Buffett thinks GAAP is almost useless now, and doesn't think accountants have a clue. He follows own "owners earnings" model, which is not a standard of any kind.
"Berkshire’s 2018 and 2019 years glaringly illustrate the argument we have with the new rule. In 2018, a down
year for the stock market, our net unrealized gains decreased by $20.6 billion, and we therefore reported GAAP
earnings of only $4 billion. In 2019, rising stock prices increased net unrealized gains by the aforementioned $53.7
billion, pushing GAAP earnings to the $81.4 billion reported at the beginning of this letter. Those market gyrations
led to a crazy 1,900% increase in GAAP earnings!
Meanwhile, in what we might call the real world, as opposed to accounting-land, Berkshire’s equity holdings
averaged about $200 billion during the two years, and the intrinsic value of the stocks we own grew steadily and
substantially throughout the period."
GAAP is definitely an imperfect standard, so I don't begrudge them going their own way (and their way seems to be reasonable, from a cursory view). My comment mostly comes from the frankly ludicrous financials that have been making headlines in the last few years.
Agreed. Also noteworthy that Buffett points out the shortcomings of GAAP’s mark-to-market rule whether it makes Berkshire earnings look undeservedly good (2019) or bad (2018).
Meanwhile, in what we might call the real world, as opposed to accounting-land, Berkshire’s equity holdings averaged about $200 billion during the two years, and the intrinsic value of the stocks we own grew steadily and substantially throughout the period."