Book value has grown from $19 to $114,214, a rate of 19.7% compounded annually.*

from Warren Buffett – Letter To Shareholders 2012 on Rap Genius

Meaning

Berkshire Hathaway has had the highest sustained, steady growth of book value of any publicly traded company with an average of 10.3% higher annual compounded growth in book value than the S&P 500.

This has led to an overall growth of 586,817% in book value versus a 7,433% increase in book value of the S&P 500.

The increase in book value is the main way that Warren Buffett measures his success as CEO of Berkshire Hathaway. He doesn’t care about short term market swings, excepts as they allow him to buy assets at bargain prices. He only cares about increases in the intrinsic value of the business, which book value is a rough proxy of.

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