is here! Raise your hand if you sat there clicking "reload current page" until the 2008 letter showed up. I'll have a longer commentary later, but here are some initial thoughts:
1) Your consigliere is on record saying that value investors who venture into macroeconomics do so at their peril. I was afraid, I'll confess, that Buffett would do just that in his letter. But he didn't.
2) Buffett is well-known for preaching against diversification, but states that one of goals is for Berkshire to maintain "dozens of sources of earnings and cash" and that another is to find "new and VARIED streams of earnings." In fact, Berkshire is probably the most diversified company in the world.
3) Kremlinology alert--I'm about to read too much into Buffett's wording: On page 4 Buffett very precisely writes that the three large PIPE deals he made were "In our insurance portfolios." Meaning they were funded in large part by cheap/free float. So a 10% coupon on one of these deals is less than the return on equity to a Berkshire shareholder from doing the deal.
4) Berkshire's large equity put portfolio can be understood as partly a bet on future inflation, as they were written on indices that reflect nominal currency values. There is a chart on page 206 of Barton Bigg's Wealth, War and Wisdom that I'm too stupid to know how to reproduce. It shows that from 1932 through mid-1957, a period that included both the Great Depression and World War II, the Italian stock market enjoyed near-uninterrupted growth. But it's a nominal index--in real terms the market fell. But if you'd written a long-term put on that index on similar terms as the ones Buffett made, you would not have had to pay anything. Of course Buffett must also navigate inflation when trying to invest the premium he's received on those puts.
5) Berkshire Hathaway the stock declined 32% in 2008. Berkshire Hathaway the company declined only 9.6%, as measured by book value. Keep in mind that the company is now largely in the business at "borrowing" money from policyholder at very low/free/negative rates in order to invest in regulated utilities. Those two parts of the business did very well.