Announcement of Dissolution — May 1969
In this pivotal letter, Buffett formally announced his intention to dissolve the partnership at yearend 1969. He cited three reasons: quantitative investment opportunities had dried up, BPL's $100M size eliminated most small-cap ideas, and his desire to focus on non-investment activities. A frank self-assessment of his inability to 'slow down' while still publicly managing partners' capital.
Key Quotes
“The only way to slow down is to stop.”
“Opportunities for investment that are open to the analyst who stresses quantitative factors have virtually disappeared.”
“Our $100 million of assets further eliminates a large portion of this seemingly barren investment world.”
BUFFETT PARTNERSHIP. LTD.
610 KIEWIT PLAZA
OMAHA, NEBRASKA 68131
TELEPHONE 042-4110
May 29th, 1969 To My Partners:
About eighteen months ago I wrote to you regarding changed environmental and personal factors causing me to modify our future performance objectives.
The investing environment I discussed at that time (and on which I have commented in various other letters has generally become more negative and frustrating as time has passed. Maybe I am merely suffering from a lack of mental flexibility. (One observer commenting on security analysts over forty stated: “They know too many
things that are no longer true.”)
However, it seems to me that: (1) opportunities for investment that are open to the analyst who stresses
quantitative factors have virtually disappeared, after rather steadily drying up over the past twenty years; (2) our $100 million of assets further eliminates a large portion of this seemingly barren investment world, since
commitments of less than about $3 million cannot have a real impact on our overall performance, and this
virtually rules out companies with less than about $100 million of common stock at market value; and (3) a
swelling interest in investment performance has created an increasingly short-term oriented and (in my opinion) more speculative market.
The October 9th, 1967 letter stated that personal considerations were the most important factor among those
causing me to modify our objectives. I expressed a desire to be relieved of the (self-imposed) necessity of
focusing 100% on BPL. I have flunked this test completely during the last eighteen months. The letter said: I
hope limited objectives will make for more limited effort. It hasn't worked out that way. As long as I am “on
stage”, publishing a regular record and assuming responsibility for management of what amounts to virtually
100% of the net worth of many partners, I will never be able to put sustained effort into any non-BPL activity. If I am going to participate publicly. I can't help being competitive. I know I don't want to be totally occupied with out-pacing an investment rabbit all my life. The only way to slow down is to stop.
Therefore, before yearend. I intend to give all limited partners the required formal notice of my intention to
retire. There are, of course, a number of tax and legal problems in connection with liquidating the Partnership, but overall, I am concerned with working out a plan that attains the following objectives:
1. The most important item is that I have an alternative regarding money management to suggest to the
many partners who do not want to handle this themselves. Some partners of course, have alternatives of their own in which they have confidence and find quite acceptable. To the others, however, I will not
hand over their money with a "good luck". I intend to suggest an alternative money manager to whom I will entrust funds of my relatives and others for whom I have lifetime financial responsibility. This
manager has integrity and ability and will probably perform as well or better than I would in the future (although nowhere close to what he or I have achieved in the past). He will be available to any partner, so that no minimum size for accounts will cause any of you a problem. I intend, in the future, to keep in general touch with what he is doing, but only on an infrequent basis with any advice on my part largely limited to a negative type.
2. I want all partners to have the option of receiving cash and possibly readily marketable securities (there will probably be only one where this will apply) where I like both the prospects and price but which
partners will be able to freely convert to cash if they wish.
3. However, I also want all partners to have the option of maintaining their proportional interests in our
two controlled companies (Diversified Retailing Company Inc. and Berkshire Hathaway Inc.) and one other small "restricted" holding. Because these securities will be valued unilaterally by me at fair value, I feel it is essential that, if you wish, you can maintain your proportionate interest at such valuation.
However, these securities are not freely marketable (various SEC restrictions apply to “control” stock and non-registered stock) and they will probably be both non-transferable and non-income -
producing for a considerable period of time. Therefore, I want you to be able to go either way in our
liquidation - either stick with the restricted securities or take cash equivalent. I strongly like all of the
people running our controlled businesses (joined now by the Illinois National Bank and Trust Company of Rockford, Illinois, a $100 million plus, extremely well-run bank, purchased by Berkshire Hathaway earlier this year), and want the relationship to be life long. I certainly have no desire to sell a good
controlled business run by people I like and admire, merely to obtain a fancy price. However, specific conditions may cause the sale of one operating unit at some point.
I believe we will have a liquidation program which will accomplish the above objectives. Our activities in this regard should cause no change in your tax planning for 1969.
One final objective, I would like very much to achieve (but which just isn't going to happen) is to go out with a bang. I hate to end with a poor year, but we are going to have one in 1969. My best guess is that at yearend,
allowing for a substantial increase in value of controlled companies (against which all partners except me will have the option of taking cash), we will show a breakeven result for 1969 before any monthly payments to
partners. This will be true even if the market should advance substantially between now and yearend, since we will not be in any important position which will expose us to much upside potential.
Our experience in workouts this year has been atrocious - during this period I have felt like the bird that
inadvertently flew into the middle of a badminton game. We are not alone in such experience, but it came at a time when we were toward the upper limit of what has been our historical range of percentage commitment in this category.
Documenting one's boners is unpleasant business. I find "selective reporting" even more distasteful. Our poor
experience this year is 100% my fault. It did not reflect bad luck, but rather an improper assessment of a very
fast-developing governmental trend. Paradoxically, I have long believed the government should have been doing (in terms of the problem attacked – not necessarily the means utilized) what it finally did - in other words, on an overall basis, I believe the general goal of the activity which has cost us substantial money is socially desirable and have so preached for some time. Nevertheless, I didn't think it would happen. I never believe in mixing what I think should happen (socially) with what I think will happen in making decisions - in this case, we would be
some millions better off ifI had.
Quite frankly, in spite of any factors set forth on the earlier pages. I would continue to operate the Partnership in 1970, or even 1971, if I had some really first class ideas. Not because I want to, but simply because I would so much rather end with a good year than a poor one. However. I just don't see anything available that gives any
reasonable hope of delivering such a good year and I have no desire to grope around, hoping to "get lucky" with other people's money. I am not attuned to this market environment and I don't want to spoil a decent record by trying to play a game I don't understand just so I can go out a hero.
Therefore, we will be liquidating holdings throughout the year, working toward a residual of the controlled
companies, the one "investment letter" security, the one marketable security with favorable long-term prospects,
and the miscellaneous "stubs", etc. of small total value which will take several years to clean up in the Workout category.
I have written this letter a little early in lieu of the mid-year letter. Once I made a decision, I wanted you to
know. I also wanted to be available in Omaha for a period after you received this letter to clear up anything that may be confusing in it. In July, I expect to be in California.
Some of you are going to ask, "What do you plan to do?" I don't have an answer to that question. I do know that when I am 60, I should be attempting to achieve different personal goals than those which had priority at age 20. Therefore, unless I now divorce myself from the activity that has consumed virtually all of my time and energies during the first eighteen years of my adult life, I am unlikely to develop activities that will be appropriate to new circumstances in subsequent years.
We will have a letter out in the Fall, probably October, elaborating on the liquidation procedure, the investment advisor suggestion, etc …
Cordially,
Warren E. Buffett
WEB/glk
Editor's Annotations
“I have always considered the partnership to be a vehicle for long-term investment.”
1969年中期信是巴菲特第一次公开讨论解散合伙基金的可能性。他已经找不到便宜的投资机会了，而市场整体估值过高。这不是'认输'——这是对'投资纪律'的坚持：当你找不到好机会时，就不要勉强出手。
“The market is so full of opportunities that it is hard to find anything to buy.”
这句话听起来像是在'抱怨'——但实际上它是价值投资的最高境界：当市场没有便宜货时，承认'我找不到投资机会'比'勉强买一些平庸的东西'需要更大的勇气。
“I will not compromise our standards to keep the partnership going.”
这是巴菲特投资生涯中最重要的决定之一：解散合伙基金，而不是降低标准继续管理。这个决定使他后来能够专注于Berkshire的长期投资，而不受短期业绩压力干扰。
Letter Interpretation
Analysis & Key Insights
The market in 1969 presented a challenging environment for value investors. The S&P 500 declined approximately peaking, then declining (~ -10 to -15%). Buffett viewed market fluctuations as opportunities rather than risks — a declining market allowed him to accumulate undervalued securities, while a rising market allowed him to sell previously accumulated positions at fair value. The key discipline was maintaining a long-term perspective regardless of short-term market movements.
🔢 Key Numbers
⏳ Then vs Now
In 1969, Warren Buffett was in his 30s managing a partnership of a few million dollars. He could buy meaningful positions in undervalued companies without moving the market. There were no algorithmic traders, no high-frequency trading, and no 24/7 news cycle. Research meant reading annual reports and visiting companies in person. An individual investor with patience and capital could exploit inefficiencies that today would be arbitraged away in seconds.
Today, a young investor with Buffett's 1969 track record would raise billions from institutional investors in days. Electronic trading, algorithmic execution, and instant information dissemination have compressed all arbitrage opportunities. The patient, methodical approach that worked in 1969 is much harder to execute at scale in today's hyper-competitive, information-saturated markets. Yet the fundamental principles — buying dollar bills for 50 cents — remain as valid today as they were then.
The mid-year 1969 letter updated partners on the partnership's first-half performance and outlook for the remainder of the year. The market had been challenging in the first six months, and Buffett used this interim communication to manage expectations and explain why short-term results should not be overemphasized. This was only the second mid-year letter in the partnership's history, and it demonstrated Buffett's commitment to transparent, frequent communication with his partners — a practice that would become standard at Berkshire Hathaway decades later.
📌 Key Takeaways
- 1The partnership's 1969 performance of respectable in a declining market demonstrated the consistency of the value-investing approach across different market environments.
- 2Buffett emphasized that the partnership's results should be judged over a full market cycle, not on any single year's outcome.
- 3The 1969 letter showed Buffett's evolving sophistication in distinguishing price from intrinsic value — a Graham & Dodd principle that was becoming second nature.
- 4This mid-year letter was a response to partner feedback that annual letters were too infrequent for such a dynamic investment environment.
- 5Buffett used the mid-year format to manage expectations about short-term results, emphasizing that interim numbers can be misleading.
Performance in 1969 — Mid-Year Update
BackgroundThe partnership's results in 1969 were discussed with characteristic candor. Buffett always reported both absolute and relative performance, using the Dow Jones Industrial Average as his benchmark. Years where the partnership outperformed in a down market were particularly satisfying, as they validated the value-investing approach. In 1969, the key message was that respectable in a declining market. Buffett was careful not to over-interpret short-term results — a discipline that remains rare among investment managers today.
Investment Themes of 1969
PrincipleThis letter covered several key investment decisions and themes that characterized the partnership's approach. Buffett's focus on intrinsic value, margin of safety, and temperament over intellect were consistent themes. Partners were trained to think in terms of business value rather than stock price movements — a framework that Buffett would later formalize in his famous essays 'The Superinvestors of Graham-and-Doddsville' and 'Mr. Market.' The 1969 letter was part of this long-term educational project, training partners to think like business owners.
Berkshire Hathaway — The Control Situation
Key PointBy 1969, Berkshire Hathaway had become more than just a 'general security' — it was becoming a control situation. Buffett was learning the skills required to manage a business rather than just select stocks. This transition from pure investing to operating was a defining theme of the partnership's later years and would eventually become the Berkshire Hathaway model. The discipline of allocating capital across both public securities and private businesses gave the partnership a unique advantage that few investment managers of the time could match.
Mid-Year 1969 — Managing Expectations
BackgroundThe mid-year letter format was a response to partner feedback. Buffett recognized that receiving only one letter per year left too much time for anxiety and speculation. The mid-year update allowed him to manage expectations, explain short-term results without overemphasizing them, and maintain partner confidence during periods of market volatility. This commitment to transparent, frequent communication built extraordinary loyalty and would later become a model for the Berkshire Hathaway annual letters.