Buffett addresses the significant insurance losses from major hurricanes, yet notes that Berkshire’s financial strength remained unshaken. He celebrates the final victory of his S&P 500 bet against Protégé Partners, proving the superiority of passive investing over active management. The letter also explains how the 2017 Tax Cuts and Jobs Act significantly boosted Berkshire’s net worth and GAAP earnings.

Buffett introduces his new investment managers, Todd Combs and Ted Weschler, praising their performance and cultural fit. He expresses disappointment in failing to make a major acquisition despite a large cash pile. The letter emphasizes the importance of the 'Big Four' investments and the continued growth of Berkshire’s insurance float as a source of low-cost capital for the conglomerate.

Buffett highlights the transformative acquisition of BNSF, emphasizing its role as a productive asset for decades. He discusses the massive capital expenditures required for railroads and utilities, contrasting them with capital-light businesses. The letter also addresses the slow recovery in the housing market and the enduring strength of Berkshire’s insurance float, which provides low-cost funding for future investments.