Insights from Analyzing 10 Years of Berkshire Hathaway Letters
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Reflections on NLP Analysis
My quantitative evaluation suggests that Berkshire Hathaway is a robust company with a solid portfolio of investments and businesses, notably in the insurance sector. The anticipated growth in financial strength and share price seems likely over time.
However, my analytical approach may have overlooked more nuanced insights. To verify this, I reviewed the 2021 annual letter to see if my findings aligned with Buffett's perspectives. Contrary to my expectations, the sentiment expressed in the 2021 letter diverged from my analytical conclusions.
Buffett does highlight the contributions from insurance subsidiaries, yet he also emphasizes other significant income sources such as Apple, BNSF (rail), and BHE (energy). Moreover, he characterizes Berkshire as a holder of substantial U.S.-based infrastructure companies rather than random acquisitions. His reflections on personal relationships are also critical, revealing his passion for his work and the people involved.
Conclusions
Ultimately, while my NLP exercise may not have yielded groundbreaking insights, it was not entirely fruitless. It became clear that applying NLP to annual reports may not be the most effective approach, as it often misses the underlying lessons that are not quantifiable.
NLP has its merits, particularly in counting words and identifying correlations across various authors. However, when analyzing the works of a single author, especially one as sagacious as Buffett, a thorough reading proves more beneficial.