Warren Buffett's 1962 annual letter, one of his most foundational. He lays out his famous \"Ground Rules\" for judging performance, illustrates the staggering power of compounding, and explains his three-category method: undervalued \"generals,\" work-outs, and control situations. In a down year for the Dow (minus 7.6%), his limited partners gained 11.9%. The highlight is the Dempster Mill turnaround, how new manager Harry Bottle converted a failing manufacturer's assets into cash and roughly doubled the holding's value. Buffett also defines what true conservatism means to him: knowledge and reason, not crowd agreement.
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