When I was a child the mailman came once a day. Now the mail arrives every moment. I used to believe it was preposterous that people could fall in love online. Now I see that all relationships are virtual, even those that take place in person. Whether we use our bodies or a keyboard, it all comes down to two minds crying out from their solitude.

Part of what separates us from the other creatures on earth is that we make up stories. We are storytellers. And we can tell bad stories and we can tell good stories. We can tell stories that lead to division and hate and war. Or we can tell stories that lead to cooperation and peace and progress.

There is always an impulse to degrade people who are different from you, to diminish them, to demean them, and it never seems to go away, even when there is ample evidence that when we work together, we do better. It’s not about material progress or personal comfort. It’s about personal identity, and there are still so many forces at work in the human psyche that lead some people to think that their identity requires them to have someone to look down on or to demean or to feel that they’re superior to, and I think that that’s at the root of all this. It’s the only story in human society. Who is the other? Who is one of yours? Cain and Abel.

The problem is I'm older now, I'm 40 years old, and this stuff doesn't change the world. It really doesn't. That's going to break people's hearts. I'm sorry, it's true. Having children really changes your view on these things. We're born, we live for a brief instant, and we die.

The reaction of my family and me to our extraordinary good fortune is not guilt, but rather gratitude. Were we to use more than 1% of my claim checks on ourselves, neither our happiness nor our well-being would be enhanced. In contrast, that remaining 99% can have a huge effect on the health and welfare of others.

In particular, my decision to sell McDonald's was a very big mistake. Overall, you would have been better off last year if I had regularly snuck off to the movies during market hours.

The asset I most value, aside from health, is interesting, diverse, and long-standing friends.

The strategy we've adopted precludes our following standard diversification dogma. Many pundits would therefore say the strategy must be riskier than that employed by more conventional investors. We disagree. We believe that a policy of portfolio concentration may well decrease risk if it raises, as it should, both the intensity with which an investor thinks about a business and the comfort-level he must feel with its economic characteristics before buying into it.

I've mentioned that we strongly prefer to use cash rather than Berkshire stock in acquisitions. A study of the record will tell you why: If you aggregate all of our stock-only mergers (excluding those we did with two affiliated companies, Diversified Retailing and Blue Chip Stamps), you will find that our shareholders are slightly worse off than they would have been had I not done the transactions. Though it hurts me to say it, when I've issued stock, I've cost you money.

Ironically, though, this is also the purchase in which I made my biggest mistake - of a kind, however, never recognized on financial statements. We paid $600 million in 1989 for Gillette preferred shares that were convertible into 48 million (split-adjusted) common shares. Taking an alternative route with the $600 million, I probably could have purchased 60 million shares of common from the company. The market on the common was then about $10.50, and given that this would have been a huge private placement carrying important restrictions, I probably could have bought the stock at a discount of at least 5%. I can't be sure about this, but it's likely that Gillette's management would have been just as happy to have Berkshire opt for common. But I was far too clever to do that.