See the link below for the annual investor letters.

Here are some of the highlights:

1. Deal-making CEOs
In explaining why he thinks it’s so difficult to find stand-alone companies to buy at a “sensible” price, Buffett blames a buying frenzy driven in part by overly eager corporate managers who are egged on by their boards:
“If Wall Street analysts or board members urge that brand of CEO to consider possible acquisitions, it’s a bit like telling your ripening teenager to be sure to have a normal sex life.”

2. On leverage and sleeping well
“Our aversion to leverage has dampened our returns over the years. But Charlie and I sleep well. Both of us believe it is insane to risk what you have and need in order to obtain what you don’t need.”

3. Stop on in
Buffett touts one of the deals Berkshire did get done in 2017, its acquisition of a 38.6% partnership interest in travel-center operator Pilot Flying J, or PFJ. He offers this plug:
“When driving on the Interstate, drop in. PFJ sells gasoline as well as diesel fuel, and the food is good. If it’s been a long day, remember, too, that our properties have 5,200 showers.”

4. Liquidity and the ‘kindness of strangers’
In a discussion of Berkshire’s insurance float—the pool of money collected from premiums but not yet paid out in claims—Buffett talks about the desire for ample liquidity:
“Charlie and I never will operate Berkshire in a manner that depends on the kindness of strangers—or even—that of friends who may be facing liquidity problems of their own. During the 2008-2009 crisis, we liked having Treasury bills—loads of Treasury bills—that protected us from having to rely on funding sources such as bank lines or commercial paper.
“We have intentionally constructed Berkshire in a manner that will allow it to comfortably withstand economic discontinuities, including such extremes as extended market closures.”

5. ‘In America…’
Buffett regularly argues that the very long-term outlook for the U.S. economy—and stocks SPX, -1.27% —is undeniably bullish:
“Charlie and I view the marketable common stocks that Berkshire owns as interests in businesses, not as ticker symbols to be bought or sold based on their ‘chart’ patterns, the ‘target’ prices of analysts or the opinions of media pundits. Instead, we simply believe that if the businesses of the investees are successful (as we believe most will be) our investments will be successful as well. Sometimes the payoffs to us will be modest; occasionally the cash register will ring loudly. And sometimes I will make expensive mistakes.
“Overall—and over time—we should get decent results. In America, equity investors have the wind at their back.”

6. Watch those fees
Buffett is a stock picker, but he’s adamant most investors are better off sticking with passive, low-cost, index-tracking products. In a section where he again bashes Wall Street and hedge funds, he reminds:
“Performance comes, performance goes. Fees never falter.”

7. ‘Willingness to look foolish’
“Though markets are generally rational, they occasionally do crazy things. Seizing the opportunities then offered does not require great intelligence, a degree in economics or a familiarity with Wall Street jargon such as alpha and beta. What investors then need instead is an ability to both disregard mob fears or enthusiasms and to focus on a few simple fundamentals. A willingness to look unimaginative for a sustained period—or even to look foolish—is also essential.”

Here is the full annual Buffett 2017 Letter.

“Volatility is greatest at turning points, diminishing as a new trend becomes established.” George Soros

1. China to Retaliate Against U.S. Metal Tariffs — It’s the latest trade tension escalation between the world’s top two economies. China has threatened retaliation after the Trump administration received a green light to impose steep tariffs on aluminum and steel imports on national security grounds. “If the final decision from the U.S. hurts China’s interests, we will definitely take necessary measures to protect our rights,” said Wang Hejun, a senior official at China’s Commerce Ministry.
2. Apple Looks to Buy Cobalt Directly from Miners — Apple is in talks to buy long-term supplies of cobalt directly from miners for the first time, seeking to procure “several thousand” metric tons of cobalt per year for a period of at least five years, Bloomberg reports. The strategy is designed to buffer Apple’s (NASDAQ:AAPL) reserves of the key lithium ion battery ingredient amid industry fears of a shortage driven by the electric vehicle boom.
3. United Technologies to Consider Breakup Decision in 2018 — United Technologies (UTX) is studying a plan to split up a portfolio that includes aerospace, elevators and air conditioners, with a decision to be announced by the end of this year. “The real question is do you get a significant multiple expansion by having separate companies,” CEO Greg Hayes told the Barclays investor conference in Miami.
4. Chinese Regulator Seizes Control of Anbang Insurance Group— the Chinese government has seized control of Anbang Insurance Group and said its chairman had been prosecuted, in a striking move that highlights Beijing’s willingness to crack down on financial risk and curtail debt-laden conglomerates. Anbang is said to have violated laws and regulations that “may seriously endanger the solvency of the company,” following acquisitions including the Waldorf Astoria and insurers in Europe and Asia.

The week ahead — Economic data from Econoday.com:

“If I have positions going against me, I get right out; if they are going for me, I keep them… Risk control is the most important thing in trading. If you have a losing position that is making you uncomfortable, the solution is very simple: Get out, because you can always get back in.” Paul Tudor Jones

1. OxyContin Maker Stops Promoting Opioids — OxyContin maker Purdue Pharma is stopping to promote the drug and other opioids to doctors amid a series of state and municipal lawsuits that blame the company for contributing to the opioid epidemic. It will also cut its U.S. sales force by more than 50%, to about 200 people, while remaining representatives “will no longer be visiting offices to engage in discussions about opioid products.”
2. ‘5G.Connected’ Debuts at Olympics — attendees of the Winter Olympic games in Pyeongchang are experiencing the future of wireless technology. The “5G.Connected” showcase, engineered by KT Corp. (NYSE:KT), uses technology from Intel (NASDAQ:INTC), Ericsson (NASDAQ:ERIC) and Samsung Electronics (OTC:SSNLF), for the world’s first broad-scale 5G network. At 10 gigabits a second, it’s about 100 times faster than 4G.
3. Trump To Endorse $0.25/gallon Gasoline Tax Hike — Pres. Trump stated late last week that he would support a $0.25/gallon increase in federal gasoline and diesel taxes to help pay for upgrading U.S. roads, bridges and other public works. The government has not raised the gas tax since 1993, under the Clinton administration. The current federal levy is 18.4 cents a gallon on retail gasoline and 24.4 cents for a gallon of diesel.
4. Big Investor Moves in Latest 4Q 13-F filings — Warren Buffett’s Berkshire Hathaway (BRK.A, BRK.B) reported a new fourth quarter stake in Teva (NYSE:TEVA), and bought more shares of Apple (NASDAQ:AAPL), which surpassed Wells Fargo (NYSE:WFC) as its largest common stock investment. Dan Loeb’s Third Point took a 2M share stake in Netflix (NASDAQ:NFLX), while David Einhorn’s Greenlight Capital showed several new big retailer holdings in J.C. Penney (NYSE:JCP), Nordstrom (NYSE:JWN), Kohl’s (NYSE:KSS) and Under Armour (NYSE:UAA).
5. Senate Blocks Immigration Plans — the Senate blocked four immigration-related proposals late last week, including a bipartisan plan that would have provided $25B for border security and a path to citizenship for 1.8M young, undocumented immigrants. A separate measure that lost by a large margin would’ve ended a diversity visa lottery program and imposed strict limits on family-based migration.
6. Latest Weekly AAII Sentiment — In this week’s survey, bullish sentiment increased from 37.0% up to 48.5% for a gain of 11.5 percentage points. That’s the largest weekly increase since last September.

Bearish sentiment plunged from 35.0% down to 21.4%. That’s the largest weekly decline in two years!

The week ahead — Economic data from Econoday.com:

“But, like Cinderella at the ball, you must heed one warning or everything will turn into pumpkins and mice: Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful. If he shows up some day in a particularly foolish mood, you are free to either ignore him or to take advantage of him, but it will be disastrous if you fall under his influence. Indeed, if you aren’t certain that you understand and can value your business far better than Mr. Market, you don’t belong in the game. As they say in poker, “If you’ve been in the game 30 minutes and you don’t know who the patsy is, you’re the patsy.'” — Warren Buffett

1. The SEC and CFTC Plan to Ask Congress for Federal Oversight of Digital-Currency & Credit Card Ban on Buying Crypto-currencies — worries over a global regulatory clampdown led bitcoin – which is still trading below $8,000 – last week to record its biggest weekly loss since December 2013. Lloyds (NYSE:LYG) is barring its credit card customers from buying bitcoin and other cryptocurrencies. It follows similar moves by U.S. rivals JPMorgan (NYSE:JPM), BofA (NYSE:BAC) and Citigroup (NYSE:C), which all announced similar bans on crypto purchases via credit cards. In addition, the SEC and CFTC plan to ask Congress to consider federal oversight for digital-currency trading platforms, many of which have been operating in a regulatory gray zone.
2. Steve Wynn Steps Down as Wynn Resorts Chairman, CEO — Steve Wynn has resigned as CEO and Chairman of Wynn Resorts (NASDAQ:WYNN) in the wake of allegations of sexual misconduct that surfaced in recent weeks. “I have reached the conclusion I cannot continue to be effective in my current roles,” he declared. The company has named current President Matt Maddox as its new CEO and Boone Wayson as Non-Executive Chairman.
3. CBOE Announced No major Impact from VIX products’ Demise — CBOE Global Markets does not expect any significant impact on trading volumes at the exchange following the collapse of two popular exchange-traded products (ETPs) that let traders bet that volatility will fall. The Chicago exchange addressed analysts’ questions after markets closed late last week, following an almost 15% decline in CBOE’s share price in the last three days.
4. Gun Maker Remington Seeks Financing for Bankruptcy Filing — one of the biggest U.S. gun manufacturers is taking steps toward filing for bankruptcy, according to Reuters. Remington has “reached out to banks and credit investment funds” in search of “debtor-in-possession financing” that would let the company continue operations once it went bankrupt.
5. Congress Ends Brief Government Shutdown — Just hours after the government stumbled into another shutdown, Congress passed a budget agreement early Friday that would extend the current level of federal funding until March 23. The bill would also bump limits on defense and non-defense spending by about $300B over the next two years.
6. Stock-market Correction Looks a lot like 1996-1997 — according to Jeff deGraaf of Reinaissance Macro Research, the current market trend for the past 12-month shows similar pattern from the 1996-1997. Noted ““Today’s price action is weaker over a shorter period of time than that of ‘96, and then, as we suspect happens today, the market needed a few weeks to convalesce before resuming its uptrend. When we aggregate the price paths of the top 25 correlations with today, the picture suggests a pause of a few weeks and resumption of trend,”. See the chart below.

The week ahead — Economic data from Econoday.com:

“My attitude is that I always want to be better prepared than someone I’m competing against. The way I prepare myself is by doing my work each night.” — Marty Schwartz

1. President Trump team Considers Nationalizing 5G Network — national security officials in the Trump administration are looking at options where the U.S. government could take over part of the country’s mobile network as a way of guarding against “dominant malicious actor” China. The report from Axios describes two options: The U.S. government pays for and builds the single network – an unprecedented nationalization of private infrastructure – or an alternative where U.S. wireless providers build their own 5G networks, which would be less commercially disruptive to the industry.
2. Amazon, Berkshire, JPMorgan Link Up to Form New Health-Care Company — Amazon (AMZN) rocked the healthcare sector after announcing that it has partnered with Warren Buffett’s Berkshire Hathaway (NYSE: BRK-A) and Jamie Dimon’s JPMorgan Chase & Co. (NYSE: JPM) to start a new company to address rising healthcare costs for their U.S. employees, that may potentially be rolled out to all Americans. The new entity will be an independent company that will be “free from profit-making incentives and constraints”. Its initial focus will be on technology solutions that will provide U.S. employees and their families with simplified, high-quality and transparent healthcare at a reasonable cost.
3. Boeing Buys Stake in Battery Technology Start-up — Boeing HorizonX Ventures (NYSE:BA) has taken a minority stake in startup Cuberg, which is seeking to develop next-generation battery technology for potential aerospace and industrial applications. “Battery technology is still heavy,” so you can’t make it for a plane of current commercial aircraft size, Cuberg CEO Richard Wang addressed in a recent interview on CNBC.
4. FOMC Stays On Hold, Expects Further Gradual Hikes — the Federal Reserve held its Fed Funds target range at 1.25-1.5% in its recent meeting as Janet Yellen gets ready to depart the central bank. The economy continues to strengthen, and inflation is expected to move up, according to the policy statement, while the FOMC continues to anticipate further gradual increases in short-term rates. Rate markets have about fully priced in March as the next move.
5. Treasury Yields Spike – 10-year yield surpassing 2.8 percent and the 30-year bond yield rising above 3 percent for the first time in eight months — The S&P 500 Index’s slumped nearly 5% last week after the 10-year Treasury yield popped above 2.85 percent for the first time since January 2014.

The week ahead — Economic data from Econoday.com: