Warren Buffett chides investors as his profits double
By Joshua Chaffin in New York
Published: March 11 2001 18:25GMT | Last Updated: March 11 2001 23:20GMT
 

 
Warren Buffett, America's legendary investor, has used his annual letter to shareholders 
to scold investors swept up by the fairytale of the internet and technology bubble. 

Mr Buffett, whose Berkshire Hathaway insurance and investment company, has won 
consistently high returns from his individual approach, did not spare the feelings of 
investors suffering from the collapse of technology stocks. 

"They know that overstaying the festivities . . . will eventually bring on pumpkins and 
mice," Mr Buffett wrote, comparing them to Cinderella. "But they nevertheless hate to 
miss a single minute of what is one helluva party. 

He sounded a rallying cry for the old economy: "I will tell you now that we have embraced 
the 21st century by entering such cutting edge industries as brick, carpet, insulation 
and paint," Mr Buffett wrote. "Try to control your enthusiasm." 

In his "Nothing sedates rationality like large doses of effortless money," he added in 
the letter at the weekend that accompanied his insurance and investment company's 
earnings. 

The 70-year-old investing legend could be forgiven for lecturing. After suffering a 
difficult 1999, Mr Buffett rebounded smartly in 2000. Berkshire's net profits rose 113 
per cent to $3.3bn while earnings per share more than doubled from $1,025 to $2,185. 

The results marked not only a turnaround for Mr Buffett, but the symbolic end to the 
speculative hysteria over internet and technology shares. 

When Mr Buffett issued his letter to shareholders at this time last year, Berkshire's 
stock had slumped to a one-year low of $41,800 as investors pushed aside the old-
fashioned value investments that Mr Buffett made famous in favour of flashy internet 
start-ups and dotcoms. 

Since then, the Nasdaq technology-based index has fallen by more than half from its high 
while Berkshire's stock has soared to $71,500 on the strength of investments in proven, 
old-economy companies. 

In his most recent letter, Mr Buffett warned investors to expect modest returns from the 
stock market, stating that "the long-term prospect for equities in general is far from 
exciting".