Warren Buffett says he and his $38-billion cash pile are looking for acquisitions.

In his yearly letter to Berkshire Hathaway shareholders, issued on Saturday, the legendary investor gave a bullish earnings forecast for Berkshire's collection of businesses. He said it would engage in record capital spending and forecast that a US housing market recovery would start within a year.

Berkshire has ramped up spending and acquisitions at its housing-related businesses.

Foremost though was his acknowledgement of the need for Berkshire to expand its non-insurance businesses, a broad collection that most prominently includes railroad Burlington Northern and electric utility Mid American.

"Our elephant gun has been reloaded, and my trigger finger is itchy," Buffett said.

One veteran Berkshire investor described the letter as "punchy" and "confidently American".

"I think it's a very upbeat letter; it's one that celebrates his courage on behalf of investors of going into the marketplace when the world was most fearful," said Tom Russo, a partner at Gardner Russo and Gardner, of Pennsylvania, one of the top 15 holders of Berkshire class A shares.

Buffett's enthusiasm for the US was clear in the letter, not only in his capital spending plans but also in his outlook on the growth opportunities for railway, utility and other groups Berkshire owns that are exposed to the US economy and consumer.

"Money will always flow towards opportunity. There is an abundance of that in America," he wrote.

That outlook could provide a boost to markets today as positive comments from Buffett's investors' letter have in the past.

Buffett addressed the succession issue in the 26-page letter, something investors expected, given his age, 80, and the lack of a clear replacement.

Investment manager Todd Combs, hired late last year, would initially manage a portfolio of $1-billion to $3-billion, Buffett said. Berkshire might eventually add another one or two managers.

But Buffett said he would continue to manage the bulk of the portfolio while he was CEO.

Berkshire's equity holdings topped $52-billion at year-end.

He said less in the letter about who might follow him as chief executive, though he said there were good candidates. The most frequently tipped is David Sokol, chairman of Mid American and private jet service Net Jets.

Low interest rates had earned the group a "pittance" in recent times. He said a substantial rise in investment income was "unlikely to come soon".