Since I have been a shareholder of Berkshire Hathaway (NYSE: BRK.A), I have enjoyed reading with great interest the musings of company chairman Warren Buffett as he gives almost a play-by-play review of the year in his letter to shareholders. He writes in a tone I would compare to Will Rogers, the writer, actor, comedian, cowboy and former mayor of Beverly Hills.

"My pal Warren" highlights both the triumphs and disasters of the year and his own perspective of the State of the Union and the economy like only he can. I strongly recommend investors take the time to read his letter(s).

One of the most often referred to items in Buffett's letters is regarding the quality of the management at each of the companies that Berkshire owns, or has major stock holdings in. There are many shrewd investors who will make a convincing argument that the quality of management is the highest priority.

He glowingly speaks of the wisdom, integrity and hard work of his management partners. He openly states that one reason that most of Berkshire acquisitions tend to work so well is the mutual appreciation of these character traits they all share. Unlike many companies that look to make money by shaking up the management structure, Buffett bases his investment strategy on keeping the strong management that built the enterprise in place.

He and his partner vice-chairman Charlie Munger, a brilliant man in his own right, often quip that most of the managers of his enterprises are very wealthy and do not need to work, so he considers himself the world's greatest cheerleader, keeping them interested in their jobs. He says he is lucky they are all so motivated that this is an easy task.

Given that good managers tend to be very involved in the detailed operations and major decisions of the company, their ability to grapple with a wide range of issues from budget appropriations, to product development, to key hiring decisions and marketing is essential to success.

When you think of the success of Apple Inc. (NASDAQ: AAPL) you think of Steve Jobs. When Microsoft Inc. (NASDAQ: MSFT) comes up in a conversation, Bill Gates comes to mind. Most certainly the remarkable success of Berkshire Hathaway itself is inseparable from Warren Buffett.

In the deplorable risk management in the financial sector we have witnessed the firing of CEOs at Citigroup (NYSE: C) and Merrill Lynch (NYSE: MER), while CEOs Jamie Dimon of JP Morgan Chase (NYSE: JPM) and Lloyd C. Blankfein of Goldman Sachs (NYSE: GS) look brilliant in comparison.

Who is in the hot seat now? None other than Jeffrey Immelt of General Electric (NYSE: GE), who was hand picked for the job by a leader of historic proportions, Jack Welch, only to reign over a company that has seen its stock price shed value for the last six years. This might have been Welch's only bad call, but finding the right leaders is a challenge so it is no surprise that when you find one you should be able to ride him all the way to the bank!

You can find Buffett's letters on the company website or refer to Everything Warren Buffett for this year's letter, and past years as well.

Previous stories in the series:

• Serious Money: The page on Buffett -- Part I: your understanding
• Serious Money: The page on Buffett -- Part II: Dividends
• Serious Money: The page on Buffett -- Part III: Price-to-book
• Serious Money: The page on Buffett -- Part IV: Durable Competitve Advantage

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of BRK.B.