II. Refer to the Berkshire Hathaway Chairman's Letter in the 2018 Annual Report 4. What is the overall gain in book value growth of Berkshire Hathaway from 1964 to 2018? What is the overall gain in growth of the S&P from 1964 to 2018? What is the compounded annual growth in per share market value for Berkshire and for the S&P from 1965 to 2018? 5. Per Buffett, Berkshire's net income figures will be severely distorted in future quarterly and annual reports. In the Letter to Shareholders of the 2017 Annual Report, Buffett states: I must first tell you about a new accounting rule a generally accepted accounting principle (GAAP) that in future quarterly and annual reports will severely distort Berkshire's net income figures and very often mislead commentators and investors. The new rule says that the net change in unrealized investment gains and losses in stocks we hold must be included in all net income figures we report to you. That requirement will produce some truly wild and capricious swings in our GAAP bottom-line. Berkshire owns $170 billion of marketable stocks (not including our shares of Kraft Heinz), and the value of these holdings can easily swing by $10 billion or more within a quarterly reporting period. Including gyrations of that magnitude in reported net income will swamp the truly important numbers that describe our operating performance. For analytical purposes, Berkshire's "bottom-line will be useless. Did Buffett's prediction prove to be true? Explain. II. Refer to the Berkshire Hathaway Chairman's Letter in the 2018 Annual Report 4. What is the overall gain in book value growth of Berkshire Hathaway from 1964 to 2018? What is the overall gain in growth of the S&P from 1964 to 2018? What is the compounded annual growth in per share market value for Berkshire and for the S&P from 1965 to 2018? 5. Per Buffett, Berkshire's net income figures will be severely distorted in future quarterly and annual reports. In the Letter to Shareholders of the 2017 Annual Report, Buffett states: I must first tell you about a new accounting rule a generally accepted accounting principle (GAAP) that in future quarterly and annual reports will severely distort Berkshire's net income figures and very often mislead commentators and investors. The new rule says that the net change in unrealized investment gains and losses in stocks we hold must be included in all net income figures we report to you. That requirement will produce some truly wild and capricious swings in our GAAP bottom-line. Berkshire owns $170 billion of marketable stocks (not including our shares of Kraft Heinz), and the value of these holdings can easily swing by $10 billion or more within a quarterly reporting period. Including gyrations of that magnitude in reported net income will swamp the truly important numbers that describe our operating performance. For analytical purposes, Berkshire's "bottom-line will be useless. Did Buffett's prediction prove to be true? Explain
