In Saturday's annual letter to Berkshire Hathaway shareholders, Warren Buffett relied on his favorite rhetorical tool to explain his financial decisions--the analogy. You'd be smart to use it, too.

Berkshire Hathaway is the holding parent of many companies Buffett has acquired over the years. Some of his purchases have turned out to be "disappointing," Buffett acknowledged. A few were "outright disasters." But a reasonable number "exceeded my hopes." Those winners outweigh the losers.

Here's where the analogy comes in.

"In reviewing my uneven record, I've concluded that acquisitions are similar to marriage," Buffett wrote. "They start, of course, with a joyful wedding--but then reality tends to diverge from pre-nuptial expectations. Sometimes, wonderfully, the new union delivers bliss beyond either party's hopes. In other cases, disillusionment is swift.... It's easy to get dreamy-eyed during corporate courtships."

Buffett reminds shareholders that, over time, he's enjoyed happy corporate marriages.

"Pursuing that analogy, I would say that our marital record remains largely acceptable, with all parties happy with the decisions they made long ago. Some of our tie-ups have been positively idyllic."

Analogies act as shortcuts.

Few financial experts use analogy as effectively as Buffett does. Later in the letter, Buffett refers to an analogy he first made in last year's letter--the "American tailwind" (technically, Buffett is using a metaphor, a type of analogy).

A 'tailwind' is one word that communicates volumes.

I'm writing today's column on a 15-hour flight home to California from the UAE. We've caught a nice tailwind, which should mean we'll arrive a few minutes early. Pilots don't need to explain "tailwind." It's a short-cut word that most people understand. You don't have to be an expert in wind-speed to know the plane is getting an extra push.

The extra push is how Buffett sees investing in the U.S. stock market. While anything can happen to stocks in the short term, Buffett's says the U.S. stock market has never lost money in any 10-year period. Through economic shocks, world wars, and civil unrest, progress pushes American businesses forward.

One word expresses it nicely. 

Analogies improve understanding.

Find an analogy when you have a complex topic to present. If your topic can fill a book--or even a lengthy academic paper--use an analogy as a shortcut.

If you're stuck for ideas, keep in mind that most words used to describe the stock market are analogies and metaphors--mental shortcuts that offer a lot of meaning in one or two words.

Watch CNBC and, on any given day, you'll hear that the stock market is either a "bull market" or a "bear market." It's either climbing a "wall of worry" or riding a "wave of euphoria." The market is either "hitting some turbulence" or "coasting to new highs."

Commentators, writers, and educators use analogies all the time, whether they're aware of it or not. Great communicators like Buffett are intentional about it. They think about an appropriate analogy ahead of time, and pull out the best one from their rhetorical toolbelt. 

Analogy is a time-tested communication tool because it helps your listener understand information they know little about or don't have the time to learn. Give it a try. A great analogy or metaphor will catapult your presentation to the next level.