Every year, Warren Buffett writes an annual letter to the shareholders of Berkshire Hathaway. His annual letters are one of the most widely read documents in the business world as investors clue in on Buffett’s outlook for the market and economy as well as Berkshire’s performance the past year:

To the Shareholders of Berkshire Hathaway Inc.:

Berkshire’s gain in net worth during 2015 was $15.4 billion, which increased the per-share book value of both our Class A and Class B stock by 6.4%. Over the last 51 years (that is, since present management took over), per-share book value has grown from $19 to $155,501, a rate of 19.2% compounded annually.

During the first half of those years, Berkshire’s net worth was roughly equal to the number that really counts: the intrinsic value of the business. The similarity of the two figures existed then because most of our resources were deployed in ...

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