To the Shareholders of Berkshire Hathaway

# 2000 Letter to Shareholders ## To the Shareholders of Berkshire Hathaway Inc.: In 2000, Berkshire's net worth increased by $3.9 billion, or 6.5%. Our per-share book value has grown from $19.46 in 1965 to $40,442 at year-end 2000, a rate of 22.6% compounded annually. ## The Technology Bubble The year 2000 witnessed the bursting of the technology **bubble**. Companies with no earnings, no business plan, and no prospect of earning money were valued at billions of dollars. This was not investing—it was **speculation**. > "The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs." Investors who bought stocks based on price momentum rather than business value suffered devastating losses when the bubble burst. Those who focused on intrinsic value and maintained a margin of safety were protected. ## Investing vs. Speculation **Investing** is the process of laying out money now to get more back in the future. It requires analyzing a business, estimating its future cash flows, and buying at a price that provides a reasonable return. **Speculation** is buying something hoping that someone else will pay more for it later, regardless of its underlying value. Speculation is not illegal or immoral, but it is not what we do at Berkshire. ## Intrinsic Value Matters No matter how exciting a new technology may be, we will not invest unless we can estimate its [[intrinsic value]] with reasonable confidence. We passed on the technology boom not because we didn't understand the technology, but because we couldn't value the businesses. ## Conclusion Price is what you pay, value is what you get. In the technology bubble, many investors paid prices that bore no relationship to value. The inevitable result was disappointment. Warren E. Buffett Chairman of the Board