Warren Buffett used the word “magic” (or a derivative such as “magical”) ten times in the last six Berkshire Hathaway Inc. Shareholder Letters and 18 times in the last 15 Shareholder Letters.
Reading thousands of pages of CFA study materials (a long time ago), I don’t remember the word “magic” once.
All 28 instances of the word “magic” (including derivatives) in Berkshire Hathaway Inc.’s Shareholder Letters written by Warren Buffett, 1977-2018
Most of the uses of “magic” below are positive. Some are pejorative.
2018: 1) By retaining all earnings for a very long time, and allowing compound interest to work its magic, we have amassed funds that have enabled us to purchase and develop the valuable groves earlier described.
2) The magical metal was no match for the American mettle.
2017: For the last 53 years, the company has built value by reinvesting its earnings and letting compound interest work its magic.
2016: 1) Charlie and I have no magic plan to add earnings except to dream big and to be prepared mentally and financially to act fast when opportunities present themselves.
2) This year the magic potion may be hedge funds, next year something else.
2015: 1) Mark’s accomplishments remind me of the magic regularly performed by Jacob Harpaz at IMC, our remarkable Israeli manufacturer of cutting tools.
2) This all-powerful trend is certain to continue: America’s economic magic remains alive and well.
2014: 1) The dynamism embedded in our market economy will continue to work its magic.
2) In LTV’s 1966 annual report, he explained the magic that would follow: “Most importantly, acquisitions must meet the test of the 2 plus 2 equals 5 (or 6) formula.”
2013: 1) And the dynamism embedded in our market economy will continue to work its magic.
2010: 1) The magic of TTI’s exceptional performance is created by Paul Andrews, its CEO, and his associates.
2007: 1) Why should these companies not put their U.S. managers in charge of the non-U.S. pension assets and let them work their magic on these assets as well?
2006: 1 & 2) It’s a business without magic except for that imparted by the people who run it. But Eitan, Jacob and their associates are true managerial magicians who constantly develop tools that make their customers’ machines more productive.
3) That was a magic moment for me.
2005: 1) For owners as a whole, there is simply no magic – no shower of money from outer space – that will enable them to extract wealth from their companies beyond that created by the companies themselves.
2) The new Helpers, however, assure the Gotrocks that this change of clothing is all-important, bestowing on its wearers magical powers similar to those acquired by mild-mannered Clark Kent when he changed into his Superman costume.
2004: 1) Capitalism had worked its magic, and these low-cost operations looked unstoppable.
1998: 1) Indeed, at deal time, major auditing firms sometimes point out the possibilities for a little accounting magic (or for a lot).
1990: 1 & 2) Attending were other children, adoring relatives, and Beemer the Clown, a local entertainer who includes magic tricks in his act. Beginning these, Beemer asked Emily to help him by waving a "magic wand" over "the box of wonders."
3) And that sums up my contribution to the performance of Berkshire's business magicians - the Blumkins, the Friedman family, Mike Goldberg, the Heldmans, Chuck Huggins, Stan Lipsey and Ralph Schey.
1989: 1) This financial creature has a magical quality: The embezzlers are richer by the amount of the bezzle, while the embezzlees do not yet feel poorer.
2) In our illustration, a company capable of earning only $100 million dollars annually - and therefore capable of paying only that much in interest - magically creates "earnings" for bondholders of $150 million.
1987: 1 & 2) There's nothing magic about the Uniform business; the only magic is in the Heldmans.
1982: 1) Proportionately, you have done just as well as if you had owned the magic 20%.
1981: 1) We have no magic formula to insulate our controlled insurance companies against this deteriorating future.
In addition to the word “magic”, Berkshire has enjoyed the action “magic” at the Berkshire Hathaway annual shareholder meeting. For eleven years, from 2006 to 2016, the Dallas magician Norman Beck performed at annual shareholder meetings. Below, a 2010 annual meeting photo posted by Berkshire subsidiary Borsheims; that year, in the Shareholder Letter, Buffett promised “Norman Beck, a remarkable magician from Dallas, will bewilder onlookers”.
(The upper left of the photo above might feature the crowd around blindfolded Patrick Wolff (out of frame), twice US chess champion, who took on all comers, in groups of six.)
What is up with Warren Buffett and “magic”? In “Warren Buffett "magic" (Part II)”, the investigation continues, and takes a surprising turn. Spoiler: less than meets the eye. To read Part II, click here.
Postscript: This exercise was sparked by a Warren Buffett quote about companies that bought back stock while revenues and profits grew, a formula he called magic. To find Buffett’s quote, I searched on “magic” in his Shareholder Letters and realized I was getting lots of hits.
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Part II completes the idea here: https://greatquarter.substack.com/p/warren-buffett-magic-part-ii