(An audio version of this letter can now be found as Episode 53 of The Unlimited Podcast by Ginsler Wealth. Use the link provided or find us on your favourite podcast app: Apple Podcasts / Spotify)
To Ginsler Wealth’s Clients:
While I am still not sure how I got into Harvard Business School back in 2001, once on campus I was constantly amazed by the caliber of speakers the school could attract. But at HBS, no visiting speaker generated more excitement than the Greatest Investor in the World – Warren Buffett. HBS’s auditorium – Burden Hall – would be packed to the rafters to hear Buffett’s sage advice. I had the great fortune of hearing and seeing Buffett twice during my two years at HBS. And Warren was even nice enough to take a picture with me. I note that almost 25 years later, Buffett looks about the same while I certainly don’t have the same head of hair I did back then!
I have been following Buffett’s musings since leaving HBS. Each year, Buffett pens his annual letter to Berkshire Hathaway shareholders. And for the past many years, I have written a standalone Ginsler Wealth commentary on each of Warren’s letters (see 2023, 2022, and 2021).
Buffett’s latest letter was released on February 22, amid one of the most volatile and uncertain calendar quarters, perhaps in history; and I am writing this letter after the first week of April with Trump’s Tariffs roiling global markets. As usual, Buffett’s letter contains some very important themes and lessons. As such, I thought I’d connect The Oracle of Omaha’s latest insights to today’s investing environment—and how we’re applying them in managing your portfolios at Ginsler Wealth. Buffett’s quotes will be in bold italics throughout.
For context – which I suspect you are all aware of – Trump’s actions (primarily) drove the U.S. stock market[i] to a negative 4.6% return through to the end of March 31, 2025 (and dramatically lower than that in the first week of April). World equity markets, generally, have all turned negative for the year-to-date as well.
REMAIN INVESTED & DON’T TIME THE MARKETS
The most common question I’ve been asked in recent months is how to navigate the uncertainty surrounding Trump’s tariffs and other unpredictable developments. This is often followed by the acknowledgment that no one can reliably forecast what’s coming next—particularly since it’s unclear whether even Trump knows what he’ll declare from one day to the next.
“Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities. That preference won’t change. Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses,…”
“Businesses, as well as individuals with desired talents…will usually find a way to cope with … instability…”
Buffett reminds us that staying invested will, in hindsight, likely be seen as the wisest course of action. We have written often about “doing nothing” and “doing something”, including combining the two ideas in my February 2nd Note to Clients re Trump Tariffs. As my former boss, Gerald Sheff, Co-Founder of pre-eminent wealth management firm Gluskin Sheff + Associates Inc., reminded our listeners on the latest episode of The Unlimited Podcast, “Doing nothing is often the best thing to do. Because if you do something, you have to do it right twice.”
And in line with Buffett’s comments, our general approach to investing does not involve “going to cash” when uncertainty or volatility rises. Instead, we aim to construct portfolios that are built to better withstand market swings than traditional equity and bond portfolios (more on this below).
“Greg [Abel][ii] and I have no view on future foreign exchange rates…”
It is also important to remind you that Buffett consistently emphasizes that he and his team have little ability to predict what will happen in the economy and markets. Instead, they focus on making sound decisions without relying on a crystal ball. We do the same at Ginsler Wealth.
THE IMPORTANCE OF DIVERSIFICATION AND BUILDING THE ALLWEATHER PORTFOLIO
“In 2024, Berkshire did better than I expected though 53% of our 189 operating businesses reported a decline in earnings.”
We have described our portfolio construction approach many times, and in my 2022 Year End Letter, I called this portfolio the “All-Weather” portfolio – a portfolio that can provide a reasonable level of downside protection, some income along the way, and the opportunity for growth and gains.
A typical “diversified” investment portfolio (outside Ginsler Wealth) is sometimes called the “60/40 Portfolio” (i.e., 60% stocks and 40% bonds). As you know, at Ginsler Wealth we have augmented that so-called diversified portfolio to include other asset classses (alternatives and real estate, most commonly), and include a variety of sub-strategies within each asset class.
As Buffett explains in his quote above, even with more than half of Berkshire’s businesses experiencing a decline in earnings, Berkshire’s diversified “portfolio” of businesses did well overall.
Breaking down the “Ginsler Wealth” pie chart above, the high-level results of the strategies in each asset class over the first quarter of 2025 were as follows:
Given the unique circumstances, goals, and objectives of each client family, it’s challenging to provide a personalized performance summary in a general letter like this. However, one key takeaway applies broadly: the importance of diversification only grows as market volatility and uncertainty increase.
“A small but important exception to our U.S.-based focus is our growing investment in Japan.”
Buffett details in his recent letter about Berkshire’s investments outside the U.S. In my last quarterly letter, I described one of our key moves going into 2025: decreasing U.S. equity exposure and increasing International/Emerging Markets exposure. As per the table above, (so far) that has been a good decision, and we believe maintaining this international exposure enhances the overlal diversification of portfolios.
THE COST OF DIVERSIFICATION IS WORTH IT
“Berkshire Hathaway – paid far more in corporate income tax than the U.S. government had ever received from any company – even the American tech titans that commanded market values in the trillions.”
A theme of Buffett’s last few letters has been the amount of taxes Berkshire proudly pays each year. Why? Because paying taxes means they’re making a lot of money.
At Ginsler Wealth, part of our role is to help you minimize taxes through thoughtful financial and tax planning, as well as by designing tax-efficient portfolios (I discussed this in my 2024 Q1 letter – Free Money Edition). But that doesn’t mean avoiding taxes at all costs.
At a high level, equities tend to be among the most tax-efficient investments because you typically only pay taxes when (if) you sell them at a gain—often many years down the road—and only half of that gain is taxable. But unfortunately, this tax advantage doesn’t come cheap. The “cost” is market uncertainty, volatility, sharp swings, sleepless nights, and maybe even a touch of nausea, which I suspect many investors felt last week.
As one tries to reduce those unpleasant side effects by holding more stable and consistent investments (some of which I highlighted in the pie charts and table above), the trade-off is often reduced tax efficiency—meaning you may pay a higher tax rate per unit of return. However, like Buffett, we believe this “cost” in the form of taxes is well worth it over the long run—especially during periods of market distress like we’re experiencing today.
REMINDER: INVESTING REQUIRES A LONG TIME HORIZON
“Our measure [of operating earnings] excludes capital gains or losses on the stocks and bonds we own, whether realized or unrealized. Over time, we think it highly likely that gains will prevail, though the year-by-year numbers will swing wildly and unpredictably.”
“Our horizon for such commitments is almost always far longer than a single year. In many, our thinking involves decades.”
Everyone knows that investing requires a long time horizon. But in our experience, many investors have a long time horizon…until they get spooked. And there is always something to worry about. As Buffett says, year-by-year swings will be wild and unpredictable. But the chart below – which I call “Climbing the ‘Wall of Worry’” – shows a reasonably predictable long-term pattern.
OPPORTUNITY KNOCKS (AGAIN?)
“…really outstanding businesses are very seldom offered in their entirety, but small fractions of these gems can be purchased Monday through Friday on Wall Street and, very occasionally, they sell at bargain prices.”
A few years ago, in the third quarter of 2022, after a brutal nine-month stretch, the U.S. equity market was down 25% for the year, and the Canadian market was down 13%. Fixed income markets—the “bonds” in the traditional “60/40 Portfolio” mentioned earlier—were also down significantly. At that point, the 60/40 Portfolio didn’t feel all that diversified. I released my “Opportunity Knocks”-themed quarterly letter on October 9, 2022. I encourage you to revisit it for a look at past market declines and the strong recoveries that often followed. As the chart below shows, just three days later, the U.S. equity market[vi] bottomed out—and went on to gain 78% to its recent high in mid-February, almost 63% through the end of March, and 47% as of April 4, 2025 (even after recent steep declines).
In other words, periods of significant market declines have historically been some of the best—and most opportunistic—times to invest. But please don’t assume the market will bottom three days from now. Remember…I don’t have a crystal ball.
WARREN BUFFETT COLES NOTES (OR TL;DR, FOR THE YOUNG FOLKS…)
- Stay invested. Don’t try to time the markets or predict the future. Do nothing, sometimes.
- Diversification works. True diversification proves its value when you need it most (like now).
- Paying taxes is okay. It means you’re making money. Don’t let tax concerns override sound investment decisions.
- Think long term. Successful investing requires patience. Markets tend to climb the “Wall of Worry.”
- Find opportunity in fear. As Buffett famously said: “Be fearful when others are greedy, and greedy when others are fearful.”
—————–
ME AND BUFFETT ARE ALIKE
“During the 2019-23 period, I have used the words ‘mistake’ or ‘error’ 16 times in my letters to you. Many other huge companies have never used either word…”.
Probably the only thing Warren Buffett and I have in common, aside from our love of Coca-Cola and McDonalds, is that we both make mistakes. In fact, I am probably better than Buffett at making mistakes.
“Greg, our directors and I all have a very large investment in Berkshire in relation to any compensation we receive. If you lose money, so do we. This approach encourages caution but does not ensure foresight.”
But also like Buffett, me and my family are invested in the same holdings and strategies we recommend for our clients. So, when it comes to managing your portfolios, both I and the Ginsler Wealth team think and act with great care. Yes, we will make mistakes from time to time. But we do well when you do well, and vice versa. You can trust that we are fully focused on navigating today’s uncertainty—guided, in part, by the timeless wisdom of the Oracle of Omaha.
Thank you for your continued trust, support and confidence. We are available 24/7 should you need us.
Sincerely,
Brian Ginsler
President & CEO
—————–
[i] S&P 500 Index as a proxy for the U.S. stock market.
[ii] Greg Abel, from Edmonton, Alberta, Canada, was confirmed by Warren Buffett to be his successor as CEO of Berkshire Hathaway.
[iii] The Ginsler Wealth portfolio shown here is simply an illustration and is not meant to be representative of each client’s portfolio with Ginsler Wealth. Every client has different risk tolerances, goals, objectives, time horizons, etc. and each portfolio at Ginsler Wealth is tailored for each individual client’s circumstances.
[iv] The strategies mentioned are the “core” strategies held in most/many client portfolios and exclude specialized or very lightly-allocated strategies that are used sparingly for particular client situations, especially those with higher risk tolerances. It also excludes “cash management” types of strategies and holdings, which were all positive, as one would expect. However, it is important to note that the experience detailed herein may not be in line with individual client-specific results. See endnote iii above for client-specific disclaimers.
[v] Source: Haverford, Ibbotson Associates and taken from the following website: https://www.pwafinancial.com/blog-01/wall-worry. The S&P 500 is a broad representative index of large capitalization U.S. stocks. It is not possible to invest directly in an index. Past performance is no guarantee of future results. The Panics of 1837, 1857, 1873, 1896 & 1907 were periods of financial crisis and extreme market volatility that resulted in deep economic downturns.
[vi] The S&P 500 Total Return Index.
