Zero Hedge

The Tarrot Card Reader Of Omaha (and Charlie)'s Q4 net income fell 96% to $117 million, from $2.95 billion, for a fifth consecutive drop. Book value fell 9.1% of more than generally expected on declines in equity and fixed-income portfolios and writedowns in derivatives. Scary was the increase in liabilities on equity derivatives which increased 49% to $10 billion. It is likely that this number will keep growing as long as the market drops.

Key takehome "economy will be in shambles throughout 2009 - and, for that matter, probably well beoynd."

Here are some highlights from the letter (which is presented below):

During 2008 I did some dumb things in investments. I made at least one major mistake of commission and several lesser ones that also hurt. … Furthermore, I made some errors of omission, sucking my thumb when new facts came in that should have caused me to re-examine my thinking and promptly take action.
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By yearend, investors of all stripes were bloodied and confused, much as if they were small birds that had strayed into a badminton game.
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We're certain, for example, that the economy will be in shambles throughout 2009 -- and, for that matter, probably well beyond -- but that conclusion does not tell us whether the stock market will rise or fall.
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This led to a dysfunctional credit market that in important respects soon turned non-functional. The watchword throughout the country became the creed I saw on restaurant walls when I was young: "In God we trust; all others pay cash."
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In poker terms, the Treasury and the Fed have gone 'all in.' Economic medicine that was previously meted out by the cupful has recently been dispensed by the barrel. These once-unthinkable dosages will almost certainly bring on unwelcome aftereffects.
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Whatever the downsides may be, strong and immediate action by government was essential last year if the financial system was to avoid a total breakdown. Had that occurred, the consequences for every area of our economy would have been cataclysmic. Like it or not, the inhabitants of Wall Street, Main Street and the various Side Streets of America were all in the same boat.
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Amid this bad news, however, never forget that our country has faced far worse travails in the past. … America has had no shortage of challenges.
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This means that our $58.5 billion of insurance "float" -- money that doesn't belong to us but that we hold and invest for our own benefit -- cost us less than zero. In fact, we were paid $2.8 billion to hold our float during 2008. Charlie and I find this enjoyable.
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Berkshire is always a buyer of both businesses and securities, and the disarray in markets gave us a tailwind in our purchases. When investing, pessimism is your friend, euphoria the enemy.
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Additionally, the market value of the bonds and stocks that we continue to hold suffered a significant decline along with the general market. This does not bother Charlie and me. Indeed, we enjoy such price declines if we have funds available to increase our positions.