Washington Public Power Supply System
華盛頓公用電力系統
From October, 1983 through June, 1984 Berkshire's insurance subsidiaries continuously purchased large quantities of bonds of Projects 1, 2, and 3 of Washington Public Power Supply System (「WPPSS」). This is the same entity that, on July 1, 1983, defaulted on $2.2 billion of bonds issued to finance partial construction of the now-abandoned Projects 4 and 5. While there are material differences in the obligors, promises, and properties underlying the two categories of bonds, the problems of Projects 4 and 5 have cast a major cloud over Projects 1, 2, and 3, and might possibly cause serious problems for the latter issues. In addition, there have been a multitude of problems related directly to Projects 1, 2 and 3 that could weaken or destroy an otherwise strong credit position arising from guarantees by Bonneville Power Administration.
從1983年十月到1984年六月期間，Berkshire的保險子公司持續購入大筆的華盛頓公用電力系統（WPPSS）的1、2、3級債。這就是那家因為在1983年無法履約償還發行的22億美元債券的公司，當初發債是為了興建四、五期電廠，但現在已經放棄了。雖然這兩種債券在義務人、承諾事項與抵押擔保品上有極大不同，但四、五期的問題已經給已經發行的一、二、三期債券蒙上一層陰影，而且可能對後續發行債券產生重大問題。此外一、二、三期本身的一些問題也可能摧毀Bonneville能源站提供的原先看起來有很強信用基礎的保證。
Despite these important negatives, Charlie and I judged the risks at the time we purchased the bonds and at the prices Berkshire paid (much lower than present prices) to be considerably more than compensated for by prospects of profit.
儘管有這些負面因素，但Charlie和我估計以我們當初買進時所承擔的風險與購買的價格（遠低於現在的市價）來說，預期報酬率仍足以彌補所要承擔的風險。
As you know, we buy marketable stocks for our insurance companies based upon the criteria we would apply in the purchase of an entire business. This business-valuation approach is not widespread among professional money managers and is scorned by many academics. Nevertheless, it has served its followers well (to which the academics seem to say, 「Well, it may be all right in practice, but it will never work in theory.」) Simply put, we feel that if we can buy small pieces of businesses with satisfactory underlying economics at a fraction of the per-share value of the entire business, something good is likely to happen to us - particularly if we own a group of such securities.
如你們所知道的，我們為保險公司買進上市公司的股票的標準與我們買下整個企業的標準並沒有區別，然而這種企業評價模式並沒有被基金經理所應用，並且被很多學者所詬病。然而，對於那些追隨者來說它卻很有用（對此有些學者回說，可能實際上真的可行，但理論上是說不通的）簡單的說，如果我們能夠以合理的價格買到代表一小部分優良企業的經濟利益，而且能夠積累一些這樣的投資組合，對我們來說也是件不錯的事。
We extend this business-valuation approach even to bond purchases such as WPPSS. We compare the $139 million cost of our yearend investment in WPPSS to a similar $139 million investment in an operating business. In the case of WPPSS, the 「business」 contractually earns $22.7 million after tax (via the interest paid on the bonds), and those earnings are available to us currently in cash. We are unable to buy operating businesses with economics close to these. Only a relatively few businesses earn the 16.3% after tax on unleveraged capital that our WPPSS investment does and those businesses, when available for purchase, sell at large premiums to that capital. In the average negotiated business transaction, unleveraged corporate earnings of $22.7 million after-tax (equivalent to about $45 million pre-tax) might command a price of $250 - $300 million (or sometimes far more). For a business we understand well and strongly like, we will gladly pay that much. But it is double the price we paid to realize the same earnings from WPPSS bonds.
我們甚至將這種商業評估方法應用到購買像WPPSS這類債券上。比較購買一億三千九百萬的WPPSS債券與購買同樣金額的上市公司股權。在購買WPPSS的情況下，可以賺取兩千兩百七十萬的稅後盈餘（通過利息支付）而且都是現金，而只有少數企業可以獲得每年16.3%的稅後資本報酬率，即便可以交易，且有很高的資本溢價。以一般併購交易來說，沒有槓桿的公司每年可賺取兩千三百萬的稅後盈餘的公司（稅前要賺四千五百萬），可能支付對價為兩億五千萬到三億美元（有時更高），當然對於那種我們瞭解並且非常喜愛的公司，我們很樂意付出那麼多。但是等於我們花費兩倍的價錢來獲取與WPPSS相同的收益。
However, in the case of WPPSS, there is what we view to be a very slight risk that the 「business」 could be worth nothing within a year or two. There also is the risk that interest payments might be interrupted for a considerable period of time. Furthermore, the most that the 「business」 could be worth is about the $205 million face value of the bonds that we own, an amount only 48% higher than the price we paid.
然而對於WPPSS這個例子，我們認為存在一種可能的風險，即在第一、二年它有可能變得一文不值。同時也可能存在在一定時期內無法支付利息的風險。更為重要的是我們持有兩億多的票面價值，只比我們付出的價格高了48%。
This ceiling on upside potential is an important minus. It should be realized, however, that the great majority of operating businesses have a limited upside potential also unless more capital is continuously invested in them. That is so because most businesses are unable to significantly improve their average returns on equity - even under inflationary conditions, though these were once thought to automatically raise returns.
可能的獲利上限也是一大缺點。這應該被認識到，但是大多數的股投資也存在潛在獲利上限，除非更多的資本被不斷地投入。這是因為大多數公司無法顯著提高他們的資本回報率，即使在通脹的條件下，儘管通脹被認為會自動提高回報率率。
(Let's push our bond-as-a-business example one notch further: if you elect to 「retain」 the annual earnings of a 12% bond by using the proceeds from coupons to buy more bonds, earnings of that bond 「business」 will grow at a rate comparable to that of most operating businesses that similarly reinvest all earnings. In the first instance, a 30-year, zero-coupon, 12% bond purchased today for $10 million will be worth $300 million in 2015. In the second, a $10 million business that regularly earns 12% on equity and retains all earnings to grow, will also end up with $300 million of capital in 2015. Both the business and the bond will earn over $32 million in the final year.)
讓我們對這個把債券作為投資的例子進一步說明：如果你選擇將年回報率為12%的債券的利息收入繼續購買更多的債券，那麼債券的收益就會以一種速度增長，就像投資一些以留存收益繼續再投資的企業一樣。在第一種情況下，如果今天以一千萬投資30年零息債券，則30年後大概2015年你約可得到三億美元，而對後者而言，三十年後公司市值一樣可以增加到三億美元，兩者在後一年都可以獲得三千二百萬美元。
Our approach to bond investment - treating it as an unusual sort of 「business」 with special advantages and disadvantages - may strike you as a bit quirky. However, we believe that many staggering errors by investors could have been avoided if they had viewed bond investment with a businessman's perspective. For example, in 1946, 20-year AAA tax-exempt bonds traded at slightly below a 1% yield. In effect, the buyer of those bonds at that time bought a 「business」 that earned about 1% on 「book value」 (and that, moreover, could never earn a dime more than 1% on book), and paid 100 cents on the dollar for that abominable business.
我們的投資債券的方法，是將其看成是一種特殊的企業投資，它有有利的地方也有不利的地方，這可能會使你感到有些奇怪。但我們相信如果你以一般投資的角度來看債券投資的話，將會避免一些頭痛的問題。比如在1946年20年期的AAA級免稅債券，它的增值利率1%不到，事實上購買這些債券的投資人相當於投資一家年收益率不到一個百分點的公司。（甚至連賬面價值的1%都賺不到）。
If an investor had been business-minded enough to think in those terms - and that was the precise reality of the bargain struck - he would have laughed at the proposition and walked away. For, at the same time, businesses with excellent future prospects could have been bought at, or close to, book value while earning 10%, 12%, or 15% after tax on book. Probably no business in America changed hands in 1946 at book value that the buyer believed lacked the ability to earn more than 1% on book. But investors with bond-buying habits eagerly made economic commitments throughout the year on just that basis. Similar, although less extreme, conditions prevailed for the next two decades as bond investors happily signed up for twenty or thirty years on terms outrageously inadequate by business standards. (In what I think is by far the best book on investing ever written - 「The Intelligent Investor」, by Ben Graham - the last section of the last chapter begins with, 「Investment is most intelligent when it is most businesslike.」 This section is called 「A Final Word」, and it is appropriately titled.)
如果一個投資者有一點商業頭腦，面對這種投資條件，他一定會大笑地走開，當時存在一些前景良好且每年可以獲得10%、12%或者15%稅後利潤的公司，但卻以賬面價值交易，在1946年能以賬面價值交易的公司可能沒有人會懷疑它賺取不到1%的稅後利潤。但是債券投資者仍舊在這樣的條件下交易。雖然沒有那麼誇張，但在往後二十年裡債券持有者持續地以從商業角度來看完全不合理的條件簽訂了長達二三十年的合同。（至今在我看來最優秀的書籍——由Ben Graham所寫的The Intelligent Investor的最後一章，被稱作是終極世界中寫到，最佳的投資最像商業投資。）
We will emphasize again that there is unquestionably some risk in the WPPSS commitment. It is also the sort of risk that is difficult to evaluate. Were Charlie and I to deal with 50 similar evaluations over a lifetime, we would expect our judgment to prove reasonably satisfactory. But we do not get the chance to make 50 or even 5 such decisions in a single year. Even though our long-term results may turn out fine, in any given year we run a risk that we will look extraordinarily foolish. (That's why all of these sentences say 「Charlie and I」, or 「we」.)
我們必須再次強調投資WPPSS有一定的風險，而且難以具體衡量。但是Charlie和我一生當中有五十次類似的投資機會，我們預期我們的業績將被證明令人滿意。但是我們在一年中沒有機會做出50次甚至只是5次這樣的決定。儘管我們長期的收益可能證明我們還不賴，但是任意一年來看，我們都冒著巨大的風險，使我們看上去格外的愚蠢。（這就是所有的話都是以「Charlie和我」，或者「我們」開頭。）
Most managers have very little incentive to make the intelligent – but – with – some – chance – of – looking – like – an - idiot decision. Their personal gain/loss ratio is all too obvious: if an unconventional decision works out well, they get a pat on the back and, if it works out poorly, they get a pink slip. (Failing conventionally is the route to go; as a group, lemmings may have a rotten image, but no individual lemming has ever received bad press.)
大部分經理人都有較小的動機去做那些聰明但有時可能會變成白痴的決策，他們個人的得失非常明顯：如果一個沒有爭議的決策運行良好，上司可能拍拍他的肩膀表示鼓勵，但是萬一失敗，卻有可能被辭退。（按照舊例失敗是一條可行之路，作為一個整體，一群旅鼠臭名昭著，但是一直旅鼠將會受到責難。）
Our equation is different. With 47% of Berkshire's stock, Charlie and I don't worry about being fired, and we receive our rewards as owners, not managers. Thus we behave with Berkshire's money as we would with our own. That frequently leads us to unconventional behavior both in investments and general business management.
但是這不是總成立的。擁有Berkshire 47%的股份，Charlie和我不用擔心被炒魷魚，而且我們是以老闆而不是經理人的身份領取報酬。因此我們把Berkshire的錢當做自己的錢一樣看待。這經常使我們在投資行為與管理風格上與傳統表現不同。
We remain unconventional in the degree to which we concentrate the investments of our insurance companies, including those in WPPSS bonds. This concentration makes sense only because our insurance business is conducted from a position of exceptional financial strength. For almost all other insurers, a comparable degree of concentration (or anything close to it) would be totally inappropriate. Their capital positions are not strong enough to withstand a big error, no matter how attractive an investment opportunity might appear when analyzed on the basis of probabilities.
在某種程度上我們保持與眾不同的做法，這使我們可以將保險公司的的資金集中投資之上，包括WPPSS債券。這種集中是有意義的，因為我們的保險業務是建立在異常雄厚的財務實力的基礎上的。對於絕大部分其他的保險公司而言，相同程度的集中度（或者與其接近）將完全不合適。他們的頭寸沒有強大到承受巨大錯誤的地步，不管一個投資機會基於概率的分析是多麼的吸引人。
With our financial strength we can own large blocks of a few securities that we have thought hard about and bought at attractive prices. (Billy Rose described the problem of over-diversification: 「If you have a harem of forty women, you never get to know any of them very well.」) Over time our policy of concentration should produce superior results, though these will be tempered by our large size. When this policy produces a really bad year, as it must, at least you will know that our money was committed on the same basis as yours.
以我們的財務實力我們可以買下一些那些我們曾認為較難在合理價格買入的股票。（Billy Rose曾經將其形容為過度分散化：「如果你有用四十個妻妾，你一定沒有辦法對每一個女人認識透徹。」）長期開看我們的集中策略將會顯現出優勢，儘管會因為較大規模的拖累。當這項策略在某年表現很差，至少你可以知道我們的資金的投向和各位是是一樣的。