The Letters of Warren Buffett: Word Count vs. Stock Performance

I had noticed Warren Buffett’s annual letter to shareholders was getting long in recent years, so I thought it would be interesting to compare word count to Berkshire stock performance over the last decade or so. Does Buffett write longer notes in years when Berkshire’s stock performs worse? Does he go long when it performs well? No relationship? Inquiring minds want to know.

The (graphical) answer belows shows that in the early and mid 1990s Buffett’s letter length tracked fairly nicely with stock performance. Of late, however, the two have become disconnected, with letter length no longer varying as much, and what little word count changes there are these days tend not to be highly correlated with Berkshire share price.

What does it all mean? I have no idea.

In case you’re curious, it’s a negative 0.4 correlation. Put differently, a standard regression model says Warren will weigh in tomorrow morning with a 12,612 word opus. Just in case you needed a number for the office pool.

[Update] Oooooh, I’m so smart. Buffett’s 2005 letter is now out, and it clocks in at  … 12,613 words. I was off by just one word. I can hardly get over my cleverness.


  1. Hey there is another correlation. The more Buffett Bashing there is, (and you have joined the loud chorus) the more he Outperforms in the years ahead. You haven’t forgotten the last time he was bashed, have you? It was 1999. Btw you must know there is good reason there are more words? Please you must know this. The company is bigger and more complicated every year. And as his desire, he wants his fellow owners to understand as much of it as is possible. But your messages are confirming that the Buffett bashing trend is in full flower again.

  2. Buffett bashing? Hardly. Playfully pointing out Buffett’s fondness for lengthly letters has nothing to do with bashing Mr. B. ‘Cause I am no Berkshire bear.

  3. Darn, you should have been an industry analyst, not a financial one!
    Also, since 1991 the size of MS Word has grown 10X and Buffett’s (and the rest of us) writing productivity has grown, oh, about 1%…but we cannot wiat for the next release…

  4. Hi Paul –
    Check this out – you may be wrong about your correlation this time around.