Quick, when was the last time you heard a CEO admit to making a mistake, absent a snarling Congressional investigative committee? The events of the global financial crisis are a reminder of the paucity of business leaders who accept responsibility for their decisions. Indeed, one might be downright shocked to hear a CEO say, “I made some errors of omission, sucking my thumb when new facts came in that should have caused me to re-examine my thinking and promptly take action.” For those who know Warren Buffett, this kind of brutal honesty is all but expected.

Warren Buffett, as you know, is one of the richest men on the planet, having built his fortune through shrewd investments as the Chairman and CEO of Berkshire Hathaway. Known as the Oracle of Omaha (where he grew up and continues to live today), Buffett has distinguished himself as a brilliant businessman with unshakable integrity. Some of the more recognized brands in the Berkshire Hathaway portfolio and coffers include: GEICO, Benjamin Moore, ACME Building Products, NetJets, The Pampered Chef, Dairy Queen, and Fruit Of the Loom. They also hold significant stakes in American Express, Gillette, Coca-Cola, H&R Block, and the Moody’s Corporation.

Each year, with simple prose and honest reflection, Buffett writes an annual letter to his shareholders, summarizing not only the performance of his company but also the state of the global economy. Great wisdom is evident in every sentence he writes, and that is why Gear Patrol considers the annual Berkshire Hathaway Chairman’s Letter (PDF) to be required reading.

Below are a few of the qualities that characterize Buffett, along with quotes from the latest letter. Use them as a guide for conducting the business of your life.

Healthy skepticism: “CEOs who have concocted their own valuations for esoteric financial instruments have seldom erred on the side of conservatism. That club of optimists is one that… I have no desire to join.”

Quirky humor: “By yearend, investors of all stripes were bloodied and confused, much as if they were small birds that had strayed into a badminton game.”

Contrarian wisdom: “Beware the investment activity that produces applause; the great moves are usually greeted by yawns.”

Candid self-reflection: “I made some other already-recognizable errors as well. The tennis crowd would call my mistakes ‘unforced errors.’”

Grounded, unshakable optimism: “Though the path has not been smooth, our economic system has worked extraordinarily well over time. It has unleashed human potential as no other system has, and it will continue to do so. America’s best days lie ahead.”

Cost: Free (Yet Priceless)

Archive To All Berkshire Hathaway Stockholder Letters