Warren Buffett’s letter to shareholders gives us a great view of the overall economy from a man who has his finger in every pot and his letter to investors gives us a very good insight as to how things are going in the various sectors his operations cover. Most importantly, what I have learned in my own 40 years or reading Mr. Buffett’s reports (my Grandfather was a shareholder) is what should shape any long-term investing strategy: Patience and performance.

I often preach to members the joys of letting gains compound and our $25,000-$100,000 Portfolio, which is currently at $27,531 (up 10%) after 4 weeks, is an exercise in how to quickly compound small gains over the course of a year. Primarily, we try to follow Warren Buffett’s Number One Rule of Investing, which is: Don’t Lose Money. Buffett’s Rule #2 is: See Rule #1 and like us, it’s not that nothing Warren Buffett ever buys loses money – it’s just that he doesn’t ever buy things he isn’t willing to stick with UNTIL they make money. Sure we take a few losses along the road but, by being selective in our entries, we don’t discard stocks that we carefully selected just because the market temporarily disagrees with our valuations.

Buffett sees 2011 as a year free of a mega-catastrophe in his insurance and possessing segments and "a general business climate somewhat better than that of 2010 but weaker than that of 2005 or 2006." The company plans on spending 33% more on property and equipment this year ($8Bn total) and ALL of it in the United States – where Mr. Buffett still sees good value but, like us, takes a cautious approach, saying: "Money will always flow toward opportunity, and there is an abundance of that in America. Commentators today often talk of “great uncertainty.” But think back, for example, to December 6, 1941, October 18, 1987 and September 10, 2001. No matter how serene today may be, tomorrow is always uncertain." However, Buffet goes on to say:

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