Warren Buffett：Berkshire 1978 Letter, Excerpt 3

For example, over the last three years - generally a bonanza period for the insurance industry, our largest profit producer - Berkshire’s per share net worth virtually has doubled, thereby compounding at about 25% annually through a combination of good operating earnings and fairly substantial capital gains. Neither this 25% equity gain from all sources nor the 19.4% equity gain from operating earnings in 1978 is sustainable. The insurance cycle has turned downward in 1979, and it is almost certain that operating earnings measured by return on equity will fall this year. However, operating earnings measured in dollars are likely to increase on the much larger shareholders’ equity now employed in the business.

Source： https://www.berkshirehathaway.com/letters/1978.html
Locator：1978 Chairman's Letter, excerpt 3 · Verified：2026-10-19 · Verification：Short excerpt

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