The General Stock Market in 1960
A year ago, I commented on the somewhat faulty picture presented in 1959 by the Dow-Jones Industrial Average which had advanced from 583 to 679, or 16.4%. Although practically all investment companies showed gains for a year, less than 10% of them were able to match or better the record of Industrial Average. The Dow-Jones Utility Average had a small decline and Railroad Average recorded a substantial one.
去年，我指出道琼斯工业平均指数有16.4%的涨幅，从583点涨到679点，但却与市场真实情况背道而驰。虽然所有的投资机构那一年都显示盈利，但是达到或者超过道琼斯指数涨幅的公司却不到10%。道琼斯公共事业平均指数有所下跌而铁路平均指数却下跌显著。
In 1960, the picture was reversed. The Industrial Average declined from 679 to 616, or 9.3%. Adding back the dividends which would have been received through ownership of the Average still left it with an overall loss of 6.3%. On the other hand, the Utility Average showed a good gain and, while all the results are not now available, my guess is that about 90% of all investment companies out-performed the Industrial Average. The majority of investment companies appear to have ended the year with overall results in the range of plus or minus 5%. On the New York Stock Exchange, 653 common stocks registered losses for the year while 404 showed gains.
在1960年，情况反转了。工业指数从679点跌到616点，有9.3%的跌幅。算上股利总体下跌也应该有6.3%。 另一方面，公共事业平均指数却涨幅显著，同时虽然全部结果没有出来，我猜有90%的投资公司表现要好于工业平均指数。大多数投资公司的表现应该在+/-5%之间。在纽约证交所，去年有653只股票下跌，404只股票上涨。
Results in 1960:
1960年表现
My continual objective in managing partnership funds is to achieve a long-term performance record superior to that of the Industrial Average. I believe this Average, over a period of years, will more or less parallel the results of leading investment companies. Unless we do achieve this superior performance there is no reason for existence of the partnerships.
我管理合伙基金的一贯目标是长期的收益要好于工业指数。我相信长期来看，工业指数的回报率最终会或多或少和头部的投资公司水平持平。如果我们不以超越指数为目标，我们的合伙基金又有何存在的意义？
However, I have pointed out that any superior record which we might accomplish should not be expected to be evidence by a relatively constant advantage in performance compared to Average. Rather it is likely that if such an advantage is achieved, it will be through better-than-average performance in stable or declining markets and average or perhaps even poorer-than-average performance in rising markets.
但是，正如我之前所说，我们曾经取得过的任何成绩都不能佐证我们可以持续跑赢指数。如果我们期望达到长期收益率超越指数的目标，应该通过以下方法实现：1, 在盘整或者熊市时超越市场平均回报; 2, 在牛市大涨时和市场持平或者略低于市场。
I would consider a year in which we declined 15% and the Average 30% to be much superior to a year when both we and the Average advanced 20%. Over a period of time there are going to be good and bad years; there is nothing to be gained by getting enthused or depressed about the sequence in which they occur. The important thing is to be beating par; a four on a par thee hole is not as good as a five on a par five hole and it is unrealistic to assume we are not going to have our share of both par three's and par five's.
如果某年我们下跌了15%而指数下跌了30%，我会觉得该年的表现要更好于我们和指数都上涨了20%。长期来看，市场起起伏伏，情绪随着市场的涨跌而时而兴奋时而沮丧是毫无意义的。像高尔夫球一样，关键是低于标准杆的成绩完成球道。在标准杆三杆的球道以四杆完成明显不如以标准杆完成五杆的球道。同时，假设我们只会在三杆或者五杆的球道打球是不现实的。（什么情况都有可能碰到？不能假设只有好事发生？）
The above does of philosophy is being dispensed since we have a number of new partners this year and I want to make sure they understand my objectives, my measure of attainment of these objectives, and some of my known limitations.
今年我们又多了几位新合伙人，因此我重申以上的投资理念而且希望他们能够理解我的目标，我实现这些目标的方法以及我的一些认知局限。
With this background it is not unexpected that 1960 was a better-than-average year for us. As contrasted with an overall loss of 6.3% for the industrial Average, we had a 22.8% gain for the seven partnerships operating throughout the year. Our results for the four complete years of partnership operation after expenses but before interest to limited partners or allocation to the general partner are:
有了以上的阐述，我们在1960年优于市场平均的表现就一点也不意外了。相比于工业平均指数总体下跌了6.3%，我们一个合伙人基金一年一整年获得了22.8%的收益。以下是四个年度合伙人收益表现，统计扣除了运营支出，但是包含了给有限合伙人的利息和一般合伙人的分红：
It should be emphasized again that these are the net results to the partnership; the net results to the limited partners would depend on the partnership agreement that they had selected.
需要强调的是这个表是合伙公司的净利润结果，对于有限合伙人的净利润要根据他们在签订合伙协议时选定的条款来计算。
The overall gain or loss is computed on a market to market basis. After allowing for any money added or withdrawn, such a method gives results based upon what would have beed realized upon liquidation of the partnership at the beginning of the year and what would have been realized upon liquidation gains or losses and is different , of course, from our tax results which value securities at cost and realize gains or losses only when securities are actually sold.
总体的损益是根据市场价格来计算的。自从开始允许任意资金加入和撤出之后，这种计算方法是统计基于合伙公司在年初年末清算价值的改变。而清算价值的增减必然和我们纳税金额不一致，因为只有在股票售出并减去购买股票成本之后的损益才需要交税。
On a compounded basis, the cumulative results have been:
复合收益率如下：
Although four years is entirely too short a period from which to make deductions, what evidence there is points toward confirming the proposition that our results should be relatively better in moderately declining or static markets. To the extent that this is true, it indicates that our portfolio may be more conservatively, although decidedly less conventionally, invested than if we owned "blue-chip" securities. During a strongly rising market for the latter, we might have real difficulty in matching their performance.
尽管短短四年的结果不足以作出任何推断，但是从目前的数据中我们可以得出结论：我们的投资组合在盘整或者下跌的市场中表现相对出色。上述的结论也表明我们的投资组合相比于投资所谓“蓝筹”股虽然不那么传统但也更保守谨慎。在市场火爆蓝筹股暴涨时，要赶上他们的确有点难。
Multiplicity of Partnerships:
合伙公司间的不同
A preceding table shows that the family is growing. There has been no partnership which has had a consistently superior or inferior record compared to our group average, but there has been some variance each year despite my efforts to keep all partnerships invested in the same securities and in about the same proportions. This variation, of course, could be eliminated by combining the present partnerships into one large partnership. Such a move would also eliminate much detail and moderate amount of expense.
从表1可以看出合伙公司的个数在增加。目前没有任何一个合伙公司的收益持续好于或者逊于平均水平，尽管我尽量使每个合伙公司都按照相同的比例投资相同的股票，不过他们每年的收益多寡都有不同。如果我们将目前的合伙公司合并，就不会有这些差别而且会省去很多琐碎的费用。
Frankly, I am hopeful of doing something along this line in the next few years. The problem is that various partners have expressed preferences for varying partnership arrangements. Nothing will be done without unanimous consent of partners.
坦白说，我希望能在未来几年将所有的合伙公司合并。问题在于很多合伙人表示更希望合伙公司分开管理。在所有合伙人达成统一意见前什么都不会变。
Advance Payments:
预付款
Several partners have inquired about adding money during the year to their partnership. Although an exception has been made, it is too difficult to amend partnership agreements during mid-year where we have more than one family represented among the limited partners. Therefore, in mixed partnerships an additional interest can only be acquired at the end of the year.
好几位合伙人询问有关在年中给合伙企业增资的问题。虽然有此先例，但是我们无法在年中修改合伙协议，尤其当有限合伙人中有不止一个家庭。因此，在混合合伙人公司增资带来的额外利息只能在年末一次付清。
We do accept advance payments during the year toward partnership interest and pay interest at 6% on this payment from the time received until the end of the year. At that time, subject to amendment of the agreement by the partners, the payment plus interest is added to the partnership capital and thereafter participates in profits and losses.
我们接受年中的增资，并且对该项增资以年息6%支付利息，起息日从增资之日起直到年末。到年末，我们将修改合伙人协议，届时增资数额和相应利息总金额将被记入合伙公司的本金并从此计算损益。
Sanborn Map:
桑伯恩地图公司：
Last year mention was made of an investment which accounted for a very high and unusual proportion (35%) of our net assets along with the comment that I have some hope this investment would be concluded in 1960. This hope is materialized. The history of an investment of this magnitude may be of interest you.
去年我有提到一笔占我们资产总量35%的投资，并且期望这笔投资能在1960年获利。今年这个愿望达成了。我想各位一定对这笔投资的来龙去脉很感兴趣。
Sanborn Map Co. is engaged in the publication and continuous revision of extremely detailed maps of all cities of the United States. For example, the volumes mapping Omaha would weigh perhaps fifty pounds and provide minute details on each structure. The map would be revised by the paste-over method showing new construction, changed occupancy, new fire protection facilities, changed structural materials, etc. These revisions would be done approximately annually and a new map would be published every twenty or thirty years when further pasteovers became impractical. The cost of keeping the map revised to an Omaha customer would run around $100 per year.
桑伯恩地图公司致力于出版美国所有城市的精确地图，并且持续不断的细化更新。例如，奥巴马市的地图就将近50磅重，对于每个设施都提供了细致的描述。地图会使用黏贴的方式来更新建筑，房屋所有权的变更，新的消防设施，建筑材料的更换，等等。差不多每年更新一次，同时当无法再通过黏贴方式更新地图时，会出新的一版地图，差不多每二十年或者三十年会再版一次。每年Omaha地图更新的费用是$100.
This detailed information showing diameter of water mains underlying streets, location of fire hydrants, composition of roof, etc., was primarily of use to fire insurance companies. Their underwriting departments, located in a central office, could evaluate business by agents nationally. The theory was that a picture was worth a thousand words and such evaluation would decide whether the risk was properly rated, the degree of conflagration exposure in an area, advisable reinsurance procedure, etc. The bulk of Sanborn's business was done with about thirty insurance companies although maps were also sold to customers outside the insurance industry such as public utilities, mortgage companies, and taxing authorities.
地下水管的直径，消防栓的位置，房屋顶顶材料结构，等等这些详细的信息主要被经营火灾险的保险公司使用。在（保险）公司总部的承保部门会全国范围内评估他们的生意。一图胜千言，保险公司会根据这些地图来评估风险是否计算正确，某个地区会发生多大规模的火灾，以及建议的续保流程，等等。桑伯恩公司的主要生意伙伴是三十几家保险公司，虽然他们也把地图卖给非保险业的客户，比如公共部门，贷款公司和税务部门。
For seventy-five years the business operated in a more or less monopolistic manner, with profits realized in every year accompanied by almost complete immunity to recession and lack of need for any sales effort. In the earlier years of the business, the insurance industry became fearful that Sanborn's profits would become too great and placed a number of prominent insurance men on Sanborn's board of directors to act in a watch-dog capacity.
过去75年的时间里，这个生意以近乎垄断的方式在运营，每年盈利毫无衰退的迹象同时也完全不用到处推销产品。在早些年，保险公司害怕桑伯恩公司利润太高，因此以监管的目的在桑伯斯董事会安排了很多重要人员。
In the early 1950’s a competitive method of under-writing known as "carding" made inroads on Sanborn’s business and after-tax profits of the map business fell from an average annual level of over $500,000 in the late 1930's to under $100,000 in 1958 and 1959. Considering the upward bias in the economy during this period, this amounted to an almost complete elimination of what had been sizable, stable earning power.
在二十世纪中叶，另外一种更有效的记录方法名叫“Line Carding”让桑伯恩公司的地图生意从1930年末的$500,000利润降到1958-1959年的不到$100,000。考虑到在这段时间经济景气上行，这个曾经盈利可观并稳定的生意已经全军覆没了。
However, during the early 1930's Sanborn had begun to accumulate an investment portfolio. There were no capital requirements to the business so that any retained earnings could be devoted to this project. Over a period of time, about $2.5 million was invested, roughly half in bonds and half in stocks. Thus, in the last decade particularly, the investment portfolio blossomed while the operating map business wilted.
然而，从1930年早期桑伯恩公司就开始累积投资。由于自身的生意不需要任何资金的投入，所以保留盈余都投入到了这个项目中。过了一段时间，投入了差不多两千五百万美元，债券股票差不多一半一半。因此，特别是过去十年，虽然地图生意日渐萎缩，投资收益开花结果。
Let me give you some idea of the extreme divergence of these two factors. In 1938 when the Dow-Jones Industrial Average was in the 100-120 range, Sanborn sold at $110 per share. In 1958 with the Average in the 550 area, Sanborn sold at $45 per share. Yet during that same period the value of the Sanborn investment portfolio increased from about $20 per share to $65 per share. This means, in effect, that the buyer of Sanborn stock in 1938 was placing a positive valuation of $90 per share on the map business ($110 less the $20 value of the investments unrelated to the map business) in a year of depressed business and stock market conditions. In the tremendously more vigorous climate of 1958 the same map business was evaluated at a minus $20 with the buyer of the stock unwilling to pay more than 70 cents on the dollar for the investment portfolio with the map business thrown in for nothing.
让我来给你们分析一下两个因素的极端差别。在1938年当道琼斯指数是100-120的时候，桑伯恩公司股价是110美元一股。到了1958年指数在550区间的时候，桑伯恩却卖在45美元美股。然而在相同的时期桑伯恩公司的投资组合价值从每股$20上涨到了每股$65。这意味着，在1938年桑伯恩股票购买者为它的地图生意付了$90每股（$110股价中有$20是和地图生意无关的），然而这一年无论是股票市场还是公司的生意都开始萎靡不振。在市场一片向好的1958年，相同的地图生意却作价负$20/股。仅按照公司投资组合的市价（地图业务一文不值）来计算，当前股票差不多也是按7折左右的价格在出售，然而投资者却不买账。
How could this come about? Sanborn in 1958 as well as 1938 possessed a wealth of information of substantial value to the insurance industry. To reproduce the detailed information they had gathered over the years would have cost tens of millions of dollars. Despite “carding” over $500 million of fire premiums were underwritten by “mapping” companies. However, the means of selling and packaging Sanborn’s product, information had remained unchanged throughout the year and finally this inertia was reflected in the earnings.
怎么会这样呢？桑伯恩公司在1958年所拥有的信息对于保险业的价值和在1938年并无差别。复制他们这么多年积累的信息需要耗费上千万美元。尽管有“Carding”的竞争，还是有超过五亿美元的火险是由地图公司负责的。然而，桑伯斯公司的产品和资讯的销售，分销方法长期停滞不前的情况最终反映在了公司收入的减少上。
The very fact that the investment portfolio had done so well served to minimize in the eyes of most directors the need for rejuvenation of the map business. Sanborn had a sales volume of about $2 million per year and owned about $7 million worth of marketable securities. The income from the investment portfolio was substantial, the business had no possible financial worries, the insurance companies were satisfied with the price paid for maps, and the stockholders still received dividends. However, these dividends were cut five times in eight years although I could never find any record of suggestions pertaining to cutting salaries or director's and committee fees.
正是由于在投资上的巨大成功导致大多数董事会成员目光短浅对于重振地图业务毫无兴趣。桑伯恩公司每年有200万美元的销售收入并且拥有市值700万美元的股票。投资收入丰厚，公司没有任何财务风险，保险公司对于地图售价十分满意同时股东每年也有分红。但是，尽管在过去八年中股东分红已经降低了五次，董事会的工资和委员会费用却毫无削减的迹象。
Prior to my entry on the Board, of the fourteen directors, nine were prominent men from the insurance industry who combined held 46 shares of stock out of 105,000 shares outstanding. Despite their top positions with very large companies which would suggest the financial wherewithal to make at least a modest commitment, the largest holding in this group was ten shares. In several cases, the insurance companies these men ran owned small blocks of stock but these were token investments in relation to the portfolios in which they were held. For the past decade the insurance companies had been only sellers in any transactions involving Sanborn stock.
再我加入董事会之前，总共有14位董事，有九位来自于保险公司管理层，他们总共占有105,000流通股中的46股。虽然他们在大公司里担任重要职位有足够财务资源来进行至少适当的投资，但是他们中最多的持股人却只有10股的份额。与他们所拥有的投资组合相比，保险公司占的这点股份仅仅是象征性的投资。过去十年中保险公司是桑伯恩公司股票的唯一卖家。
The tenth director was the company attorney, who held ten shares. The eleventh was a banker with ten shares who recognized the problems of the company, actively pointed them out, and later added to his holdings. The next two directors were the top officers of Sanborn who owned about 300 shares combined. The officers were capable, aware of the problems of the business, but kept in a subservient role by the Board of Directors. The final member of our cast was a son of a deceased president of Sanborn. The widow owned about 15,000 shares of stock.
第十位董事是公司律师，有十股。第十一位董事是一个银行家也有十股，他察觉到并且积极指出公司的问题所在而且随后增持公司股票。之后两位董事是公司管理层，总共有300股。这两位高管了解公司的问题但是却一直在董事会中和稀泥。最后一位董事是亡故的桑伯恩执行长官的儿子，他的妈妈拥有15,000股。
In late 1958, the son, unhappy with the trend of the business, demanded the top position in the company, was turned down, and submitted his resignation, which was accepted. Shortly thereafter we made a bid to his mother for her block of stock, which was accepted. At the time there were two other large holdings, one of about 10,000 shares (dispersed among customers of a brokerage firm) and one of about 8,000. These people were quite unhappy with the situation and desired a separation of the investment portfolio from the map business, as did we.
在1958年末，儿子十分不满当前公司的现状和未来，要求掌管公司被拒绝，继愤而辞职却被批准。不久之后，她的母亲接受了我们购买她手中的股份的提议。当时有另外两个大股东，其中一位是经纪行拥有1万股分散在不同的客户手中，另外一位拥有8000股。这些股东也非常不满当前公司的状况，和我们一样希望股票投资收益要从地图生意中剥离出来。
Subsequently our holdings (including associates) were increased through open market purchases to about 24,000 shares and the total represented by the three groups increased to 46,000 shares. We hoped to separate the two businesses, realize the fair value of the investment portfolio and work to re-establish the earning power of the map business. There appeared to be a real opportunity to multiply map profits through utilization of Sanborn's wealth of raw material in conjunction with electronic means of converting this data to the most usable form for the customer.
随后我们（包括合作伙伴），通过在流通市场的收集，持股达到24,000股，并且和另外两家合力占股46,000。我们希望将两个生意分开计算，一方面投资组合的合理价值体现出来，另一方面致力于恢复地图业务的盈利能力。如果能够将桑伯恩宝贵的地图原始资料数字化从而更好地服务于客户相信利润可以成倍上涨。
There was considerable opposition on the Board to change of any type, particularly when initiated by an outsider, although management was in complete accord with our plan and a similar plan had been recommended by Booz, Allen & Hamilton (Management Experts). To avoid a proxy fight (which very probably would not have been forthcoming and which we would have been certain of winning) and to avoid time delay with a large portion of Sanborn’s money tied up in blue-chip stocks which I didn’t care for at current prices, a plan was evolved taking out all stockholders at fair value who wanted out. The SEC ruled favorably on the fairness of the plan. About 72% of the Sanborn stock, involving 50% of the 1,600 stockholders, was exchanged for portfolio securities at fair value. The map business was left with over $l,25 million in government and municipal bonds as a reserve fund, and a potential corporate capital gains tax of over $1 million was eliminated. The remaining stockholders were left with a slightly improved asset value, substantially higher earnings per share, and an increased dividend rate.
尽管公司管理层完全同意我们的提议并且管理专家Booz, Allen&Hamilton也提出相似的计划，公司的改变仍然受到强烈的抵制，尤其当改变是由外人发起的时候。为了避免代理权之争（尽管很有可能不会发生，而且我们大概率会赢得代理权）以及尽快将桑伯恩公司大部分资产以当前的股价售出从而和蓝筹股割离开，我们提出了一个让股东在合理的价格退出的计划。证券交易委员会对这一计划的公正性表示赞同。桑伯恩72%的股票，1600名股东中的一半人将手中的股票以公平的价格换成了公司投资组合中的其他股票。地图出版业只剩下125万美元的市政以及国债作为准备金，以及潜在的100多万美元的收入税减免。留下的股东资产价值有所上升，大幅提升了每股收益以及获得了更高的分红比例。
Necessarily, the above little melodrama is a very abbreviated description of this investment operation. However, it does point up the necessity for secrecy regarding our portfolio operations as well as the futility of measuring our results over a short span of time such as a year. Such control situations may occur very infrequently. Our bread-and-butter business is buying undervalued securities and selling when the undervaluation is corrected along with investment in special situations where the profit is dependent on corporate rather than market action. To the extent that partnership funds continue to grow, it is possible that more opportunities will be available in “control situations.”
必须得指出，上述的小情节是对投资运营十分精简的表述。但是同样体现了对我们投资操作保密的重要性以及仅仅以极短的时间比如一年来衡量投资表现的无效性。这种全局操控的情况非常少见，我们主营业务业务还是购买低估的股票并等到估值恢复的时候卖出和投资一些利润来自于公司运营而不是市场的机会。随着合伙公司规模越来越大，很有可能会有越来越多的全局操控的投资案例。
The auditors should be mailing your financial statement and tax information within about a week. If you have any questions at all regarding either their report or this letter, be sure to let me know.
审计师会在一周内将财务结算单和税务信息寄出。如果对他们的报表或者这封信有任何疑问，请联系我。
Warren E. Buffett 1-30-61