Can it really be that we've reached Part 10 in our 29-part series on the Oracle of Omaha? It can, so let's do it.

Today we pull wisdom from Warren Buffet's letter to Berkshire Hathaway shareholders about the year 1986.

Despite Buffett's constant warnings that the numbers can't be sustained, 1986 was another winner:

Our gain in net worth during 1986 was $492.5 million, or 26.1%. Over the last 22 years (that is, since present management took over), our per-share book value has grown from $19.46 to $2,073.06, or 23.3% compounded annually. Both the numerator and denominator are important in the per-share book value calculation: during the 22-year period our corporate net worth has increased 10,600% while shares outstanding have increased less than 1%.

Buffett on letting talent be talented:

...if my job were to manage a golf team - and if Jack Nicklaus or Arnold Palmer were willing to play for me - neither would get a lot of directives from me about how to swing.

A whimsical story about having a passion for your work:

(Our prototype for occupational fervor is the Catholic tailor who used his small savings of many years to finance a pilgrimage to the Vatican. When he returned, his parish held a special meeting to get his first-hand account of the Pope. "Tell us," said the eager faithful, "just what sort of fellow is he?" Our hero wasted no words: "He's a forty-four, medium.")

On hiring:

"...working with people who cause your stomach to churn seems much like marrying for money - probably a bad idea under any circumstances, but absolute madness if you are already rich."

Working in a still hot stock market, Buffett couldn't find anything worth buying:

"Meanwhile, we had no new ideas in the marketable equities field, an area in which once, only a few years ago, we could readily employ large sums in outstanding businesses at very reasonable prices. So our main capital location moves in 1986 were to pay off debt and stockpile funds."

On stock investing and the bull market rumbling along at that time:

...occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics will be unpredictable. And the market aberrations produced by
them will be equally unpredictable, both as to duration and degree. Therefore, we never try to anticipate the arrival or departure of either disease. Our goal is more modest: we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.

As this is written, little fear is visible in Wall Street. Instead, euphoria prevails - and why not? What could be more exhilarating than to participate in a bull market in which the rewards to owners of businesses become gloriously uncoupled from the plodding performances of the businesses themselves. Unfortunately, however, stocks can't outperform businesses indefinitely."

On companies that announce restructuring by selling off pieces of the business:

(Restructuring is defined narrowly, however: it extends only to dumping offending businesses, not to dumping the officers and directors who bought the businesses in the first place. "Hate the sin but love the sinner" is a theology as popular with the Fortune 500 as it is with the Salvation Army.)

Buffett uses a long section of this Letter to talk about the Reagan tax cuts and what impact they will have on Berkshire. It's too lengthy to quote with any summation, but, in the end, Buffett sees it as a mixed bag that will hurt Berkshire overall. He also believes the cuts will either be rolled back to some degree or will cause inflation, or both.

Finally, Buffett has to eat his words after Berkshire buys a corporate jet:

...your Chairman, unfortunately, has in the past made a number of rather intemperate remarks about corporate jets. Accordingly, prior to our purchase, I was forcedinto my Galileo mode. I promptly experienced the necessary "counter-revelation" and travel is now considerably easier - and considerably costlier - than in the past. Whether Berkshire will get its money's worth from the plane is an open question, but I will work at achieving some business triumph that I can (no matter how dubiously) attribute to it. I'm afraid Ben Franklin had my number. Said he: "So convenient a thing it is to be a reasonable creature, since it enables one to find or make a reason for everything one has a mind to do."