這檔子事具有
雙重標準，假設是對外發行這樣的認股權，根本就不會有十年期固定價格的選擇權出
現，(頂多十個月就很了不起了)，就算有其價格一定會高得驚人，所以實在是很難想
像公司經理人竟然會發放長期認股權，要是外面的人想拿到這種認股權，公司肯定會
將資本累積的因素考量進去。
The unwillingness of managers to do-unto-outsiders, however, is not
matched by an unwillingness to do-unto-themselves. (Negotiating with
one’s self seldom produces a barroom brawl.) Managers regularly engineer
ten-year, fixed-price options for themselves and associates that, first,
totally ignore the fact that retained earnings automatically build value and,
second, ignore the carrying cost of capital. As a result, these managers
end up profiting much as they would have had they had an option on that
savings account that was automatically building up in value.
雖然經理人吝於對外發行認股權，但他們對自己卻頗為慷慨，(自己人關起門來一切都
好談)，經理人通常會為自己設計一種期間長達十年，認股價格固定的選擇權，同時還
附帶完全忽略盈餘累積本身自動會產生的價值以及資金的時間成本，到頭來這些經理
人將因此而大大受惠，就像是擁有自動會累積利益的定存選擇權一樣。
Of course, stock options often go to talented, value-adding managers
and sometimes deliver them rewards that are perfectly appropriate. (Indeed,
managers who are really exceptional almost always get far less than they
should.) But when the result is equitable, it is accidental. Once granted,
the option is blind to individual performance. Because it is irrevocable and
unconditional (so long as a manager stays in the company), the sluggard
receives rewards from his options precisely as does the star. A managerial
Rip Van Winkle, ready to doze for ten years, could not wish for a better
“incentive” system.
當然這種獎勵方法有時也會用到那些有才能、對公司真正有貢獻的人身上，(事實上，
一家公司真正給有傑出表現的人往往都不夠多) ，不過通常這只是碰巧，而這種選擇
權一旦給了，便很難收回，無論這個人之後表現如何都不能取消(只要他老兄繼續留在
公司)，一個庸才從選擇權賺到的跟真正的人才一樣多，這實在是管理界李伯大夢最好
的去處了，不費吹灰之力，一覺醒來就坐享其成。
(I can’t resist commenting on one long-term option given an
“outsider”: that granted the U.S. Government on Chrysler shares as partial
consideration for the government’s guarantee of some lifesaving loans.
When these options worked out well for the government, Chrysler sought to
modify the payoff, arguing that the rewards to the government were both
far greater than intended and outsize in relation to its contribution to
Chrysler’s recovery. The company’s anguish over what it saw as an
imbalance between payoff and performance made national news. That
anguish may well be unique: to my knowledge, no managers - anywhere -
have been similarly offended by unwarranted payoffs arising from options
granted to themselves or their colleagues.)
我忍不住要再提一下，之前克來斯勒曾經發給美國政府外部選擇權作為部份報酬以請
求為其借款擔保的案例，當後來這些選擇權變得價值不菲時，克來斯勒竭便儘所能想
要修改條件，聲稱這比真正應該給政府協助該公司東山再起的報酬多出太多，該公司
認為政府所獲得與付出不成正比的不滿，最後甚至演變成全國性的新聞，這種不平之
鳴顯得有點突兀，因為就我所知，沒有一家公司的經理人會對本身在選擇權的不勞而
獲表示過任何異議。
Ironically, the rhetoric about options frequently describes them as
desirable because they put managers and owners in the same financial boat.
In reality, the boats are far different. No owner has ever escaped the
burden of capital costs, whereas a holder of a fixed-price option bears no
capital costs at all. An owner must weigh upside potential against
downside risk; an option holder has no downside. In fact, the business
project in which you would wish to have an option frequently is a project in
which you would reject ownership. (I’ll be happy to accept a lottery ticket as
a gift - but I’ll never buy one.)
諷刺的是，當大家一再發表「選擇權的實施有其必要，因為如此一來經理人與股東便
能同舟一濟」的論調時，事實上我要說，兩者的船是完全不同的，因為所有股東皆必
須負擔資金成本，而經理人持有的固定價格選擇權卻什麼也不必承擔，股東在期盼公
司發達的同時還必須承受公司可能失敗的風險，事實上一個你希望能享有認股權的投
資計劃往往是你不會想要投資的計劃，(若有人要免費送我樂透彩券，我一定欣然接
受，但若要我買一張則完全免談)。
In dividend policy also, the option holders’ interests are best served by
a policy that may ill serve the owner. Think back to the savings account
example. The trustee, holding his option, would benefit from a
no-dividend policy. Conversely, the owner of the account should lean to a
total payout so that he can prevent the option-holding manager from
sharing in the account’s retained earnings.
在股利政策方面亦然，凡事對持有選擇權的經理人最有利的，對股東一定最不利，回
到之前的銀行存款上頭，不領利息對於持有選擇權的受託人最有利，相反地，身為委
託人應該要傾向把利息全領出來，免得讓經理人利用利滾利佔你便宜。
Despite their shortcomings, options can be appropriate under some
circumstances. My criticism relates to their indiscriminate use and, in that
connection, I would like to emphasize three points:
雖然有那麼多缺點，選擇權在某些時候還是很好用，我批評的重點主要是它們被無限
制地遭到濫用，這裏我有三點要說明:
First, stock options are inevitably tied to the overall performance of a
corporation. Logically, therefore, they should be awarded only to those
managers with overall responsibility. Managers with limited areas of
responsibility should have incentives that pay off in relation to results
under their control. The .350 hitter expects, and also deserves, a big
payoff for his performance - even if he plays for a cellar-dwelling team.
And the .150 hitter should get no reward - even if he plays for a pennant
winner. Only those with overall responsibility for the team should have
their rewards tied to its results.
首先、由於選擇權與公司整體的表現惜惜相關，所以理論上它們應該用在負責公司全
局的高階主管身上，部門的主管則應視其負責部份的表現給予獎勵，對於打擊率高達
三成五的球員來說，應該給予大幅的調薪，即使他待的是一支大爛隊，相反地，對於
打擊率一成五的球員，就算他們那一隊最後得到冠軍也應該請他走路，只有負責全局
的人，如總教練才應與球隊整體戰績綁在一起
Second, options should be structured carefully. Absent special
factors, they should have built into them a retained-earnings or
carrying-cost factor. Equally important, they should be priced realistically.
When managers are faced with offers for their companies, they unfailingly
point out how unrealistic market prices can be as an index of real value.
But why, then, should these same depressed prices be the valuations at
which managers sell portions of their businesses to themselves? (They may
go further: officers and directors sometimes consult the Tax Code to
determine the lowest prices at which they can, in effect, sell part of the
business to insiders. While they’re at it, they often elect plans that
produce the worst tax result for the company.) Except in highly unusual
cases, owners are not well served by the sale of part of their business at a
bargain price - whether the sale is to outsiders or to insiders. The obvious
conclusion: options should be priced at true business value.
第二、選擇權規劃應當要非常慎重，除非有特殊原因，應該要把資金成本與保留盈餘
的影響列入考量，價格也要合理的訂定，當公司面臨外部購併時，他們一定馬上指出
市價是如何地不合理無法反應公司實際的價值，但是為何公司要以更低的價格賤賣給
部份股權給經理人呢? (他們甚至還會說，會儘量以最低的價格將股權賣給內部人，不
管公司要負擔多少稅負)除非在非常特殊的情況，公司不管是將部份股權廉價賣給內部
人或外部人，原來的股東權益一定受到損害，最後的結論是選擇權的認購價一定要與
真實價值相當。
Third, I want to emphasize that some managers whom I admire
enormously - and whose operating records are far better than mine -
disagree with me regarding fixed-price options. They have built corporate
cultures that work, and fixed-price options have been a tool that helped
them. By their leadership and example, and by the use of options as
incentives, these managers have taught their colleagues to think like
owners. Such a Culture is rare and when it exists should perhaps be left
intact - despite inefficiencies and inequities that may infest the option
program. “If it ain’t broke, don’t fix it” is preferable to “purity at any
price”.
第三、我必須強調有一些我非常欣賞且經營績效更甚於我的經理人，不認同我在固定
價格選擇權的看法，他們建立了一套具個人管理風格的企業文化，而其中固定價格認
股權是他們認為非常有用的一項工具，以他們個人的領導風範，並用認股權作為誘因，
他們成功地引導部屬以股東的心態來想事情，這種風格不多見，但若有我們也必須小
心的加以維護，即使這樣的作法會破壞公平性與效率，孰諺有云:「東西若沒壞，就不
必修理」，這總比無可救藥的完美主義好得多。
At Berkshire, however, we use an incentive@compensation system that
rewards key managers for meeting targets in their own bailiwicks. If See’s
does well, that does not produce incentive compensation at the News - nor
vice versa. Neither do we look at the price of Berkshire stock when we
write bonus checks. We believe good unit performance should be
rewarded whether Berkshire stock rises, falls, or stays even. Similarly, we
think average performance should earn no special rewards even if our stock
should soar. “Performance”, furthermore, is defined in different ways
depending upon the underlying economics of the business: in some our
managers enjoy tailwinds not of their own making, in others they fight
unavoidable headwinds.
然而在Berkshire我們採用的獎勵計劃係依每個人在其職權範圍內的目標達成狀況做
為獎賞的依據，若喜斯糖果表現的好，則這與新聞事業部門一點關係都沒有，反之亦
然，而我們在發放獎金時與公司本身股價高低沒有任何關連，我們認為表現好的單位，
不管Berkshire的股價是漲是跌，都應該獎勵，同樣的即使Berkshire的股價飆漲，
若員工表現平平也不應該大發獎金，而表現係依據各個公司本身競爭條件與環境列入
考量，有時只是運氣好搭上順風車一切平順，有時只是運氣差遇到逆境特別倒霉。
The rewards that go with this system can be large. At our various
business units, top managers sometimes receive incentive bonuses of five
times their base salary, or more, and it would appear possible that one
manager’s bonus could top $2 million in 1986. (I hope so.) We do not put a
cap on bonuses, and the potential for rewards is not hierarchical. The
manager of a relatively small unit can earn far more than the manager of a
larger unit if results indicate he should. We believe, further, that such
factors as seniority and age should not affect incentive compensation
(though they sometimes influence basic compensation). A 20-year-old
who can hit .300 is as valuable to us as a 40-year-old performing as well.
即使是在這樣的制度下，有時獎勵也相當可觀，在各個部門中，視狀況有人可以領到
底薪五倍以上的獎金，以今年為例就有人會領到200萬以上的獎金，而事實上金額並
沒有上限，與階級與年資也沒有太大關連，若表現得好一個小單位的主管可能比一個
大單位的主管領得多的多，只要打擊率能超過三成，不管你是二十歲的菜鳥或是四十
歲的老將，我們都一樣重視。
Obviously, all Berkshire managers can use their bonus money (or other
funds, including borrowed money) to buy our stock in the market. Many
have done just that - and some now have large holdings. By accepting
both the risks and the carrying costs that go with outright purchases, these
managers truly walk in the shoes of owners.
而很顯然的，Berkshire各事業的經理人可以利用他們所領到的獎金(或甚至去借錢)
到股票市場上買進公司本身的股票，而事實上有許多人確實如此，而且持股比例甚高，
與其他股東一樣承擔風險與資金成本，這些經理人確實與公司站在同一條陣線之上。
Now let’s get back - at long last - to our three businesses:
最後讓我們回到主要的三項事業
At Nebraska Furniture Mart our basic strength is an exceptionally
low-cost operation that allows the business to regularly offer customers the
best values available in home furnishings. NFM is the largest store of its
kind in the country. Although the already-depressed farm economy
worsened considerably in 1985, the store easily set a new sales record. I
also am happy to report that NFM’s Chairman, Rose Blumkin (the legendary
“Mrs. B”), continues at age 92 to set a pace at the store that none of us
can keep up with. She’s there wheeling and dealing seven days a week,
and I hope that any of you who visit Omaha will go out to the Mart and see
her in action. It will inspire you, as it does me.
在Nebraska家具店，我們最具優勢的競爭力在於低成本的營運，並提供客戶最有質
感的家具，身為全國同類型中規模最大的一家店，即使小鎮的經濟明顯衰退，營收仍
創新高，我也很高興跟各位報告，家具店的負責人B太太雖然高齡92，每天仍以年
輕人跟不上的步伐在店裏忙碌著，坐在輪椅上，她一個禮拜工作七天，我希望當大家
造訪Omaha時，能到店裏看看她，相信你會與我一樣精神一振。
At See’s we continue to get store volumes that are far beyond those
achieved by any competitor we know of. Despite the unmatched consumer
acceptance we enjoy, industry trends are not good, and we continue to
experience slippage in poundage sales on a same-store basis. This puts
pressure on per-pound costs. We now are willing to increase prices only
modestly and, unless we can stabilize per-shop poundage, profit margins
will narrow.
在喜斯糖果我們與同業競爭對手相比，其單店銷售量仍大幅領先，雖然我們廣為消費
大眾所接受認同，整個產業表現並不好，單店糖果銷售磅數持續下滑，這使得單位成
本提高，而我們卻只能稍微調漲價格，如此一來我們的毛利勢必受到影響。
At the News volume gains are also difficult to achieve. Though linage
increased during 1985, the gain was more than accounted for by preprints.
ROP linage (advertising printed on our own pages) declined. Preprints are
far less profitable than ROP ads, and also more vulnerable to competition.
In 1985, the News again controlled costs well and our household
penetration continues to be exceptional.
在新聞事業方面一樣很難增加發行量，雖然廣告量略增，但主要來自於夾報部份，ROP
廣告(報紙版面上的廣告)卻減少，前者的利潤遠比後者低，且競爭較激烈，所幸去年
成本控制得宜而家庭訂戶數表現頗佳。
One problem these three operations do not have is management. At
See’s we have Chuck Huggins, the man we put in charge the day we bought
the business. Selecting him remains one of our best business decisions.
At the News we have Stan Lipsey, a manager of equal caliber. Stan has
been with us 17 years, and his unusual business talents have become more
evident with every additional level of responsibility he has tackled. And, at
the Mart, we have the amazing Blumkins - Mrs. B, Louie, Ron, Irv, and Steve
- a three-generation miracle of management.
我們較不擔心的是這三家都有優秀的管理階層，在接手喜斯後，我們便一直有Chuck
掌控大局，選上他是我們作得最對的決策之一，在新聞事業我們也有同樣是狠角色的
Stan Lipsey，他跟我們在一起十七年了，每當我們賦予他更多責任時，他的才能表現
便更上一層樓，在家具店不用說我們則有B太太家族，三代同堂可謂一門豪傑。
I consider myself extraordinarily lucky to be able to work with
managers such as these. I like them personally as much as I admire them
professionally.
能夠跟這一群優秀的專業經理人一起共事，我實在感到非常幸運，在專業上我佩服之
至，在私人方面則是我的好朋友。
Insurance Operations
保險事業營運
Shown below is an updated version of our usual table, listing two key
figures for the insurance industry:
下表是年報中常見表格的更新，列示保險事業的主要兩項數字:
Yearly Change Combined Ratio
in Premiums after Policyholder
Written (%) Dividends
------------- ------------------
1972 ............... 10.2 96.2
1973 ............... 8.0 99.2
1974 ............... 6.2 105.4
1975 ............... 11.0 107.9
1976 ............... 21.9 102.4
1977 ............... 19.8 97.2
1978 ............... 12.8 97.5
1979 ............... 10.3 100.6
1980 ............... 6.0 103.1
1981 ............... 3.9 106.0
1982 ............... 4.4 109.7
1983 ............... 4.5 111.9
1984 (Revised) ..... 9.2 117.9
1985 (Estimated) ... 20.9 118.0
Source: Best’s Aggregates and Averages
The combined ratio represents total insurance costs (losses incurred
plus expenses) compared to revenue from premiums: a ratio below 100
indicates an underwriting profit, and one above 100 indicates a loss.
綜合比率Combined Ratio代表所有的保險成本(損失加上費用)佔保費收入的比率，
100以下表示有承保利益，反之100以上則表示有承保損失。
The industry’s 1985 results were highly unusual. The revenue gain
was exceptional, and had insured losses grown at their normal rate of most
recent years - that is, a few points above the inflation rate - a significant
drop in the combined ratio would have occurred. But losses in 1985 didn’t
cooperate, as they did not in 1984. Though inflation slowed considerably
in these years, insured losses perversely accelerated, growing by 16% in
1984 and by an even more startling 17% in 1985. The year’s growth in
losses therefore exceeds the inflation rate by over 13 percentage points, a
modern record.
1985年產業整體的數字有點不尋常，保費收入大幅成長，而如果投保損失則與前幾
年一樣以固定比率成長(約比通貨膨脹率高幾個百分點) ，則兩項因素加起來將使得
Combined Ratio下降，只可惜損失不大配合，雖然通膨有趨緩的現象，但理賠損失
卻成長驚人，相較於去年的16%，今年創新高的17%更顯得驚人，足足比通貨膨脹率
高出13個百分點。
Catastrophes were not the culprit in this explosion of loss cost. True,
there were an unusual number of hurricanes in 1985, but the aggregate
damage caused by all catastrophes in 1984 and 1985 was about 2% of
premium volume, a not unusual proportion. Nor was there any burst in the
number of insured autos, houses, employers, or other kinds of “exposure
units”.
意外並不是理賠損失大幅增加的主因，雖然1985年確實有幾次相當大的颶風發生，
但所造成的損失僅佔保費收入的2%，這比例不算異常，此外也不是投保汽車、房屋、
員工或其他投保標的出險的爆增。
A partial explanation for the surge in the loss figures is all the
additions to reserves that the industry made in 1985. As results for the
year were reported, the scene resembled a revival meeting: shouting “I’ve
sinned, I’ve sinned”, insurance managers rushed forward to confess they
had under reserved in earlier years. Their corrections significantly affected
1985 loss numbers.
可能可以解釋的原因是去年業界大幅提撥損失準備，就像報告所顯示的，這場景有點
像檢討會議，保險事業經理人大家一窩蜂地承認前幾年損失準備確實提撥不足，而結
果修正後的數字嚴重影響今年的損益。
A more disturbing ingredient in the loss surge is the acceleration in
“social” or “judicial” inflation. The insurer’s ability to pay has assumed
overwhelming importance with juries and judges in the assessment of both
liability and damages. More and more, “the deep pocket” is being sought
and found, no matter what the policy wording, the facts, or the precedents.
另外一項更令人困擾的因素是社會或司法通膨成本的增加，保險業者的賠償能力已成
為陪審團判決責任與損害成立與否的重要因素，越來越多人覬諛深口袋，不管保單上
是怎麼寫、不管事實真相為何，也不管以前的判例。
This judicial inflation represents a wild card in the industry’s future,
and makes forecasting difficult. Nevertheless, the short-term outlook is
good. Premium growth improved as 1985 went along (quarterly gains
were an estimated 15%, 19%, 24%, and 22%) and, barring a
supercatastrophe, the industry’s combined ratio should fall sharply in 1986.
這成為保險業預測未來最不確定的因素，儘管如此，短期間的影響尚屬有限，只要保
費成長的速度持續，(單季成長率預估分別為15%、19%、24%及22%)，不要發生什
麼特別大的災難，明年產業整體的Combined Ratio可望大幅下降。
The profit improvement, however, is likely to be of short duration.
Two economic principles will see to that. First, commodity businesses
achieve good levels of profitability only when prices are fixed in some
manner or when capacity is short. Second, managers quickly add to
capacity when prospects start to improve and capital is available.
不過獲利改善的情況無法持續太久，主要有兩個原因，一是商品化企業只有在價格穩
定或供給短缺的情況下才能維持高獲利，一是公司必須在景氣轉佳之前先擴充產能並
準備好資金。
In my 1982 report to you, I discussed the commodity nature of the
insurance industry extensively. The typical policyholder does not
differentiate between products but concentrates instead on price. For
many decades a cartel-like procedure kept prices up, but this arrangement
has disappeared for good. The insurance product now is priced as any
other commodity for which a free market exists: when capacity is tight,
prices will be set remuneratively; otherwise, they will not be.
如同我在1982年年報跟各位報告過的，曾廣泛地討論商品化企業的特點，一般的投
保人不太在乎產品的差異而只注意價格，幾十年來公會的壟斷使得價格居高不下，但
這種情況如今已不復見，在自由市場中，保單與其他商品一樣地被自由訂價，當供給
吃緊，價格自然上升，反之就不會。
Capacity currently is tight in many lines of insurance - though in this
industry, unlike most, capacity is an attitudinal concept, not a physical fact.
Insurance managers can write whatever amount of business they feel
comfortable writing, subject only to pressures applied by regulators and
Best’s, the industry’s authoritative rating service. The comfort level of
both managers and regulators is tied to capital. More capital means more
comfort, which in turn means more capacity. In the typical commodity
business, furthermore, such as aluminum or steel, a long gestation
precedes the birth of additional capacity. In the insurance industry, capital
can be secured instantly. Thus, any capacity shortage can be eliminated in
short order.
雖然在供給方面，目前在許多險種有些吃緊，但保險業不像大部份的行業，所謂的產
能只是心態上而非實質的，只要他認為適當，保險業者可以接下無限量的保單，這其
間只受到主管當局與公會評比的壓力，公司與主管當局在乎的是資本的適足性，越多
的資本當然是越好，也代表可以簽下更多的保單，就算是標準的商品化企業，如鋼鐵
或鋁業，要增加產能還要一定的前置期間，而在保險業，資金卻是可以隨時取得，因
此供給不足的情況可能馬上就會消失。
That’s exactly what’s going on right now. In 1985, about 15 insurers
raised well over $3 billion, piling up capital so that they can write all the
business possible at the better prices now available. The capital-raising
trend has accelerated dramatically so far in 1986.
這就是目前實際發生的狀況，在去年總計有十五家業者大約募集了三十億的資金，使
得他們可以吃下所有可能的生意，而且資金募集的速度越來越快。
If capacity additions continue at this rate, it won’t be long before
serious price-cutting appears and next a fall in profitability. When the fall
comes, it will be the fault of the capital-raisers of 1985 and 1986, not the
price-cutters of 198X. (Critics should be understanding, however: as was
the case in our textile example, the dynamics of capitalism cause each
insurer to make decisions that for itself appear sensible, but that
collectively slash profitability.)
照這樣下去，不用多久馬上的會面臨到殺價競爭的情況，然後獲利也會跟著受影響。
而這一切都要歸疚那些大幅增資的業者(有人一定會批評，就像我們在紡織業一樣，資
本社會的動態變化，使得所有業者做出那種個別看似合理，但就產業整體而言，弊多
於利的結果。)
In past reports, I have told you that Berkshire’s strong capital position
- the best in the industry - should one day allow us to claim a distinct
competitive advantage in the insurance market. With the tightening of the
market, that day arrived. Our premium volume more than tripled last year,
following a long period of stagnation. Berkshire’s financial strength (and
our record of maintaining unusual strength through thick and thin) is now a
major asset for us in securing good business.
以往年報我曾告訴過大家，Berkshire雄厚的資本結構(堪稱業界之最)，總有一天能讓
我們在保險業擁有獨一無二的競爭力，隨著市場的緊縮，這一天已到來，去年我們的
保費收入在經過許多年的停滯之後，增加三倍以上，Berkshire的財務實力(以及過去
優異的記錄)是我們爭取業務最有用的利器。
We correctly foresaw a flight to quality by many large buyers of
insurance and reinsurance who belatedly recognized that a policy is only an
IOU - and who, in 1985, could not collect on many of their IOUs. These
buyers today are attracted to Berkshire because of its strong capital
position. But, in a development we did not foresee, we also are finding
buyers drawn to us because our ability to insure substantial risks sets us
apart from the crowd.
我們正確地預期到大客戶對於品質的要求，在他們了解到保單也不過是一張借據，而
許多借條在去年皆無法兌現。這些客戶最後都被Berkshire健全的資本結構吸引上
門，而另外有一點是我們沒有預期到的發展，那就是還有許多客戶是因為我們能夠承
擔鉅額的風險而覺得我們與眾不同。
To understand this point, you need a few background facts about
large risks. Traditionally, many insurers have wanted to write this kind of
business. However, their willingness to do so has been almost always
based upon reinsurance arrangements that allow the insurer to keep just a
small portion of the risk itself while passing on (“laying off”) most of the
risk to its reinsurers. Imagine, for example, a directors and officers (“D &
O”) liability policy providing $25 million of coverage. By various
“excess-of-loss” reinsurance contracts, the company issuing that policy
might keep the liability for only the first $1 million of any loss that occurs.
The liability for any loss above that amount up to $24 million would be
borne by the reinsurers of the issuing insurer. In trade parlance, a
company that issues large policies but retains relatively little of the risk for
its own account writes a large gross line but a small net line.
關於這點，你必須對鉅額風險有一些認識，在以往有許多業者都很願意接下這種保單，
但是他們會這樣做的原因是因為透過再保險的安排，業者只要保留一小部份的風險，
其餘大部份的風險則移轉給再保業者，想想看例如董監事經理人投保二千五百萬的責
任險，透過與再保公司簽約，保單發行公司可以只留下頭一個一百萬損失，超過的部
份最高到二千四百萬則由再保公司負責，照業界的說法，其保險毛額很高，但淨額卻
很少。
In any reinsurance arrangement, a key question is how the premiums
paid for the policy should be divided among the various “layers” of risk. In
our D & O policy, for example. what part of the premium received should be
kept by the issuing company to compensate it fairly for taking the first $1
million of risk and how much should be passed on to the reinsurers to
compensate them fairly for taking the risk between $1 million and $25
million?
在任何的再保安排中，最重要的問題是保費收入要如何來分配，以我們的經理人責任
保險為例，保險人必需要有足夠的保費來彌補其承擔第一個一百萬損失的風險，而再
保人必需要有足夠的保費來彌補其承擔一百萬到二千五百萬損失的風險。
One way to solve this problem might be deemed the Patrick Henry
approach: “I have but one lamp by which my feet are guided, and that is the
lamp of experience.” In other words, how much of the total premium would
reinsurers have needed in the past to compensate them fairly for the losses
they actually had to bear?
一種解決這種難題的方法叫做派翠克-亨利法則:係完全依照過去的經驗，換句話說過
去再保業者需要多少保費來彌補其所承擔的損失，來訂定未來的保費。
Unfortunately, the lamp of experience has always provided imperfect
illumination for reinsurers because so much of their business is “long-tail”,
meaning it takes many years before they know what their losses are.
Lately, however, the light has not only been dim but also grossly misleading
in the images it has revealed. That is, the courts’ tendency to grant awards
that are both huge and lacking in precedent makes reinsurers’ usual
extrapolations or inferences from past data a formula for disaster. Out
with Patrick Henry and in with Pogo: “The future ain’t what it used to be.”
但不幸的是過去的經驗因為投保期間過長往往無法完全反映實際的情況，亦即要在許
多年之後才能真正知道會發生多少損失，而且最近產業能見度不但越來越差，有時甚
至還會誤導，亦即法院不管以前判例，傾向於給予鉅額的賠償，使得再保業者過去推
估的公式與結果相差太遠而變成一場大災難。派翠克-亨利不管用，換成Pogo所說:
「未來與過去絕對不同。」
The burgeoning uncertainties of the business, coupled with the entry
into reinsurance of many unsophisticated participants, worked in recent
years in favor of issuing companies writing a small net line: they were able
to keep a far greater percentage of the premiums than the risk. By doing
so, the issuing companies sometimes made money on business that was
distinctly unprofitable for the issuing and reinsuring companies combined.
(This result was not necessarily by intent: issuing companies generally
knew no more than reinsurers did about the ultimate costs that would be
experienced at higher layers of risk.) Inequities of this sort have been
particularly pronounced in lines of insurance in which much change was
occurring and losses were soaring; e.g., professional malpractice, D & 0,
products liability, etc. Given these circumstances, it is not surprising that
issuing companies remained enthusiastic about writing business long after
premiums became woefully inadequate on a gross basis.
產業的不確定性加上許多經驗不足的新進者，使得這幾年保險業者偏好維持低水準的
保單淨額，他們能夠吃下比其所能承擔的風險要大得多的保單量，這樣的作法有時在
保險與再保公司整體虧錢的情況下，本身甚至還能獲利，(這種結局並不是刻意的，通
常保單發行公司對於較高階的風險所生最後成本的了解的不一定比再保公司多) ，這
種不合理的情況尤其會發生在環境變化快且成本高漲的時代，如執行業務不當、經理
人與產品責任險等，在這些情況下，也難怪保險公司還會積極簽發保單，即使保費毛
額已相當不合理之時。
An example of just how disparate results have been for issuing
companies versus their reinsurers is provided by the 1984 financials of one
of the leaders in large and unusual risks. In that year the company wrote
about $6 billion of business and kept around $2 1/2 billion of the
premiums, or about 40%. It gave the remaining $3 1/2 billion to reinsurers.
On the part of the business kept, the company’s underwriting loss was less
than $200 million - an excellent result in that year. Meanwhile, the part
laid off produced a loss of over $1.5 billion for the reinsurers. Thus, the
issuing company wrote at a combined ratio of well under 110 while its
reinsurers, participating in precisely the same policies, came in
considerably over 140. This result was not attributable to natural
catastrophes; it came from run-of-the-mill insurance losses (occurring,
however, in surprising frequency and size). The issuing company’s 1985
report is not yet available, but I would predict it will show that dramatically
unbalanced results continued.
最明顯的例子是在1984年有一家大型的同業，在那一年那家公司一共簽下六十億元
的保單，在保留其中的40%約二十五億後，將剩下的三十五億轉給再保公司，結果保
留部份理賠的損失最後只有不到二億元(算是不錯的成績) ，但是分保出去的部份卻使
再保業者蒙受了十五億元的損失，此舉使得保險公司的Combined Ratio不到110，
但再保公司卻高達140，而這與天然災害一點關係都沒有(但發生的頻率卻相當高)，
完全是業者之間的分配問題，雖然我尚未看到該公司今年的年報，但可想而知這種不
平衡的情況一定還繼續維持著。
A few years such as this, and even slow-witted reinsurers can lose
interest, particularly in explosive lines where the proper split in premium
between issuer and reinsurer remains impossible to even roughly estimate.
The behavior of reinsurers finally becomes like that of Mark Twain’s cat:
having once sat on a hot stove, it never did so again - but it never again sat
on a cold stove, either. Reinsurers have had so many unpleasant surprises
in long-tail casualty lines that many have decided (probably correctly) to
give up the game entirely, regardless of price inducements. Consequently,
there has been a dramatic pull-back of reinsurance capacity in certain
important lines.
已有好幾年一些反應較慢的再保業者由於無法對保費作合理的分配，甚至是估算，使
得權益因而受損，到最後再保業者的行為有點像馬克吐溫的貓一樣，「一旦被熱爐子
燙過一次，便不會再去碰任何爐子，即使是冷的爐子也一樣」，再保業者在長期的意
外險方面有太多不愉快的經驗，以至於到最後乾脆放棄(有可能是正確地)該項業務，
不管投保價格如何誘人，結果使得某些業務的供給量嚴重短缺。
This development has left many issuing companies under pressure.
They can no longer commit their reinsurers, time after time, for tens of
millions per policy as they so easily could do only a year or two ago, and
they do not have the capital and/or appetite to take on large risks for their
own account. For many issuing companies, gross capacity has shrunk
much closer to net capacity - and that is often small, indeed.
如此一來許多再保客戶便著急了，他們不能夠再像以前一樣，動不動就將上千萬的保
單轉給再保業者，進而也沒有能力與財力自行吃下大額的保單，有的業者的承保毛額
萎縮到與承保淨額相當。
At Berkshire we have never played the lay-it-off-at-a-profit game and,
until recently, that put us at a severe disadvantage in certain lines. Now
the tables are turned: we have the underwriting capability whereas others
do not. If we believe the price to be right, we are willing to write a net line
larger than that of any but the largest insurers. For instance, we are
perfectly willing to risk losing $10 million of our own money on a single
event, as long as we believe that the price is right and that the risk of loss is
not significantly correlated with other risks we are insuring. Very few
insurers are willing to risk half that much on single events - although, just
a short while ago, many were willing to lose five or ten times that amount
as long as virtually all of the loss was for the account of their reinsurers.
在Berkshire我們從來不玩這類的遊戲，雖然這樣的作法使我們在某些業務處於不利
的競爭地位，不過現在整個局勢已改變，我們擁有同業比不上的承保實力，只要我們
認為價格合理，我們願意簽下其他大型業者吃不下的保單，例如我們願意承擔一次可
能損失1,000萬美元的風險，只要價格合理且其風險與我們已承保的風險無太大的相
關。同業間連願意承擔前述一半的都不多見，儘管在不久之前，有再保業者當靠山，
許多業者甚至願意吃下十倍以上的保單。
In mid-1985 our largest insurance company, National Indemnity
Company, broadcast its willingness to underwrite large risks by running an
ad in three issues of an insurance weekly. The ad solicited policies of only
large size: those with a minimum premium of $1 million. This ad drew a
remarkable 600 replies and ultimately produced premiums totaling about
$50 million. (Hold the applause: it’s all long-tail business and it will be at
least five years before we know whether this marketing success was also an
underwriting success.) Today, our insurance subsidiaries continue to be
sought out by brokers searching for large net capacity.
1985年我們旗下保險公司National Indemnity在保險雜誌大幅刊登廣告對外宣傳
願意吃下超過百萬美金的大額保單，結果總計收到高達六百封的回函，最後約有五千
萬美金的生意成交(先不要高興太早，由於屬於長期保單，至少要經過五年以上才能確
定這次成功的行銷也是成功的承保)，現在一般的保險經紀人要接高額的保單第一個一
定會想到我們的保險子公司。
As I have said, this period of tightness will pass; insurers and
reinsurers will return to underpricing. But for a year or two we should do
well in several segments of our insurance business. Mike Goldberg has
made many important improvements in the operation (prior
mismanagement by your Chairman having provided him ample opportunity
to do so). He has been particularly successful recently in hiring young
managers with excellent potential. They will have a chance to show their
stuff in 1986.
不過就像我說過的，供給吃緊的狀況不會維持太久，大家最後還是會回到低價競爭的
老路，不過一兩年內，我們在幾項業務方面還是有很好的發揮空間，Mike Goldberg
在營運上作了許多的改進(本人先前的管理不當，提供他不少發揮的空間) ，尤其是最
近幾年他找了許多深具潛力的優秀人才進來，明年他們將更有機會一顯長才。
Our combined ratio has improved - from 134 in 1984 to 111 in 1985
- but continues to reflect past misdeeds. Last year I told you of the major
mistakes I had made in loss-reserving, and promised I would update you
annually on loss-development figures. Naturally, I made this promise
thinking my future record would be much improved. So far this has not
been the case. Details on last year’s loss development are on pages 50-52.
They reveal significant underreserving at the end of 1984, as they did in the
several years preceding.
Combined Ratio方面也由去年的134進步到今年的111，只不過過去不良的影響還
在，去年我曾告訴各位由於本人在損失準備的提列不當，我曾保證會定期跟各位報告，
本來我是想說以後的記錄應該會漸漸改善，不過到目前為止，好像並非如此，細節詳
後述，去年的損失準備提列與前幾年一樣還是明顯不足。
The only bright spot in this picture is that virtually all of the
underreserving revealed in 1984 occurred in the reinsurance area - and
there, in very large part, in a few contracts that were discontinued several
years ago. This explanation, however, recalls all too well a story told me
many years ago by the then Chairman of General Reinsurance Company.
He said that every year his managers told him that “except for the Florida
hurricane” or “except for Midwestern tornadoes”, they would have had a
terrific year. Finally he called the group together and suggested that they
form a new operation - the Except-For Insurance Company - in which they
would henceforth place all of the business that they later wouldn’t want to
count.
所幸不足的部份主要發生在再保部份，而許多保單已陸續到期，這種解釋使我想起許
多年前，通用再保的董事長告訴我的一個小故事，他說每年公司的經理人都告訴他「除
了佛羅里達的颶風豁中西部的龍捲風的話，今年的成績一定很好」，到最後實在忍不
住他召集所有幹部開會並建議他們乾脆另外成立一個新的部門，叫作「除了」部門專
門把他們後來不計入的業務塞在那裏算了。
In any business, insurance or otherwise, “except for” should be
excised from the lexicon. If you are going to play the game, you must
count the runs scored against you in all nine innings. Any manager who
consistently says “except for” and then reports on the lessons he has
learned from his mistakes may be missing the only important lesson -
namely, that the real mistake is not the act, but the actor.
不管是在保險或其他行業也好，應該把「除了」這個字眼從辭典裏刪除，如果你要參
加比賽，就應該把對手所有的得分全部計入，任何一直把「除了」掛在嘴上的經理人，
之後只會說又上了一課的人，真正應該上的課，如何換掉演員而不是劇本。
Inevitably, of course, business errors will occur and the wise manager
will try to find the proper lessons in them. But the trick is to learn most
lessons from the experiences of others. Managers who have learned much
from personal experience in the past usually are destined to learn much
from personal experience in the future.
當然不可避免的作生意往往會出些差錯，而聰明的經理人一定能從中記取教訓，但這
教訓最好是從別人身上學來的，若過去習慣犯錯表示未來還是會繼續犯錯。
GEICO, 38%-owned by Berkshire, reported an excellent year in 1985 in
premium growth and investment results, but a poor year - by its lofty
standards - in underwriting. Private passenger auto and homeowners
insurance were the only important lines in the industry whose results
deteriorated significantly during the year. GEICO did not escape the trend,
although its record was far better than that of virtually all its major
competitors.
Berkshire持有38%股權的GEICO公司，在保費收入成長與投資收益方面皆表現突
出，但在核保績效與其過去高標準相較卻表現平平，私家小客車與住宅房屋險是去年
度惡化最厲害的險種，GEICO也難逃一劫，雖然它的成績比起其他主要的競爭對手要
好得多。
Jack Byrne left GEICO at mid-year to head Fireman’s Fund, leaving
behind Bill Snyder as Chairman and Lou Simpson as Vice Chairman. Jack’s
performance in reviving GEICO from near-bankruptcy was truly
extraordinary, and his work resulted in enormous gains for Berkshire. We
owe him a great deal for that.
Jack在年中離開GEICO去主持消防人員基金，留下Bill與Lou擔任正副董事長，Jack
之前挽救GEICO免於破產的表現卓著，他的努力使得Berkshire獲益良多，我們欠他
的實在是數不清。
We are equally indebted to Jack for an achievement that eludes most
outstanding leaders: he found managers to succeed him who have talents
as valuable as his own. By his skill in identifying, attracting and developing
Bill and Lou, Jack extended the benefits of his managerial stewardship well
beyond his tenure.
其中還包括吸引許多優秀的人才，他找到具有跟他一樣特質的經營階層來繼承他，使
得他對公司的貢獻與影響力超過他實際的任期。
Fireman’s Fund Quota-Share Contract
與消防人員基金代操合約
Never one to let go of a meal ticket, we have followed Jack Byrne to
Fireman’s Fund (“FFIC”) where he is Chairman and CEO of the holding
company.
絕對不要輕易放棄任何一張飯票，結果我們跟著Jack 加入由他擔任控股公司董事長
兼總經理的消防人員基金FFIC。
On September 1, 1985 we became a 7% participant in all of the
business in force of the FFIC group, with the exception of reinsurance they
write for unaffiliated companies. Our contract runs for four years, and
provides that our losses and costs will be proportionate to theirs
throughout the contract period. If there is no extension, we will thereafter
have no participation in any ongoing business. However, for a great many
years in the future, we will be reimbursing FFIC for our 7% of the losses that
occurred in the September 1, 1985 - August 31, 1989 period.
1985年九月一日我們成為FFIC集團7%的參與者(不包括他們為不相關的公司所接的
再保險保單) ，合約為期四年，明訂期間的損失與成本依比例分攤，除非到期前予以
展期，否則我們將不再繼續參與，不過在可預見的未來我們仍須分攤FFIC在四年間發
生的損失中的7%。
Under the contract FFIC remits premiums to us promptly and we
reimburse FFIC promptly for expenses and losses it has paid. Thus, funds
generated by our share of the business are held by us for investment. As
part of the deal, I’m available to FFIC for consultation about general
investment strategy. I’m not involved, however, in specific investment
decisions of FFIC, nor is Berkshire involved in any aspect of the company’s
underwriting activities.
合約簽訂後FFIC須立即將7%的保費匯給我們，而我們也必須立即開始支付其所發生
的任何損失，預收的資金則用在投資之上，合約附帶條件是本人必須隨時提供一般投
資諮詢服務給FFIC，但我並不介入特定投資決策，而Berkshire也不參與該公司任何
的保險業務。
Currently FFIC is doing about $3 billion of business, and it will
probably do more as rates rise. The company’s September 1, 1985
unearned premium reserve was $1.324 billion, and it therefore transferred
7% of this, or $92.7 million, to us at initiation of the contract. We
concurrently paid them $29.4 million representing the underwriting
expenses that they had incurred on the transferred premium. All of the
FFIC business is written by National Indemnity Company, but two-sevenths
of it is passed along to Wesco-Financial Insurance Company (“Wes-FIC”), a
new company organized by our 80%-owned subsidiary, Wesco Financial
Corporation. Charlie Munger has some interesting comments about
Wes-FIC and the reinsurance business on pages 60-62.
目前FFIC 的業務量約達三十億美元，且當費率調漲後規模有可能再增加，該公司在
1985年九月的未到期保費準備達十三億美元，所以FFIC匯了其中的7%，相當於九
千多萬美金給我們，同時我們也支付了三千萬美金給他們代表他們已預付的理賠費
用，這部份的業務完全由National Indemnity承作，之後再將其中的七分之二轉給
Wesco的子公司Wes-FIC。在年報後段附有查理對Wes-FIC及其再保險業務的有趣
評論。
To the Insurance Segment tables on page 41, we have added a new
line, labeled Major Quota Share Contracts. The 1985 results of the FFIC
contract are reported there, though the newness of the arrangement makes
these results only very rough approximations.
在保險部門我們特別新增一項主要分配合約，不過由於屬於新業務，所有數字只能算
是大概的估計。
After the end of the year, we secured another quota-share contract, whose
1986 volume should be over $50 million. We hope to develop more of this
business, and industry conditions suggest that we could: a significant
number of companies are generating more business than they themselves
can prudently handle. Our financial strength makes us an attractive
partner for such companies.
到了年底我們又取得一件新合約，明年度的金額大約為五千萬元，我們希望能夠多多
擴展這項業務，如果產業環境不錯的話，許多公司產生超過其本身處理能力的業務，
而我們堅強的財務實力正是他們希望合作的最好對象。
Marketable Securities
有價證券投資
We show below our 1985 yearend net holdings in marketable equities. All
positions with a market value over $25 million are listed, and the interests
attributable to minority shareholders of Wesco and Nebraska Furniture Mart
are excluded.
下表是1985年底我們帳上持有的有價證券投資，市值超過2,500萬美元的部份，不
包含。扣除子公司Wesco及NFM的少數股權。
No. of Shares Cost Market
------------- ---------- ----------
(000s omitted)
1,036,461 Affiliated Publications, Inc. ....... $ 3,516 $ 55,710
900,800 American Broadcasting Companies, Inc. 54,435 108,997
2,350,922 Beatrice Companies, Inc. ............ 106,811 108,142
6,850,000 GEICO Corporation ................... 45,713 595,950
2,379,200 Handy & Harman ...................... 27,318 43,718
847,788 Time, Inc. .......................... 20,385 52,669
1,727,765 The Washington Post Company ......... 9,731 205,172
---------- ----------
267,909 1,170,358
All Other Common Stockholdings ...... 7,201 27,963
---------- ----------
Total Common Stocks $275,110 $1,198,321
========== ==========
We mentioned earlier that in the past decade the investment
environment has changed from one in which great businesses were totally
unappreciated to one in which they are appropriately recognized. The
Washington Post Company (“WPC”) provides an excellent example.
我們之前曾提到過去十年來投資環境已由過去完全不看重大企業的情況轉變成適度的
認同，華盛頓郵報就是一個最好的例子。
We bought all of our WPC holdings in mid-1973 at a price of not more
than one-fourth of the then per-share business value of the enterprise.
Calculating the price/value ratio required no unusual insights. Most
security analysts, media brokers, and media executives would have
estimated WPC’s intrinsic business value at $400 to $500 million just as we
did. And its $100 million stock market valuation was published daily for
all to see. Our advantage, rather, was attitude: we had learned from Ben
Graham that the key to successful investing was the purchase of shares in
good businesses when market prices were at a large discount from
underlying business values.
我們在1973年中以不到當時實質價值四分之一的價位買進股權，計算價格/價值比並
不需要有獨到的眼光，大部份的證券分析師、經紀人與媒體經營者跟我們一樣估計該
公司的價值約在四億到五億美元之間，但當時其僅一億的股票市值卻是眾人皆知，只
是我們具有的優勢是積極的態度，我們從葛拉罕那裏學到成功投資的關鍵是在買進好
的公司股票在其股價相對於代表的實際價值被低估的時候。
Most institutional investors in the early 1970s, on the other hand,
regarded business value as of only minor relevance when they were
deciding the prices at which they would buy or sell. This now seems hard
to believe. However, these institutions were then under the spell of
academics at prestigious business schools who were preaching a
newly-fashioned theory: the stock market was totally efficient, and
therefore calculations of business value - and even thought, itself - were of
no importance in investment activities. (We are enormously indebted to
those academics: what could be more advantageous in an intellectual
contest - whether it be bridge, chess, or stock selection than to have
opponents who have been taught that thinking is a waste of energy?)
在1970年代早期大部份的機構投資人卻認為企業價值與他們考量買進賣出的價格並
無太大關聯，現在看來當然令人難以置信，然而當時他們受到知名的商學院所提出的
新理論所惑，「股票市場具有完全的效率，因此計算企業的價值對於投資活動一點也
不重要」，事後想想我們實在虧欠這些學者太多了，在不管是橋牌、西洋棋或是選股
等鬥智的競賽中，還有什麼能讓我們更有利的，當對手被告知思考是白費力氣的一件
事。
Through 1973 and 1974, WPC continued to do fine as a business, and
intrinsic value grew. Nevertheless, by yearend 1974 our WPC holding
showed a loss of about 25%, with market value at $8 million against our
cost of $10.6 million. What we had thought ridiculously cheap a year
earlier had become a good bit cheaper as the market, in its infinite wisdom,
marked WPC stock down to well below 20 cents on the dollar of intrinsic
value.
1973到1974年間華盛頓郵報表現依舊良好使得實質價值持續增加，儘管如此我們
在該公司的持股市值卻由原始成本的一仟多萬減少25%變成八百萬美元，本來我們覺
得已經夠便宜的東西，沒想到在一年之後具有無比大智慧的市場又將它的標價又向下
調整到至少比其實際價值少兩成的地步。
You know the happy outcome. Kay Graham, CEO of WPC, had the
brains and courage to repurchase large quantities of stock for the company
at those bargain prices, as well as the managerial skills necessary to
dramatically increase business values. Meanwhile, investors began to
recognize the exceptional economics of the business and the stock price
moved closer to underlying value. Thus, we experienced a triple dip: the
company’s business value soared upward, per-share business value
increased considerably faster because of stock repurchases and, with a
narrowing of the discount, the stock price outpaced the gain in per-share
business value.
美好的結局可以預知，Kay Graham-華盛頓郵報的總裁具有無比的智慧與勇氣，除了
擁有極佳的管理長才將公司的內在價值進一步提昇之外，更大手筆地以便宜的價格大
量買回公司的股份，在此同時投資人開始體認到公司特殊的競爭優勢而使得公司股價
回昇到合理的價位。所以我們經歷了三重享受，一來公司本身的價值提昇，二來每股
所代表的價值因公司實施庫藏股又增加，三來隨著折價幅度逐漸縮小，股價的表現超
越公司價值實際增加。
We hold all of the WPC shares we bought in 1973, except for those
sold back to the company in 1985’s proportionate redemption. Proceeds
from the redemption plus yearend market value of our holdings total $221
million.
除了1985年依持股比例賣回給公司的股份外，其他的持股皆未變動，年底持股的市
值加上賣回股份所得的收入合計為二億二仟萬美元。
If we had invested our $10.6 million in any of a half-dozen media
companies that were investment favorites in mid-1973, the value of our
holdings at yearend would have been in the area of $40 - $60 million. Our
gain would have far exceeded the gain in the general market, an outcome
reflecting the exceptional economics of the media business. The extra
$160 million or so we gained through ownership of WPC came, in very large
part, from the superior nature of the managerial decisions made by Kay as
compared to those made by managers of most media companies. Her
stunning business success has in large part gone unreported but among
Berkshire shareholders it should not go unappreciated.
假若在當初1973年中我們將一仟萬隨便投資一家當時最熱門的媒體事業，則到今年
年底我們持股的市值大約會在四到六仟萬元之間，這結果顯然比一般市場的平均表現
高出許多，其原因在於媒體的特殊競爭力，至於再多出來的一億六仟萬部份是因為華
盛頓郵報的總裁Kay作出的決策優於其他媒體事業的經營者，雖然她驚人的事業成就
並未有人大幅報導，但Berkshire的所有股東卻不能不加以珍惜。
Our Capital Cities purchase, described in the next section, required me
to leave the WPC Board early in 1986. But we intend to hold indefinitely
whatever WPC stock FCC rules allow us to. We expect WPC’s business
values to grow at a reasonable rate, and we know that management is both
able and shareholder-oriented. However, the market now values the
company at over $1.8 billion, and there is no way that the value can
progress from that level at a rate anywhere close to the rate possible when
the company’s valuation was only $100 million. Because market prices
have also been bid up for our other holdings, we face the same
vastly-reduced potential throughout our portfolio.
由於我們買下資本城股份(後面會詳描述)使得我必須在1986年被迫離開華盛頓郵報
的董事會，但只要法令許可我們將無限期的持有華盛頓郵報的股份，我們期待該公司
的價值持續穩定成長，我們也知道公司的管理階層有才能且完全以股東的利益為導
向，不過該公司的市值目前已增加為十八億美元，公司的價值很難再以當初市值僅一
億美元時的速度成長，也由於我們其他主要的持股股價大多已反映，所以我們的投資
組合很難再像過去一般具成長潛力。
You will notice that we had a significant holding in Beatrice Companies
at yearend. This is a short-term arbitrage holding - in effect, a parking
place for money (though not a totally safe one, since deals sometimes fall
through and create substantial losses). We sometimes enter the arbitrage
field when we have more money than ideas, but only to participate in
announced mergers and sales. We would be a lot happier if the funds
currently employed on this short-term basis found a long-term home. At
the moment, however, prospects are bleak.
或許你會發現年底我們有一大筆Beatrice公司的持股，這是屬於短期的套利動作，算
是閒置資金暫時的去處(雖然不是百分之百安全，因為交易有時也會發生問題導致重大
的損失)，當資金過多時，我們偶爾也會參與套利活動，但大多只限於已宣布的購併案，
當然若能為這些資金找到更長期可靠的去處我們會更高興，但現階段卻找不到任何合
適的對象。
At yearend our insurance subsidiaries had about $400 million in
tax-exempt bonds, of which $194 million at amortized cost were issues of
Washington Public Power Supply System (“WPPSS”) Projects 1, 2, and 3. 1
discussed this position fully last year, and explained why we would not
disclose further purchases or sales until well after the fact (adhering to the
policy we follow on stocks). Our unrealized gain on the WPPSS bonds at
yearend was $62 million, perhaps one-third arising from the upward
movement of bonds generally, and the remainder from a more positive
investor view toward WPPSS 1, 2, and 3s. Annual tax-exempt income from
our WPPSS issues is about $30 million.
到年底為止，我們旗下保險子公司大約持有四億美元的免稅債券，其中大約有一半是
WPPSS華盛頓公用電力供應系統發行的債券(該公司我已於去年詳儘的說明，同時也
解釋在事情塵埃落定之前我們為何不願進一步說明公司的進出動作，就像我們投資股
票時一樣，到年底我們在該債券的未實現投資利益為6,200萬美元，三分之一的原因
是由於債券價格普遍上漲，其餘則是投資人對於WPPSS一、二、三期計劃有較正面的
看法，我們每年從該投資所獲得的免稅利益大約為3,000萬美元。
Capital Cities/ABC, Inc.
資本城/ABC
Right after yearend, Berkshire purchased 3 million shares of Capital
Cities/ABC, Inc. (“Cap Cities”) at $172.50 per share, the market price of
such shares at the time the commitment was made early in March, 1985.
I’ve been on record for many years about the management of Cap Cities: I
think it is the best of any publicly-owned company in the country. And
Tom Murphy and Dan Burke are not only great managers, they are precisely
the sort of fellows that you would want your daughter to marry. It is a
privilege to be associated with them - and also a lot of fun, as any of you
who know them will understand.
大約在年後，Berkshire買進約300萬股的資本城/ABC股票，(每股價格172.5美元，
這約當於1985年三月洽談時的市價)，我追蹤該公司的管理績效已有許多年，我認為
他們是上市公司當中最優秀的，湯姆墨菲與丹柏克不但是最優秀的管理階層，也是那
種你會想把自己的女兒嫁給他的那一種人，跟他們一起合作實在是我的榮幸，也相當
愉快，若相信各位若認識他們應該也會有這種感覺。
Our purchase of stock helped Cap Cities finance the $3.5 billion
acquisition of American Broadcasting Companies. For Cap Cities, ABC is a
major undertaking whose economics are likely to be unexciting over the
next few years. This bothers us not an iota; we can be very patient. (No
matter how great the talent or effort, some things just take time: you can’t
produce a baby in one month by getting nine women pregnant.)
我們的股權投資將使得資本城因此取得35億美元的資金用來購併美國廣播公司
ABC，雖然對資本城來說，或許ABC的效益無法在短暫幾年內就立竿見影，但我們很
有耐心一點也不心急，畢竟就算是才華與努力俱備，還是需要時間來發酵，就算你讓
九個女人同時懷孕，也不可能讓小孩一個月就生出來。
As evidence of our confidence, we have executed an unusual
agreement: for an extended period Tom, as CEO (or Dan, should he be CEO)
votes our stock. This arrangement was initiated by Charlie and me, not by
Tom. We also have restricted ourselves in various ways regarding sale of
our shares. The object of these restrictions is to make sure that our block
does not get sold to anyone who is a large holder (or intends to become a
large holder) without the approval of management, an arrangement similar
to ones we initiated some years ago at GEICO and Washington Post.
為了展現我們的信心，我們特別與管理階層簽訂了一項特別協議，那就是在一定的期
間內，我們的投票權將交給擔任CEO的湯姆墨菲(或是接任的丹柏克)來處理。事實上
這項提案是由我與查理主動提出，同時我們還自我限制了一些賣出股份的條件，這個
動作主要是為了確保我們出售的股份不會落到未經現有管理階層同意的人士身上，有
點類似幾年前我們與吉列刮鬍刀與華盛頓郵報簽訂的協議。
Since large blocks frequently command premium prices, some might
think we have injured Berkshire financially by creating such restrictions.
Our view is just the opposite. We feel the long-term economic prospects
for these businesses - and, thus, for ourselves as owners - are enhanced by
the arrangements. With them in place, the first-class managers with whom
we have aligned ourselves can focus their efforts entirely upon running the
businesses and maximizing long-term values for owners. Certainly this is
much better than having those managers distracted by “revolving-door
capitalists” hoping to put the company “in play”. (Of course, some managers
place their own interests above those of the company and its owners and
deserve to be shaken up - but, in making investments, we try to steer clear
of this type.)
由於有時鉅額的股票交易往往必須溢價取得，有些人可能認為這樣的限制可能會損及
Berkshire股東的權益，不過我們的看法正好完全相反，身為公司的所有權人，我們
認定這些企業的長期經濟利益將因為這些限制而更加鞏固，因為如此一來專業經理人
便能全心全意的為公司打拼，進而為全體股東創造最大的利益，很顯然的這比讓一些
經理人整天為了換不同的老闆而分心，(當然有些經理人會把自己的利益擺在公司的利
益之前，所以我們在投資時會儘量避開這類的經營階層)
Today, corporate instability is an inevitable consequence of
widely-diffused ownership of voting stock. At any time a major holder can
surface, usually mouthing reassuring rhetoric but frequently harboring
uncivil intentions. By circumscribing our blocks of stock as we often do,
we intend to promote stability where it otherwise might be lacking. That
kind of certainty, combined with a good manager and a good business,
provides excellent soil for a rich financial harvest. That’s the economic
case for our arrangements.
今天企業的不穩定性是股權分散的必然結果，一家公司隨時都會有大股東浮上檯面，
滿口仁義道德但實際上卻包藏禍心，我們常藉由鎖住自身持有的股權來宣示對公司穩
定的支持，這種安定感加上好的經營階層與企業型態，是讓企業獲利豐收的沃土，這
就是我們會這樣安排的用意所在。
The human side is just as important. We don’t want managers we like
and admire - and who have welcomed a major financial commitment by us
- to ever lose any sleep wondering whether surprises might occur because
of our large ownership. I have told them there will be no surprises, and
these agreements put Berkshire’s signature where my mouth is. That
signature also means the managers have a corporate commitment and
therefore need not worry if my personal participation in Berkshire’s affairs
ends prematurely (a term I define as any age short of three digits).
當然人性面也很重要，我們不希望我們欣賞與推崇的經理人，在歡迎我們的加入後，
會擔心一覺醒來，因為我們持有重要股權，所有事情一夕生變。我告訴他們絕對放心，
我們一定說話算話，而且也包括Berkshire公司的承諾，萬一我個人發生了什麼不幸
(意思是指我本人活不到一百歲就掛了)。
Our Cap Cities purchase was made at a full price, reflecting the very
considerable enthusiasm for both media stocks and media properties that
has developed in recent years (and that, in the case of some property
purchases, has approached a mania). it’s no field for bargains. However,
our Cap Cities investment allies us with an exceptional combination of
properties and people - and we like the opportunity to participate in size.
當然我們投資資本城的這次交易並未佔到什麼便宜，這反應出近年來媒體事業的蓬勃
發展(當然還比不上某些購併案的瘋狂)，事實上也沒有多少討價還價的餘地，但重點
是這項投資讓我們能與這傑出的人才與事業結合在一起，而且是相當龐大的規模。
Of course, some of you probably wonder why we are now buying Cap
Cities at $172.50 per share given that your Chairman, in a characteristic
burst of brilliance, sold Berkshire’s holdings in the same company at $43
per share in 1978-80. Anticipating your question, I spent much of 1985
working on a snappy answer that would reconcile these acts.
至於有人可能會覺得很奇怪，為何同樣一家公司，你們的董事長在五、六年前以43
塊的價錢賣掉，而現在卻以172.5塊的高價買回，有關這個問題，容我在多花一點時
間，想一個漂亮一點的答案給各位。
A little more time, please.
拜託!再給我多一點的時間。
Acquisition of Scott & Fetzer
史考特飛茲購併案
Right after yearend we acquired The Scott & Fetzer Company (“Scott
Fetzer”) of Cleveland for about $320 million. (In addition, about $90 million
of pre-existing Scott Fetzer debt remains in place.) In the next section of
this report I describe the sort of businesses that we wish to buy for
Berkshire. Scott Fetzer is a prototype - understandable, large,
well-managed, a good earner.
同一期間我們還花斥資三億二千萬美金購併了位於克里夫蘭的史考特飛茲，(此外該公
司原本的9,000萬債務將繼續存在)，下一個段落我將會說明Berkshire意欲購併公
司的一些標準，史考特飛茲就是個典型的例子-易懂、夠大、管理佳、很會賺錢。
The company has sales of about $700 million derived from 17
businesses, many leaders in their fields. Return on invested capital is good
to excellent for most of these businesses. Some well-known products are
Kirby home-care systems, Campbell Hausfeld air compressors, and Wayne
burners and water pumps.
該公司有17項事業，年營業額約七億美金，很多都是該行的領導者，投資報酬率相
當高，擁有許多知名品牌，如寇比家護系統、空氣壓縮機、瓦斯爐、打水pump等。
World Book, Inc. - accounting for about 40% of Scott Fetzer’s sales and
a bit more of its income - is by far the company’s largest operation. It also
is by far the leader in its industry, selling more than twice as many
encyclopedia sets annually as its nearest competitor. In fact, it sells more
sets in the U.S. than its four biggest competitors combined.
另外著名的世界百科全書約佔該公司銷售額的四成，是主要的營業項目之一，其銷售
量比起其他四家同業的量還多。
Charlie and I have a particular interest in the World Book operation
because we regard its encyclopedia as something special. I’ve been a fan
(and user) for 25 years, and now have grandchildren consulting the sets j
ust as my children did. World Book is regularly rated the most useful
encyclopedia by teachers, librarians and consumer buying guides. Yet it
sells for less than any of its major competitors. Childcraft, another World
Book, Inc. product, offers similar value. This combination of exceptional
products and modest prices at World Book, Inc. helped make us willing to
pay the price demanded for Scott Fetzer, despite declining results for many
companies in the direct-selling industry.
我和查理對世界百科全書特別感興趣，事實上我讀他們的書已有25年的歷史，現在
連我自己的孫子都有一套，它被所有的老師、圖書館與讀者評選為最有用的百科全書，
而且它的售價比起同類型的書還便宜，這種價美物廉產品的結合使得我們願意以該公
司提出的價格進行投資，儘管直銷業近幾年來表現並不出色。
An equal attraction at Scott Fetzer is Ralph Schey, its CEO for nine
years. When Ralph took charge, the company had 31 businesses, the
result of an acquisition spree in the 1960s. He disposed of many that did
not fit or had limited profit potential, but his focus on rationalizing the
original potpourri was not so intense that he passed by World Book when it
became available for purchase in 1978. Ralph’s operating and
capital-allocation record is superb, and we are delighted to be associated
with him.
另外值得注意的是擔任該公司總裁已九年的Ralph Schey，由於1960年代的購併風
潮，當他上任時，該公司共有多達31項的事業，他大刀闊斧將不合適或不賺錢的事
業處置掉，他在資本分配上的功力相當傑出，我們很高興能與他一起共事。
The history of the Scott Fetzer acquisition is interesting, marked by
some zigs and zags before we became involved. The company had been
an announced candidate for purchase since early 1984. A major
investment banking firm spent many months canvassing scores of
prospects, evoking interest from several. Finally, in mid-1985 a plan of
sale, featuring heavy participation by an ESOP (Employee Stock Ownership
Plan), was approved by shareholders. However, as difficulty in closing
followed, the plan was scuttled.
事實上購併史考特飛茲的過程相當有趣，在我們介入之前還有段小插曲，早在1984
年便傳出該公司有意要出售，一家投資銀行顧問花了好幾個月編織了許多美麗的遠
景，以吸引一些買主上門，最後在1985年中一項具有員工認股計劃特色的出售案為
股東大會所通過，然而到了最後節骨眼卻由於特定因素被擱置。
I had followed this corporate odyssey through the newspapers. On
October 10, well after the ESOP deal had fallen through, I wrote a short
letter to Ralph, whom I did not know. I said we admired the company’s
record and asked if he might like to talk. Charlie and I met Ralph for
dinner in Chicago on October 22 and signed an acquisition contract the
following week.
我在報上看到這項消息，立刻寫了一封簡短的信給Ralph Schey，雖然當時我並不認
識他本人，我說我們很欣賞公司過去的表現，不知道他有沒有興趣與我們談一談，不
久我與查理便在芝加哥與Ralph碰面共進晚餐，並在隔週正式簽定購併合約。
The Scott Fetzer acquisition, plus major growth in our insurance
business, should push revenues above $2 billion in 1986, more than double
those of 1985.
由於這項購併案與原本保險事業的大幅成長，將使明年公司的營收超越二十億美元，
大概是今年的兩倍。
Miscellaneous
其他事項
The Scott Fetzer purchase illustrates our somewhat haphazard
approach to acquisitions. We have no master strategy, no corporate
planners delivering us insights about socioeconomic trends, and no staff to
investigate a multitude of ideas presented by promoters and intermediaries.
Instead, we simply hope that something sensible comes along - and, when
it does, we act.
史考特飛茲購併案充份說明了我們對於購併採取隨性的態度，我們並沒有任何特定的
策略與計劃，也沒有專人來研究一些仲介者提供的企劃案，反而我們傾向一切順其自
然，反正時候到了，我們就會有所行動。
To give fate a helping hand, we again repeat our regular “business
wanted” ad. The only change from last year’s copy is in (1): because we
continue to want any acquisition we make to have a measurable impact on
Berkshire’s financial results, we have raised our minimum profit
requirement.
為了主動向命運招手，我們依慣例還是列出徵求被購併企業的小廣告，今年惟一的小
變動是第一項獲利的標準略微提高，主要是因為我們期望購併能為Berkshire帶來明
顯的改變:
Here’s what we’re looking for:
(1) large purchases (at least $10 million of after-tax
earnings),
(2) demonstrated consistent earning power (future
projections are of little interest to us, nor are
“turn-around” situations),
(3) businesses earning good returns on equity while
employing little or no debt,
(4) management in place (we can’t supply it),
(5) simple businesses (if there’s lots of technology, we
won’t understand it),
(6) an offering price (we don’t want to waste our time
or that of the seller by talking, even preliminarily,
about a transaction when price is unknown).
我們希望的企業是
(1)鉅額交易(每年稅後盈餘至少有一千萬美元)
(2)持續穩定獲利(我們對有遠景或具轉機的公司沒興趣)
(3)高股東報酬率(並甚少舉債)
(4)具備管理階層(我們無法提供)
(5)簡單的企業(若牽涉到太多高科技，我們弄不懂)
(6)合理的價格(在價格不確定前，我們不希望浪費自己與對方太多時間)
We will not engage in unfriendly takeovers. We can promise complete
confidentiality and a very fast answer - customarily within five minutes - as
to whether we’re interested. We prefer to buy for cash, but will consider
issuance of stock when we receive as much in intrinsic business value as we
give. Indeed, following recent advances in the price of Berkshire stock,
transactions involving stock issuance may be quite feasible. We invite
potential sellers to check us out by contacting people with whom we have
done business in the past. For the right business - and the right people -
we can provide a good home.
我們不會進行敵意購併，並承諾完全保密並儘快答覆是否感興趣(通常不超過五分
鐘) ，我們傾向採現金交易，除非我們所換得的實質價值跟我們付出的一樣多，否則
不考慮發行股份，當然由於最近Berkshire股價大幅上漲，發行新股也是可考慮的方
案。我們歡迎可能的賣方與那些過去與我們合作過的對象打聽，對於那些好的公司與
好的經營階層，我們可以提供一個好的歸屬。
On the other hand, we frequently get approached about acquisitions
that don’t come close to meeting our tests: new ventures, turnarounds,
auction-like sales, and the ever-popular (among brokers)
“I’m-sure-something-will-work-out-if-you-people-get-to-know-each-other”. None of these attracts us in the least.
另一方面我們也持續接到一些不符合我們條件的詢問，包括新事業、轉機股、拍賣案
以及最常見的仲介案(那些說你們要是能過碰一下面，一定會感興趣之類的) 。在此重
申我們對這些一點興趣都沒有。
* * *
Besides being interested in the purchases of entire businesses as
described above, we are also interested in the negotiated purchase of large,
but not controlling, blocks of stock, as in our Cap Cities purchase. Such
purchases appeal to us only when we are very comfortable with both the
economics of the business and the ability and integrity of the people
running the operation. We prefer large transactions: in the unusual case
we might do something as small as $50 million (or even smaller), but our
preference is for commitments many times that size.
除了以上買下整家公司的購併案外，我們也會考慮買進一大部份不具控制權的股份，
就像我們在資本城這個Case一樣，當然這要是我們對於該事業與經營階層都感到認
同時才有可能，而且是要大筆的交易，最少也要5,000萬美金以上，當然是越多越好。
* * *
About 96.8% of all eligible shares participated in Berkshire’s 1985
shareholder-designated contributions program. Total contributions made
through the program were $4 million, and 1,724 charities were recipients.
We conducted a plebiscite last year in order to get your views about this
program, as well as about our dividend policy. (Recognizing that it’s
possible to influence the answers to a question by the framing of it, we
attempted to make the wording of ours as neutral as possible.) We present
the ballot and the results in the Appendix on page 69. I think it’s fair to
summarize your response as highly supportive of present policies and your
group preference - allowing for the tendency of people to vote for the
status quo - to be for increasing the annual charitable commitment as our
asset values build.
今年破記錄的有96.8%的有效股權參與1985年的股東指定捐贈計劃，總計約四百多
萬美元捐出的款項分配給1,724家慈善機構，同時去年我們針對股東對於這項計劃與
股利政策的看法，進行全面性的公民投票，包含一個可以讓你表達對這項計劃的意見
(例如應否繼續、每一股應捐贈多少等等)你可能會有興趣知道事實上在此之前從未有
一家公司是以股東的立場來決定公司捐款的去向(為免劃地自限，我們儘量將問題的措
辭保持彈性) ，在股東會的資料中有相關的選票與結果，我們各位的回應對於本公司
現行政策的執行具有重要的參考價值。
We urge new shareholders to read the description of our
shareholder-designated contributions program that appears on pages 66
and 67. If you wish to participate in future programs, we strongly urge
that you immediately make sure that your shares are registered in the name
of the actual owner, not in “street” name or nominee name. Shares not so
registered on September 30, 1986 will be ineligible for the 1986 program.
我們也建議新股東趕快閱讀相關資訊，若你也想參加的話，我們強烈建議你趕快把股
份從經紀人那兒改登記於自己的名下。各位必須在1986年9月30日之前完成登記，
才有權利參與1986年的捐贈計畫。
* * *
Five years ago we were required by the Bank Holding Company Act of
1969 to dispose of our holdings in The Illinois National Bank and Trust
Company of Rockford, Illinois. Our method of doing so was unusual: we
announced an exchange ratio between stock of Rockford Bancorp Inc. (the
Illinois National’s holding company) and stock of Berkshire, and then let
each of our shareholders - except me - make the decision as to whether to
exchange all, part, or none of his Berkshire shares for Rockford shares. I
took the Rockford stock that was left over and thus my own holding in
Rockford was determined by your decisions. At the time I said, “This
technique embodies the world’s oldest and most elementary system of
fairly dividing an object. Just as when you were a child and one person cut
the cake and the other got first choice, I have tried to cut the company fairly,
but you get first choice as to which piece you want.”
五年前由於銀行控股公司法的通過，使得我們必須將旗下所有伊利諾銀行的股權處份
掉，當時我們的作法是相當特別的，我們宣佈Berkshire與洛克福銀行集團(伊利諾銀
行的母公司)的換股比率，讓除了我本人以外的所有股東自行決定是否將其所有或部份
Berkshire的股份轉獨立的洛克福銀行集團股份，剩下的部份由我本人全數吸收，當
時我曾說，這種分法是最古老且最有效分配一件東西的方法，就像是小時候大人會叫
一個小孩切蛋糕，然後叫另一個小孩先選一塊一樣，由我先將公司切成兩半，在讓所
有股東自由選擇。
Last fall Illinois National was sold. When Rockford’s liquidation is
completed, its shareholders will have received per-share proceeds about
equal to Berkshire’s per-share intrinsic value at the time of the bank’s sale.
I’m pleased that this five-year result indicates that the division of the cake
was reasonably equitable.
去年伊利諾銀行正式出售，當洛克福銀行集團清算結束，所有股東所收到的售股收入
與每股Berkshire的價值相當，我很高興五年後看來當時那塊蛋糕切的相當公平。
Last year I put in a plug for our annual meeting, and you took me up
on the invitation. Over 250 of our more than 3,000 registered
shareholders showed up. Those attending behaved just as those present
in previous years, asking the sort of questions you would expect from
intelligent and interested owners. You can attend a great many annual
meetings without running into a crowd like ours. (Lester Maddox, when
Governor of Georgia, was criticized regarding the state’s abysmal prison
system. “The solution”, he said, “is simple. All we need is a better class of
prisoners.” Upgrading annual meetings works the same way.)
去年超過3,000名的股東中大約有250名出席股東會，與會者的水準與去年相當，
問的問題顯示大家都相當有智慧且真正關心公司的股東，這在其他上市公司的股東會
是很少見到的，Lester Maddox-在擔任喬治亞州州長時曾批評當時糟糕透頂的獄政
制度:「解決的方法其實很簡單，我們要做的就是提昇人犯的素質水準」，我想要提昇
股東會的水準也是一樣的道理。
I hope you come to this year’s meeting, which will be held on May 20
in Omaha. There will be only one change: after 48 years of allegiance to
another soft drink, your Chairman, in an unprecedented display of
behavioral flexibility, has converted to the new Cherry Coke. Henceforth, it
will be the Official Drink of the Berkshire Hathaway Annual Meeting.
Berkshire的股東年會預計於1986年五月二十在奧瑪哈舉行，我希望各位屆時都能
參加，今年將會有一項改變，那就是經過48年的堅持，本人將進行一項前所未有的
習慣改變，將平常喝的飲料改成新的櫻桃可口可樂，而它也將是本次Berkshire股東
大會的指定飲料。
And bring money: Mrs. B promises to have bargains galore if you will
pay her a visit at The Nebraska Furniture Mart after the meeting.
最後記得帶錢來，B太太已經答應若股東在會議期間造訪她的家具店將會有意想不到
的折扣優惠!!
Warren E. Buffett
Chairman of the Board
March 4, 1986
華倫．巴菲特
董事會主席
1986年3月4日
原文載自：http://stasis.pixnet.net/blog/post/22778842
No comments:
Post a Comment