Warren Buffett's former deputy slams crypto and meme stocks, heralds AI's 'iPhone moment,' and flags big risks to commercial real estate. Here are the 6 best quotes from her annual letter.

• Warren Buffett's ex-deputy blasts meme stocks and cryptos and welcomes a more sensible market.
• Tracy Britt Cool advises investors to be careful and touts ChatGPT as groundbreaking.

Warren Buffett's former deputy has welcomed the return of sanity to financial markets — and warned a mixture of large debts, rising interest rates, and pressure on asset prices could spell trouble for commercial real estate and other parts of the US economy.

Tracy Britt Cool and her Kanbrick cofounder, Brian Humphrey, also jabbed at meme stocks and cryptocurrencies, and hailed artificial intelligence as a game-changing technology. They made the comments in their annual letter, published on Wednesday.

Britt Cool worked closely with Buffett as his financial assistant for more than a decade, chaired the boards of several Berkshire Hathaway subsidiaries, and served as CEO of Pampered Chef. She left the famed investor's company in 2020 to launch Kanbrick, a long-term investment partnership that supports and acquires midsized businesses.

Here are the 6 best quotes from Kanbrick's annual letter:

1. "As we exit an 'easy money' era of low interest rates, unicorns as common as corn, and the attendant hoopla,
we've had a recurring thought: It is supposed to be hard. Charlie Munger put this more bluntly: 'It's not supposed to be easy. Anyone who finds it easy is stupid.'"

2. "The last year has seen a reversal of the boom times of costless capital, SPACateers hawking their wares, and a cacophony of promoters fleecing Main Street investors with tokens and meme stocks. We felt out of place in this world of digital tulips and welcome a return to more sensible valuations and less focus on leverage and financial engineering."

3. "Too often risk management is either attempting to perfectly forecast the future (good luck!) or assiduously mapping out all the previous lighting strikes and avoiding those places. We prefer the more prudent approach of staying inside during a thunderstorm, even if it means missing out on the latest bandwagon."

4. "Mixing high leverage with increasing rates and the accompanying decline in asset prices is a dangerous brew waiting for a catalyst." (Britt Cool and Humphrey singled out commercial real estate, heavily indebted companies with floating-rate loans, and the mushrooming federal debt as areas of concern.)"

5. "Auctions work great for cattle, but our goal is to partner with 1-2 special owners and families each year who view their companies as family versus a commodity."

6. "In 20 years, we expect to look back at the last year as AI's iPhone moment. The experience of ChatGPT is magical, and we believe we are in the very early innings of AI's takeoff."