Warren Buffett backs fair value

Warren Buffett, one of the world’s most successful investors and one of its
richest men, has given his backing to mark-to-market accounting, even though it
contributed to the worst year for his investment company since it began trading
in 1965.

Buffett, said in his highly personalised annual chairman’s statement to
investors: ‘We endorse market-to-market accounting.’

In relation to derivative contracts, he said: ‘We have told you before that
our derivative contracts, subject as they are to mark-to-market accounting, will
produce wild swings in the earnings we report. The ups and downs neither cheer
nor bother Charlie and me.

Indeed, the “downs” can be helpful in that they give us an opportunity to
expand a position on favourable terms.’

Buffett’s investment company Berkshire Hathaway recorded a 9.6%, or $11.5bn
(£8bn), fall in its book value for 2008.

Buffett’s statement can be found at

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