FORTUNE -- The Oracle of Omaha's crystal ball must be cloudy these days.
In Warren Buffett's annual letter to Berkshire Hathaway (BRKA) shareholders, released Saturday morning, he says little about the stock market or where shares might be headed. Buffett does say, as he has in the past, that he still believes in America. Berkshire spent $11 billion on plant and equipment in 2013, and Buffett notes that 89% of that money was spent in the U.S.
"Though we invest abroad as well, the mother lode of opportunity resides in America," writes Buffett, who is the chairman and CEO of Berkshire. But he doesn't say whether stocks are the best investment opportunity in America these days. Clearly, owning a company that makes stuff that Berkshire buys is swell. There's a section about how Buffett and his partner Charlie Munger think about investing, which Fortune excerpted earlier this week. Buffett cites two of his best investments, and both are in real estate.
Buffett has gone other years without commenting on the stock market or making a prediction where shares are headed in Berkshire's annual letter. But in the last few years, Buffett has dedicated at least some of his letter to opining on the market. Two years ago, Buffett spent three-and-a-half pages on a detailed explanation of why he thought stocks were a much better investment than, say, gold or bonds. (See "Warren Buffett: Why stocks beat gold and bonds.") He also said he was bullish on U.S. housing.
Last year, Buffett devoted four paragraphs to the case for stocks, and he said that he thought the market would still "do well."
But even a year ago, Buffett's enthusiasm for the market seemed to wane. He wrote that investors should expect setbacks in the market from time to time. If that was supposed to be a wink that one could come in 2013, Buffett missed that call. In 2013, the S&P 500's total return was 32%.
Buffett's favorite gauge on whether equities are expensive or cheap is to compare the total value of stocks to gross domestic product, and he alluded to this comparison a year ago. Last year, GDP rose 1.9%. Stocks rose nearly 16 times that. A year ago, stocks collectively were trading at a value equal to 133% of GDP. After last year's market gains, we are now at 154%.
The metric has been higher -- it peaked at 190% in 1999 -- but not too often. That doesn't mean stocks are headed for a crash, but it does mean they may not have much room to grow. Back in 2001, Buffett said investors who buy when the relationship of stock values to the economy falls in the 70% to 80% range should do well. That means stocks would have to plummet 48% before we are back in Buffett buy territory.
Even so, Buffett and his managers are finding stocks to buy. In 2013, Berkshire bought more shares of Wells Fargo (WFC) and IBM (IBM), two companies that are likely to go up only if the economy and the rest of the market does well. All told, Berkshire put $4.7 billion of new money into the stock market last year.
Buffett also reveals nothing new this year about who would take over Berkshire if, or when, the 83-year-old executive retires. The only section in which Buffett talks about who will run Berkshire in the future comes at the very end of the annual report and is nearly word-for-word the same as a year ago, as it has been for the past few years. The only difference is the number of employees who work at Berkshire. It is now 330,745, up from 288,000 a year ago.
Berkshire's succession planning became an issue after Buffett announced in April 2011 that he had been diagnosed with stage 1 prostate cancer. Buffett went through treatment for the cancer, returned to work shortly after, and has resumed his normal heavy travel schedule. Buffett says, like last year, that he has never felt better.
As he has said in the past, Buffett's plan is for Berkshire to split his job in two when he leaves the company. One person will become the CEO of Berkshire's operating company. Another person or two will be left in charge of managing Berkshire's investment portfolio. Buffett says the names of his successors may change, but he says he has picked who should get those jobs if he were to leave the company suddenly. But only he and the board know who those people are.
It appears that the investing job is close to being locked up. A few years ago, Buffett hired money managers Todd Combs and Ted Weschler to help run Berkshire's portfolio. In this year's letter, Buffett says Combs and Weschler each manage more than $7 billion of Berkshire's money. And they both outperformed not only the market but Buffett himself last year. If Combs and Weschler don't get the job, at the very least it sounds like they will be able to get a nice reference.
As for the operating job, Ajit Jain, who heads up Berkshire's largest insurance unit, is seen by many as the frontrunner. This year, Buffett calls Jain's mind "an idea factory" and says that he has built a business that "no other insurance CEO has come close to matching." What's more, profits at Jain's insurance unit more than quadrupled in 2013.
Buffett also says Greg Abel, who runs Berkshire utility MidAmerican, and Matt Rose, who co-heads railroad BNSF -- two other Berkshire executives who are often talked of as possible successors -- are "extraordinary managers." But they get grouped into the same sentence, along with another BNSF executive Carl Ice, who didn't even get a mention last year.
Does that mean Jain is pulling ahead of the pack? Perhaps, but only Buffett knows.
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