This 1977 shareholder letter provides a comprehensive review of Berkshire Hathaway’s financial health and the performance of its diverse business segments. While the textile division continued to struggle with industry-wide difficulties, the insurance group experienced significant growth and exceptional profitability under disciplined management. The report emphasizes return on equity as the primary metric for success, arguing that simple increases in earnings are less meaningful than the efficiency of capital usage. It also outlines a long-term investment philosophy that prioritizes purchasing undervalued, high-quality companies with excellent leadership rather than seeking short-term market gains. Additionally, the letter highlights the strong contributions of banking interests and affiliated holdings like Blue Chip Stamps to the company's overall economic progress. Overall, the document serves as a strategic roadmap for value-based investing and operational excellence across a growing corporate portfolio.