The man considered by many to be the greatest investor of all time just had his worst year ever. Berkshire Hathaway Inc., the large holding company steered by Warren Buffett, reported Saturday that its far-flung empire, ranging from insurance to ice cream to underwear, took some big hits from the sharp economic downturn in 2008. (Berkshire’s annual letter to shareholders.)  

A common metric Berkshire uses to track performance, book value per share, fell 9.6% in 2008, its biggest decline since Mr. Buffett took over the company in 1965 when it was a family-run East Coast textile maker reports the Wall Street Journal.

Berkshire’s report was yet another stark sign of the severity of the financial crisis that continues to roil stock markets and businesses around the world. It was only the second year in more than 40 years that Berkshire’s book value per share fell; it was down 6.2% in 2001.

The company also reported its fifth year-over-year quarterly decline. The $117 million quarterly gain it eked out in the fourth quarter marked a 96% drop from last year’s $2.9 billion in fourth-quarter income.

Berkshire remains on solid footing with a large war chest of cash and diversified investments, in companies such as Wal-Mart Stores Inc., that are likely to weather the economic upheaval. What’s more, the company’s book-value performance in 2008 still far outpaced the Standard & Poor’s 500-stock index, which fell 37% last year, including dividends, as well as hedge funds, which last year averaged about an 18% decline, according to Hedge Fund Research.

Berkshire’s results “could have been a lot worse,” given the extreme economic conditions, said Morningstar’s analyst on the company, Bill Bergman. “It’s the worst economic environment in recent history, and despite that they’ve performed well.”

Mr. Buffett, in his annual letter closely read by shareholders and non-shareholders alike, said he didn’t expect an improved economy any time soon but did expect better times eventually.

“Our country has faced far worse travails in the past,” he said. “Without fail, however, we’ve overcome them.” He declined to draw a correlation between stocks and economics, saying that while he was certain the economy would be “in shambles for 2009″ that “does not tell us whether the stock market will rise or fall.”

In 2008, Berkshire’s Class A stock fell 32%. This year the shares are down about 19%, slightly better than the Dow Jones Industrial Average.

Mr. Buffett credited the federal government for stepping in with massive assistance last year, saying the intervention was “essential” to avoiding a total breakdown. But he cautioned there could be “unwelcome aftereffects,” such as inflation.

On oil, he said “odds are good that oil sells far higher in the future than the current $40 to $50 price. But so far I have been dead wrong.” And on Treasurys, he contended that the “investment world has gone from underpricing risk to overpricing it.” Future historians will comment on the Internet bubble of the 1990s and the housing bubble of the early 2000s, he said, but “the U.S. Treasury bond bubble of late 2008 may be regarded as almost equally extraordinary.”

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