Buffett urges investors to ignore 'prophets of doom' on US

Berkshire Hathaway’s Warren Buffett has urged investors to overlook the "prophets of doom" on the US economy, and says now is the time to make significant new investments.

In his annual letter to shareholders, the firm's chairman says he is "itching" to make new acquisitions for his portfolio.

"Money will always flow toward opportunity, and there is an abundance of that in America," he says.

Buffett says he plans to use some of the company's $38bn in cash to obtain new assets. "Our elephant gun has been reloaded and my trigger finger is itchy."

According to its annual report, the firm posted a 43% profit rise last year, boosted by acquisitions and economic improvements. Profits came in at $4.38bn, up from $3.06bn a year ago.

Burlington Northern Santa Fe Corporation, one of the companies bought by Berkshire last year, earned $1.03bn in the fourth quarter.

The firm's insurance business also posted a 14% increase, posting profits of $414m. In total, investment income from all of Berkshire's insurance businesses, including auto insurer Geico, amounted $1.78bn.

Other non-financial business belonging to the company benefitted from a better economy and more than doubled income to $669m.

Berkshire's book value rose 5% to $157.3bn at the end of the year from $149.7bn per share in the prior quarter.

However, the firm saw a $1.02bn write-down in fixed income for the fourth quarter, representing around 3% of its bond portfolio.

The firm's chairman Warren Buffett concedes losses from these securities have been in an "unrealised loss" position for over 12 months.

He says: "During the fourth quarter of 2010, we recorded other than temporary impairment charges of $1.02bn with respect to certain fixed maturity securities where we concluded that we were unlikely to receive all remaining contractual principal and interest amounts when due.

"These securities had been in an unrealised loss position for more than two years."