Warren Buffett：Berkshire 1979 Letter, Excerpt 4

Measuring such results against shareholders’ equity with securities valued at market could significantly distort the operating performance percentage because of wide year-to-year market value changes in the net worth figure that serves as the denominator. For example, a large decline in securities values could result in a very low “market value” net worth that, in turn, could cause mediocre operating earnings to look unrealistically good. Alternatively, the more successful that equity investments have been, the larger the net worth base becomes and the poorer the operating performance figure appears. Therefore, we will continue to report operating performance measured against beginning net worth, with securities valued at cost.

Source： https://www.berkshirehathaway.com/letters/1979.html
Locator：1979 Chairman's Letter, excerpt 4 · Verified：2026-10-19 · Verification：Short excerpt

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