4 ms·

Buffett thinks GAAP is almost useless now, and doesn't think accountants have a clue. He follows own "owners earnings" model, which is not a standard of any kin

• Proziam 7y ago
  GAAP is definitely an imperfect standard, so I don't begrudge them going their own way (and their way seems to be reasonable, from a cursory view). My comment mostly comes from the frankly ludicrous financials that have been making headlines in the last few years.
  • divbzero 7y ago
    Agreed. Also noteworthy that Buffett points out the shortcomings of GAAP’s mark-to-market rule whether it makes Berkshire earnings look undeservedly good (2019) or bad (2018).
• basch 7y ago
  "Berkshire’s 2018 and 2019 years glaringly illustrate the argument we have with the new rule. In 2018, a down year for the stock market, our net unrealized gains decreased by $20.6 billion, and we therefore reported GAAP earnings of only $4 billion. In 2019, rising stock prices increased net unrealized gains by the aforementioned $53.7 billion, pushing GAAP earnings to the $81.4 billion reported at the beginning of this letter. Those market gyrations led to a crazy 1,900% increase in GAAP earnings! Meanwhile, in what we might call the real world, as opposed to accounting-land, Berkshire’s equity holdings averaged about $200 billion during the two years, and the intrinsic value of the stocks we own grew steadily and substantially throughout the period."