FYI: To the Shareholders of Berkshire Hathaway Inc.:Berkshire earned $4.0 billion in 2018 utilizing generally accepted accounting principles (commonly called“GAAP”). The components of that figure are $24.8 billion in operating earnings, a $3.0 billion non-cash loss from animpairment of intangible assets (arising almost entirely from our equity interest in Kraft Heinz), $2.8 billion in realizedcapital gains from the sale of investment securities and a $20.6 billionlossfrom a reduction in the amount of unrealizedcapital gains that existed in our investment holdings.A new GAAP rule requires us to include that last item in earnings. As I emphasized in the 2017 annual report,neither Berkshire’s Vice Chairman, Charlie Munger, nor I believe that rule to be sensible. Rather, both of us haveconsistently thought that at Berkshire this mark-to-market change would produce what I described as “wild andcapricious swings in our bottom line
Regards,
Ted
http://www.berkshirehathaway.com/letters/2018ltr.pdf
