The tone of his final letter is reflective. Buffett says that in his 2019-2023 correspondence, he has used the words “mistake” and “error” on 16 separate occasions. He notes that most other companies haven’t used either during this period.

But this is typical of his modesty. For a man who has presided over a company that’s seen its value increase by 5,502,284% between 1964 and 2024, he’s remarkably humble. By comparison, the S&P 500 has risen by ‘only’ 39,054% during this period.

However, there’s another part of his letter that I found interesting. He notes that a “small but important exception to our US-based focus is our growing investment in Japan”. Since July 2019, Berkshire’s built stakes in ITOCHU, Marubeni, Mitsubishi, Mitsui and Sumitomo. Buffett’s rationale was that he looked at their accounts and was “amazed” at their low stock market valuations. At the end of 2024, the group reported a $9.7bn (70%) unrealised profit on these positions.

And because I’ve never invested in Japanese stocks before, this impressive performance got me thinking.

Lost decades

For over 30 years, the country’s economy has been stagnating. Under the strain of falling asset values and an ageing population, the value of the yen has fallen over a third. Real wages have also declined dramatically. But things could be on the turn. GDP growth appears to be picking up and business investment — a good indicator of confidence — is rising.

The government’s announced a stimulus package and, despite the Nikkei 225 soaring by around a third since November 2024, Japanese equities appear undervalued relative to their international peers. To try and reverse this, the Tokyo Stock Exchange has been encouraging companies to pay higher dividends.

One way of taking advantage of these attractive valuations is to buy a stake in the JPMorgan Japanese Investment Trust (LSE:JFJ). At 30 September, it had positions in 62 stocks including all but one of Berkshire’s five. The trust only invests in innovative companies operating in high-growth industries such as robotics, e-commerce and computer gaming.

Since November 2020, the trust’s share price has risen by less than 10%. But it’s now (14 November) around 75% above its five-year low of June 2022. Despite this rally, it trades at a 10% discount to its net asset value.  

But the Japanese economy remains fragile. Inflation’s rising and US tariffs could have a long-term adverse impact on growth. And interest rates are slowly increasing. In March 2024, the central bank raised the cost of borrowing for the first time in 17 years.

However, many of the trust’s holdings are in companies that have an international reach and are therefore protected – to some extent – from domestic economic pressures. And taking a position could be a good way of spreading risk. It’s possible to have a stake in 62 companies through a single investment.

On this basis, I think those looking to follow Buffett — and get a foothold in the Japanese market — could consider the investment trust.

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