In his letter to shareholders accompanying the annual results last week, Buffett admitted that the insurance and investment vehicle, which has seen its shares decline by 2.4% over the past year, was "positioned very badly in terms of buying businesses". The company reported profit before investment gains of 1.54bn, flat on last year's figure, as it coped with both bad luck and poor investment decisions.

Berkshire's reinsurance business was badly affected by Hurricane Katrina last year, exposing the company to hundreds of millions of dollars in claims. It also absorbed $926m ( 776m) in pre-tax losses resulting from foreign-currency forward contracts through which Buffett had bet heavily against the dollar. Dollar gains against the pound, the yen and the euro over the fourth quarter of 2005 handed Berkshire its first ever annual loss on foreign exchange trading.

Dubbed "the sage of Omaha" because of the homespun investing wisdom he dispenses to shareholders, Buffett was frank about Berkshire's performance: "Your Berkshire stock will not do as well under these conditions as it did five years ago or 20 years ago. And I don't have the magic solution for it."

He was fulsome in his praise for one of Berkshire's insurance subsidiaries, Geico, for cushioning Katrina's blow by delivering underwriting gains in the fourth quarter, despite the difficult conditions. "Credit Geico and its brilliant CEO, Tony Nicely, for our stellar insurance results in a disaster-ridden year. If you have a new son or grandson in 2006, name him Tony, " the letter said.

As has become customary, Buffett also took the opportunity to express his concern about US policy trends that concern him. Top of the hitlist were private equity firms and hedge funds, which the 75-year-old business icon calls "hyper helpers".

"A record portion of the earnings that would go in their entirety to owners, if they all just stayed in their rocking chairs, is now going to a swelling army of helpers, " he said. "Particularly expensive is the recent pandemic of profit arrangements under which helpers receive large portions of the winnings when they are smart or lucky, and leave family members with all the losses, and large fixed fees to boot, when the helpers are dumb or unlucky or occasionally crooked."