Letter writing has quietly declined worldwide in the last quarter century due to email and social media. However, there is a relic of the past that refuses to die and persists: annual letters to investors. This is the one tradition respected investor companies cannot do away with. 

Annual letters are crafted thoughtfully to inform shareholders and investors about the past and what the future may hold. They are legendary for their insight, clarity, and long-term perspective. 

Warren Buffett, chairman and chief executive officer (CEO) of Berkshire Hathaway is well known for his annual letters to investors and witty remarks such as “Our favourite holding period is forever”, “The stock market is designed to transfer money from the Active to the Patient”, and “You only find out who is swimming naked when the tide goes out.”

Buffett chose to ride out the current volatile economic period by holding significant cash reserves amounting to $334 billion in cash and cash equivalents. In his letter dated February 22, 2025, he explained that this accumulation resulted from significant stock sales and a scarcity of attractive investment opportunities due to elevated stock valuations. 

This was a good call given U.S. President Donald Trump’s aggressive tariff policies, which have significantly impacted the stock and bond markets. 

Amazon founder Jeff Bezos is another prolific writer known for his annual letters and phrases like “It’s always Day 1” (1997 letter), “We are stubborn on vision. We are flexible on details”, and “We are willing to be misunderstood for long periods of time.”

Other lesser-known CEOs are also studied, even though their letters may not be public. Canadian businessman and owner of Constellation Software, Mark Leonard, is a favourite amongst software investors with lines like “We don’t believe that we can predict the future. We can, however, prepare for it by focusing on businesses with enduring moats and decentralised decision-making.”

Annual letters are enduring as they provide steady leadership, especially in volatile environments like the investment scene. They prioritise clarity over financial jargon and focus on timeless principles, not just results. Their writers tell stories around their numbers and do not fear being vulnerable to readers. They own their mistakes as a way of building trust. They speak to the future based on logic. It is the art of being a sage in a highly technical and competitive world, and some of these annual letters have been so spot-on as to be prophetic. 

In his famous 1997 letter, Bezos predicted that Amazon’s strategy of focusing on customer obsession and long-term investment would be successful. He wrote, “We will make bold rather than timid investment decisions where we see a sufficient probability of gaining market leadership.”

Howard Marks, the CEO of Oaktree Capital Management, better known for his memos rather than letters, wrote before the 2007-2009 financial crisis (Great Recession), predicting, “We’re in an environment where risk is being ignored, and deals are being priced as if nothing can go wrong.” His memo, The Race to the Bottom, became well-known for warning about credit market excesses. 

Still on the crisis, Buffett foresaw that government intervention and debt accumulation would be necessary to save the situation. “Economic medicine that was previously meted out by the cupful has recently been dispensed by the barrel… and we may very well need to maintain a government debt level that seems unimaginable,” he wrote after the recession. 

Leonard, whose conglomerate owns more than 600 software companies, wrote, “We aim to buy businesses that are boring but essential, overlooked but enduring.” This strategy has worked for his company, outperforming big tech organisations in the last 10 years. 

That prophetic touch is what keeps investors reading. Larry Fink, Chairman and CEO of BlackRock, said this about his annual letter this year on LinkedIn. 

Source: LinkedIn

Locally, Kenyan companies listed on the Nairobi Securities Exchange (NSE) publish their annual letters, but investor relations are still evolving.