BUFFETT PARTNERSHIP, LTD. 810 KIEWIT PLAZA OMAHA 31, NEBRASKA
July 10, 1963
First Half Performance
During the first half of 1963, the Dow Jones Industrial Average (hereinafter called the "Dow") advanced from 652.10 to 706.88. If one had owned the Dow during this period, dividends of \$10.66 would have been received, bringing the overall return from the Dow during the first half to plus 10.0%.
Our incantation has been: (1) that short-term results (less than three years) have little meaning, particularly in reference to an investment operation such as ours that devotes a portion of resources to control situations, and; (2) That our results relative to the Dow and other common-stock-form media, will be better in declining markets and may well have a difficult time just matching such media in bubbling markets.
Nevertheless, our first-half performance, excluding any change in Dempster valuation (and its valuation did change --I'm saving this for dessert later in the letter) was plus 14%. This 14% is computed on total net assets (not non-Dempster assets) and is after expenses, but before monthly payments (to those who take them) to partners and allocation to the General Partner. Such allocations are academic on an interim basis, but if we were also plus 14% at yearend, the first 6% would be allocated to partners according to their capital, plus threequarters of the balance of 8% (14% -6%), or an additional 6%, giving the limited partners a plus 12% performance.
Despite the relatively pleasant results of the first half the admonitions stated two paragraphs earlier hold in full force. At plus 14% versus plus 10% for the Dow, this six months has been a less satisfactory period than the first half of 1962 when we were minus 7.5% versus minus 21.7% for the Dow. You should completely understand our thinking in this regard which has been emphasized in previous letters.
During the first half we had an average net investment in "generals" (long positions in generals minus short positions in generals) of approximately \$5,275,000. Our overall gain from this net investment in generals (for a description of our investment categories see the last annual letter) was about \$1,100,000 for a percentage gain from this category of roughly 21%. This again illustrates the extent to which the allocation of our resources among various categories affects short-term results. In 1962 the generals were down for the year and only an outstanding performance by both of the other two categories, "work-outs" and "controls," gave us our unusually favorable results for that year.
Now this year, our work-outs have done poorer than the Dow and have been a drag on performance, as they are expected to be in rising markets. While it would be very nice to be 100% in generals in advancing markets and 100% in work-outs in declining markets, I make no attempt to guess the course of the stock market in such a manner. We consider all three of our categories to be good businesses on a long-term basis, although their shortterm price behavior characteristics differ substantially in various types of markets. We consider attempting to gauge stock market fluctuations to be a very poor business on a long-term basis and are not going to be in it, either directly or indirectly through the process of trying to guess which of our categories is likely to do best in the near future.
Investment Companies
Shown below are the usual statistics on a cumulative basis for the Dow and Buffett Partnership. Ltd. (including predecessor partnerships) as well as for the two largest open-end (mutual funds) and two largest closed-end
investment companies following a diversified common-stock investment policy:
| Year | Dow | Mass.Inv. Trust (1) | Investors Stock (1) | Tri-Cont. (2) |
| 1957 | -8.4% | -11.4% | -12.4% | -2.4% |
| 1957 – 58 | 26.9% | 26.4% | 29.2% | 30.0% |
| 1957 – 59 | 52.3% | 37.8% | 42.5% | 40.9% |
| 1957 – 60 | 42.9% | 36.4% | 41.6% | 44.8% |
| 1957 – 61 | 74.9% | 71.3% | 76.9% | 77.4% |
| 1957 – 62 | 61.6% | 54.5% | 53.2% | 59.7% |
| 1957 – 6/30/63 | 77.8% | 72.4% | 69.3% | 75.7% |
| Annual Compounded Rate | 9.3% | 8.7% | 8.4% | 9.1% |
| Year | Lehman (2) | Partnership (3) | Limited Partners (4) |
| 1957 | -11.4% | 10.4% | 9.3% |
| 1957 – 58 | 24.7% | 55.6% | 44.5% |
| 1957 – 59 | 34.8% | 95.9% | 74.7% |
| 1957 – 60 | 38.2% | 140.6% | 107.2% |
| 1957 – 61 | 70.8% | 251.0% | 181.6% |
| 1957 – 62 | 46.2% | 299.8% | 215.1% |
| 1957 – 6/30/63 | 60.8% | 355.8% | 252.9% |
| Annual Compounded Rate | 7.6% | 26.3% | 21.4% |
Footnotes :
(1) Computed from changes in asset value plus any distributions to holders of record during year.
(2) From 1963 Moody's Bank & Finance Manual for 1957-62. Estimated for first half 1963.
(3) For 1957-61 consists of combined results of all predecessor limited partnerships operating throughout entire year after all expenses but before distributions to partners or allocations to the general partner.
(4) For 1957-61 computed on basis of preceding column of partnership results allowing for allocation to general partner based upon present partnership agreement.
The results continue to show that the most highly paid and respected investment advice has difficulty matching the performance of an unmanaged index of blue-chip stocks. This in no sense condemns these institutions or the investment advisers and trust departments whose methods, reasoning, and results largely parallel such investment companies. These media perform a substantial service to millions of investors in achieving adequate diversification, providing convenience and peace of mind, avoiding issues of inferior quality, etc. However, their services do not include (and in the great majority of cases, are not represented to include) the compounding of money at a rate greater than that achieved by the general market.
Our partnership's fundamental reason for existence is to compound funds at a better-than-average rate with less exposure to long-term loss of capital than the above investment media. We certainly cannot represent that we will achieve this goal. We can and do say that if we don't achieve this goal over any reasonable period excluding
an extensive speculative boom, we will cease operation.
Dempster Mill Manufacturing Company
In our most recent annual letter, I described Harry Bottle as the “man of the year”. If this was an understatement.
Last year Harry did an extraordinary job of converting unproductive assets into cash which we then, of course, began to invest in undervalued securities. Harry has continued this year to turn under-utilized assets into cash, but in addition, he has made the remaining needed assets productive. Thus we have had the following transformation in balance sheets during the last nineteen months:
November 30, 1961 (000’s omitted)
| Assets | Book Figure | Valued @ | Adjusted Valuation | Liabilities | |
| Cash | $166 | 100% | $166 | Notes Payable | $1,230 |
| Accts. Rec. (net) | $1,040 | 85% | $884 | Other Liabilities | $1,088 |
| Inventory | $4,203 | 60% | $2,522 | ||
| Ppd. Exp. Etc. | $82 | 25% | $21 | Total Liabilities | $2,318 |
| Current Assets | $5,491 | $3,593 | Net Worth: | ||
| Per Books | $4,601 | ||||
| Cash Value Life ins., etc. | $45 | 100% | $45 | As adjusted to quickly realizable values | $2,120 |
| Net Plant & equipment | $1,383 | Est. Net Auction Value | $800 | ||
| Total Assets | $6,919 | $4,438 | Share outstanding 60,146. Adj. Value per Share | $35.25 |
November 30, 1962 (000’s omitted)
| Assets | Book Figure | Valued @ | Adjusted Valuation | Liabilities | |
| Cash | $60 | 100% | $60 | Notes payable | $0 |
| Marketable Securities | $758 | Mkt. 12/31/62 | $834 | Other liabilities | $346 |
| Accts. Rec. (net) | $796 | 85% | $676 | Total liabilities | $346 |
| Inventory | $1,634 | 60% | $981 | ||
| Cash value life ins. | $41 | 100% | $41 | Net Worth: | |
| Recoverable income tax | $170 | 100% | $170 | Per books | $4,077 |
| Ppd. Exp. Etc | $14 | 25% | $4 | As adjusted to quickly realizable values | $3,125 |
| Add: proceeds from potential exercise of option to Harry Bottle | $60 | ||||
| Current Assets | $3,473 | $2,766 | $3,185 | ||
| Shares Outstanding 60,146 | |||||
| Misc. Invest. | $5 | 100% | $5 | Add: shs. Potentially outstanding under option: 2,000 | |
| Total shs. 62,146 | |||||
| Net plant & equipment | $945 | Est. net auction value | $700 | Adj. Value per Share | $51.26 |
| Total Assets | $4,423 | $3,471 |
November 30, 1963 (000’s omitted)
| Assets | Book Figure | Valued @ | Adjusted Valuation | Liabilities | |
| Cash | $144 | 100% | $144 | Notes payable (paid 7/3/63) | $125 |
| Marketable Securities | $1,772 | Mkt. 6/30/63 | $2,029 | Other liabilities | $394 |
| Accts. Rec. (net) | $1,262 | 85% | $1,073 | Total Liabilities | $519 |
| Inventory | $977 | 60% | $586 | ||
| Ppd. Exp. Etc | $12 | 25% | $3 | Net Worth: | |
| Per books | $4,582 | ||||
| Current Assets | $4,167 | $3,835 | As adjusted to quickly realizable values | $4,028 | |
| Misc. Invest | $62 | 100% | $62 | Shares outstanding 62,146 | |
| Net plant & equip. | $872 | Est. net auction value | $650 | Adj. Value per share | $64.81 |
| Total assets | $5,101 | $4,547 |
I have included above the conversion factors we have previously used in valuing Dempster for B.P.L. purposes to reflect estimated immediate sale values of non-earning assets.
As can be seen, Harry has converted the assets at a much more favorable basis than was implied by my valuations. This largely reflects Harry's expertise and, perhaps, to a minor degree my own conservatism in valuation.
As can also be seen, Dempster earned a very satisfactory operating profit in the first half (as well as a substantial unrealized gain in securities) and there is little question that the operating business, as now conducted, has at least moderate earning power on the vastly reduced assets needed to conduct it. Because of a very importantseasonal factor and also the presence of a tax carry forward, however, the earning power is not nearly what might be inferred simply by a comparison of the 11/30/62 and 6/30/63 balance sheets. Partly because of this seasonality, but more importantly, because of possible developments in Dempster before 1963 yearend, we have left our Dempster holdings at the same \$51.26 valuation used at yearend 1962 in our figures for B.P.L’s first half. However, I would be very surprised if it does not work out higher than this figure at yearend.
One sidelight for the fundamentalists in our group: B.P.L. owns 71.7% of Dempster acquired at a cost of \$1,262,577.27. On June 30, 1963 Dempster had a small safe deposit box at the Omaha National Bank containing securities worth \$2,028,415.25. Our 71.7% share of \$2,028,415.25 amounts to \$1,454,373.70. Thus, everything above ground (and part of it underground) is profit. My security analyst friends may find this a rather primitive method of accounting, but I must confess that I find a bit more substance in this fingers and toes method than in any prayerful reliance that someone will pay me 35 times next year's earnings.
We accept advance payments from partners and prospective partners at 6% interest from date of receipt until the end of the year. While there is no obligation to convert the payment to a partnership interest at the end of the year, this should be the intent at the time of payment.
Similarly, we allow partners to withdraw up to 20% of their partnership account prior to yearend and charge them 6% from date of withdrawal until yearend when it is charged against their capital account. Again, it is not intended that partners use US like a bank, but that they use the withdrawal right for unanticipated need for funds.
The willingness to both borrow and lend at 6% may seem "un-Buffett-like.” We look at the withdrawal right as a means of giving some liquidity for unexpected needs and, as a practical matter, are reasonably sure it will be far more than covered by advance payments.
Why then the willingness to pay 6% for advance payment money when we can borrow from commercial banks at substantially lower rates? For example, in the first half we obtained a substantial six-month bank loan at 4%. The answer is that we expect on a long-term basis to earn better than 6% (the general partner's allocation is zero unless we do although it is largely a matter of chance whether we achieve the 6% figure in any short period. Moreover, I can adopt a different attitude in the investment of money that can be expected to soon be a part of our equity capital than I can on short-term borrowed money. The advance payments have the added advantage to us of spreading the investment of new money over the year, rather than having it hit us all at once in January. On the other hand, 6% is more than can be obtained in short-term dollar secure investments by our partners, so I consider it mutually profitable. On June 30, 1963 we had advance withdrawals of \$21,832.00 and advance payments of \$562,437.11.
Taxes
There is some possibility that we may have fairly substantial realized gains this year. Of course, this may not materialize at all and actually does not have anything to do with our investment performance this year. I am an outspoken advocate of paying large amounts of income taxes -- at low rates. A tremendous number of fuzzy, confused investment decisions are rationalized through so-called "tax considerations.”
My net worth is the market value of holdings less the tax payable upon sale. The liability is just as real as the asset unless the value of the asset declines (ouch), the asset is given away (no comment), or I die with it. The latter course of action would appear to at least border on a Pyrrhic victory.
Investment decisions should be made on the basis of the most probable compounding of after-tax net worth with minimum risk. Any isolation of low-basis securities merely freezes a portion of net worth at a compounding factor identical with the assets isolated. While this may work out either well or badly in individual cases, it is a nullification of investment management. The group experience holding various low basis securities will undoubtedly approximate group experience on securities as a whole, namely compounding at the compounding rate of the Dow. We do not consider this the optimum in after-tax compounding rates.
I have said before that if earnings from the partnership can potentially amount to a sizable portion of your total taxable income, the safe thing to do is to estimate this year the same tax you incurred last year. If you do this, you cannot run into penalties. In any event, tax liabilities for those who entered the partnership on 1/1/63 will be minimal because of the terms of our partnership agreement first allocating capital gains to those having an interest in unrealized appreciation.
As in past years, we will have a letter out about November 1st (to partners and those who have indicated an interest to me by that time in becoming partners) with the amendment to the partnership agreement, commitment letter for 1964, estimate of the 1963 tax situation, etc.
My closing plea for questions regarding anything not clear always draws a blank. Maybe no one reads this far. Anyway, the offer is still open.
Cordially,
Warren E. Buffett
巴菲特合伙有限公司 地址：内布拉斯加州奥马哈31区，基威特广场810号
1963年7月10日
上半年业绩
1963年上半年，道琼斯工业平均指数（以下简称"道指"）从652.10点上涨至706.88点。如果在此期间持有道指成分股，可获得10.66美元的股息，使得上半年道指总回报率达到+10.0%。
我们反复念叨的原则是：（1）短期业绩（不足三年）意义不大，特别是对于我们这类将部分资源投入控制类标的的投资合伙企业而言；（2）我们的业绩相对于道指和其他普通股投资媒介，在下跌市场中会表现得更好，而在狂热上涨的市场中，可能很难跟上这些媒介的步伐。
不过，扣除邓普斯特（Dempster）估值变动（估值确实变了——我留着当甜点，信尾再说）之前，我们上半年的业绩是+14%。这个14%是按总净资产（不是非邓普斯特资产）计算的，已扣除费用，但未扣除向合伙人支付的月度款项（给选择提取的人）以及向普通合伙人分配的收益。在年中基础上，这类分配只是纸上谈兵，但如果年底我们也是+14%，那么前6%将根据资本分配给合伙人，另外加上剩余8%（14%-6%）的四分之三，即额外6%，这样有限合伙人的业绩就是+12%。
尽管上半年业绩相对令人满意，但前面两段提到的告诫仍然完全有效。我们+14%对比道指+10%，这半年比起1962年上半年（我们-7.5%对比道指-21.7%）来要逊色一些。各位应当完全理解我们在这方面的想法，这在之前的信里已经强调过。
上半年，我们在"低估类投资"（多头低估类投资减去空头低估类投资）上的平均净投资约为5,275,000美元。这一净低估类投资的总收益约为1,100,000美元，对应该类别的收益率大约为21%。这再次说明，我们的资源在不同类别之间的分配对短期业绩影响有多大。1962年，低估类投资全年下跌，全靠另外两个类别——"套利类投资"和"控制类投资"——的出色表现，才给我们带来了那年异常优异的回报。
而今年，我们的套利类投资表现不如道指，拖累了业绩，这在上行市场中是意料之中的。如果在上涨市场能100%持有低估类，下跌市场能100%持有套利类，那自然再好不过，但我不会试图以这种方式去猜测股市走向。我们认为，从长期来看，我们的三个类别都是好生意，尽管它们在各类市场中的短期价格行为特征差异很大。我们认为，试图预测市场波动长期来看是一门很糟糕的生意，我们不会插手，不管是直接还是间接地通过猜测哪个类别近期表现最好。
投资公司
以下是道指和巴菲特合伙有限公司（包括前身合伙企业）的累计业绩统计，以及两家最大的开放式（共同基金）和两家最大的封闭式投资公司（遵循多元化普通股投资政策）的对比数据：
| 年份 | 道指 | Mass. Inv. Trust (1) | Investors Stock (1) | Tri-Cont. (2) |
| 1957 | -8.4% | -11.4% | -12.4% | -2.4% |
| 1957–58 | 26.9% | 26.4% | 29.2% | 30.0% |
| 1957–59 | 52.3% | 37.8% | 42.5% | 40.9% |
| 1957–60 | 42.9% | 36.4% | 41.6% | 44.8% |
| 1957–61 | 74.9% | 71.3% | 76.9% | 77.4% |
| 1957–62 | 61.6% | 54.5% | 53.2% | 59.7% |
| 1957–1963年6月30日 | 77.8% | 72.4% | 69.3% | 75.7% |
| 年化复合收益率 | 9.3% | 8.7% | 8.4% | 9.1% |
| 年份 | Lehman (2) | 合伙企业 (3) | 有限合伙人 (4) |
| 1957 | -11.4% | 10.4% | 9.3% |
| 1957–58 | 24.7% | 55.6% | 44.5% |
| 1957–59 | 34.8% | 95.9% | 74.7% |
| 1957–60 | 38.2% | 140.6% | 107.2% |
| 1957–61 | 70.8% | 251.0% | 181.6% |
| 1957–62 | 46.2% | 299.8% | 215.1% |
| 1957–1963年6月30日 | 60.8% | 355.8% | 252.9% |
| 年化复合收益率 | 7.6% | 26.3% | 21.4% |
脚注：
(1) 根据资产净值变动加上年度内登记持有人的分配计算。
(2) 1957-62年数据来自1963年《穆迪银行与金融手册》。1963年上半年为估计值。
(3) 1957-61年数据包括所有前身有限合伙企业在整个年度内的合并业绩，已扣除所有费用，但未扣除向合伙人的分配或向普通合伙人的分配。
(4) 1957-61年数据根据前一栏的合伙企业业绩计算，并根据现有合伙协议扣除向普通合伙人的分配。
这些结果持续表明，薪酬最高、最受尊敬的投资建议也难以跑赢一个不加管理的蓝筹股指。这绝不是在谴责这些机构，或投资顾问和信托部门（它们的方法、推理和结果与这些投资公司大体相似）。这些媒介为数百万投资者提供了重要服务——实现充分分散、提供便利和安心、避开劣质股票等。然而，它们的服务并不包括（而且在绝大多数情况下也不声称包括）以高于整体市场的复利速度增值资金。
我们合伙企业存在的根本原因，就是比上述投资媒介做得更好——以高于平均的复利速度增值资金，同时长期资本损失风险更低。我们当然不能保证一定能实现这一目标。但我们可以，也确实这样说：如果在任何合理时期内（排除大规模投机牛市），我们未能实现这一目标，我们将停止运营。
邓普斯特农业机械制造公司
在最近一次年度信中，我把 Harry Bottle 形容为"年度人物"。现在看来还是说得太保守了。
去年，Harry 出色地将非生产性资产转化为现金，然后我们当然把这些现金投入到低估类股票中。今年，Harry 继续将未充分利用的资产变现，此外，他还让剩余所需资产变得有生产力。因此，在过去十九个月里，我们的资产负债表发生了如下转变：
1961年11月30日（单位：千美元，省略）
| 资产 | 账面值 | 估值比例 | 调整后估值 | 负债 | |
| 现金 | $166 | 100% | $166 | 应付票据 | $1,230 |
| 应收账款（净值） | $1,040 | 85% | $884 | 其他负债 | $1,088 |
| 存货 | $4,203 | 60% | $2,522 | ||
| 预付费用等 | $82 | 25% | $21 | 总负债 | $2,318 |
| 流动资产 | $5,491 | $3,593 | 净资产： | ||
| 账面值 | $4,601 | ||||
| 人寿保险现金价值等 | $45 | 100% | $45 | 按快速可变现价值调整后 | $2,120 |
| 厂房与设备净值 | $1,383 | 估计拍卖净值 | $800 | ||
| 总资产 | $6,919 | $4,438 | 流通股数 60,146股。调整后每股价值 | $35.25 |
1962年11月30日（单位：千美元，省略）
| 资产 | 账面值 | 估值比例 | 调整后估值 | 负债 | |
| 现金 | $60 | 100% | $60 | 应付票据 | $0 |
| 有价证券 | $758 | 1962/12/31 市价 | $834 | 其他负债 | $346 |
| 应收账款（净值） | $796 | 85% | $676 | 总负债 | $346 |
| 存货 | $1,634 | 60% | $981 | ||
| 人寿保险现金价值 | $41 | 100% | $41 | 净资产： | |
| 可收回所得税 | $170 | 100% | $170 | 账面值 | $4,077 |
| 预付费用等 | $14 | 25% | $4 | 按快速可变现价值调整后 | $3,125 |
| 加：来自Harry Bottle潜在行权的收益 | $60 | ||||
| 流动资产 | $3,473 | $2,766 | $3,185 | ||
| 流通股数 60,146股 | |||||
| 杂项投资 | $5 | 100% | $5 | 加：期权下潜在流通股数：2,000股 | |
| 总股数 62,146股 | |||||
| 厂房与设备净值 | $945 | 估计拍卖净值 | $700 | 调整后每股价值 | $51.26 |
| 总资产 | $4,423 | $3,471 |
1963年11月30日（单位：千美元，省略）
| 资产 | 账面值 | 估值比例 | 调整后估值 | 负债 | |
| 现金 | $144 | 100% | $144 | 应付票据（1963年7月3日已付清） | $125 |
| 有价证券 | $1,772 | 1963/6/30 市价 | $2,029 | 其他负债 | $394 |
| 应收账款（净值） | $1,262 | 85% | $1,073 | 总负债 | $519 |
| 存货 | $977 | 60% | $586 | ||
| 预付费用等 | $12 | 25% | $3 | 净资产： | |
| 流动资产 | $4,167 | $3,835 | 账面值 | $4,582 | |
| 按快速可变现价值调整后 | $4,028 | ||||
| 杂项投资 | $62 | 100% | $62 | 流通股数 62,146股 | |
| 厂房与设备净值 | $872 | 估计拍卖净值 | $650 | 调整后每股价值 | $64.81 |
| 总资产 | $5,101 | $4,547 |
上面我列出了我们此前为 BPL 目的在评估邓普斯特时使用的折算因子，以反映非盈利性资产的估计即时出售价值。
可以看出，Harry 实现资产变现的成果比我估值所隐含的要好得多。这很大程度上归功于 Harry 的专业能力，或许也有一小部分是因为我估值时偏保守。
同样可以看出，邓普斯特上半年获得了非常令人满意的经营利润（以及证券方面的大量未实现收益），而且毫无疑问，按目前的方式运营，这家企业在所需资产大幅缩减后，至少具备中等水平的盈利能力。然而，由于一个非常重要的季节性因素以及存在税收结转抵扣，其盈利能力远不能仅通过比较1962年11月30日和1963年6月30日的资产负债表来推断。部分由于这种季节性，但更重要的是由于邓普斯特在1963年底前可能发生的情况，我们在 BPL 上半年的数据中仍将邓普斯特的持仓按1962年底的每股51.26美元估值。不过，如果年底估值低于这个数字，我会非常惊讶。
给咱们团队里那些信奉基本面分析的朋友一个花絮：BPL 持有邓普斯特71.7%的股份，购买成本为1,262,577.27美元。1963年6月30日，邓普斯特在奥马哈国民银行有一个小保险箱，里面装着价值2,028,415.25美元的证券。我们占71.7%即1,454,373.70美元。也就是说，地上的一切（以及地下的部分）都是利润。我那些证券分析师朋友可能会觉得这是一种相当原始的会计方法，但我得承认，我觉得这种"掰手指脚趾"的方法，比虔诚指望有人愿意支付明年盈利的35倍，要实在得多。
我们接受合伙人和准合伙人的预付款，从收到之日起到年底按6%计息。虽然年底没有义务将付款转为合伙权益，但付款时的意图应当如此。
同样，我们允许合伙人在年底前提取其合伙账户最多20%的资金，并从提取之日起到年底按6%收费，年底从资本账户中扣除。同样，合伙人不应该把我们当银行用，而是在遇到意外资金需求时使用这个提取权。
愿意同时以6%借款和放贷，看起来可能"不像巴菲特的风格"。我们把这个提取权视为提供一些流动性的手段以应对意外需求，而且实际上，我们有相当把握预付款会远远超过提取额。
那为什么我们愿意为预付款支付6%的利息，而我们可以从商业银行以低得多的利率借到钱？例如，上半年我们以4%利率获得了一笔可观的六个月银行贷款。答案是：我们预计长期来看能赚到超过6%（如果低于6%，普通合伙人的分配就是零——尽管在短时期内能否达到6%很大程度上是运气问题）。此外，对于预期很快会成为我们股本一部分的资金，我可以采取与短期借款不同的投资态度。预付款对我们还有一个好处，就是新资金可以在全年陆续投入，而不是一月份一下子涌进来。另一方面，6%比我们的合伙人在短期美元安全投资中能获得的收益要高，所以我认为这对双方都有利。1963年6月30日，我们的预提款为21,832.00美元，预付款为562,437.11美元。
税务
今年我们有可能实现相当可观的已实现收益。当然，也可能根本不会实现，而且实际上这与我们今年的投资业绩无关。我是大声鼓吹缴纳大量所得税的人——在低税率下。有大量模糊不清、混乱不堪的投资决策是通过所谓的"税务考虑"来合理化自己的。
我的净资产是持有资产的市场价值减去出售时应付的税款。负债和资产一样真实，除非资产价值下跌（哎哟）、资产被捐赠（不予置评）、或者我带着它死去。后一种做法至少可以说近似于"皮洛士式胜利"（意思是惨胜如败）。
投资决策应当基于税后净资产最可能的复利增长以及最小风险。把低税基的资产单独锁起来，只是将一部分净资产冻结在与该资产相同的复利因子中。虽然个别情况下结果可能好也可能坏，但这是对投资管理的废止。持有各种低税基资产的人群的整体经历，无疑会接近证券整体的人群经历——也就是以道指的复利速度复利。我们不认为这是最优的税后复利速度。
我之前说过，如果来自合伙企业的收入可能构成你总应税收入的很大一部分，那么安全的做法是今年预估与去年相同的税款。如果这样做，就不会被罚款。无论如何，对于1963年1月1日入伙的合伙人来说，由于我们的合伙协议条款优先将资本利得分配给那些对未实现增值享有权益的人，他们的税务负担将会很小。
和往年一样，我们将在11月1日左右发出一封信（给合伙人和届时已向我表示有兴趣成为合伙人的人），内容包括合伙协议修正案、1964年承诺函、1963年税务情况估计等。
最后，我恳请大家对不清楚的地方提出问题，但每次都没人响应。也许没人读到这么远。不管怎样，邀请仍然有效。
此致，
Warren E. Buffett