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.