In all of the election news over the weekend, I suspect many people might have missed the news that an investing era will draw to a close at the end of 2025.
Warren Buffett, the man known as the 'Oracle of Omaha' has announced that he will retire as CEO of investment conglomerate Berkshire Hathaway in just under seven months' time.
It will draw the curtain on an extraordinary investment career which spanned more than 80 years (he bought his first shares when he was 11), and six decades running Berkshire (I own shares, for the record).
Over that time, Berkshire Hathaway's share price has risen by an average 19.9% per annum, compounded, compared to 10.4% for the S&P 500 index (the index of the largest ~500 companies that trade on US stock exchanges).
Which is impressive, but kinda hides the really astonishing reality.
Compounding at 10.4% for 60 years results in $1,000 becoming a bit over $390,000.
But doing it at 19.9%… that turns your $1,000 into $5,500,000.
Yes, really.
(Those numbers are as of the end of last year, the most current figures available from the company.)
Buffett, who will be 95 when his reign ends, has not only been a spectacularly successful investor, but also a patient and generous teacher, having written and spoken in many public forums over that career, including holding marathon Q&A sessions at the company's annual meeting each year, something I've been privileged to attend on a few occasions.
He is eminently quotable, and has been singularly responsible for educating generations of investors who chose to take advantage of that opportunity. His annual shareholder letters have been turned into a book, The Essays of Warren Buffett, which I think should be compulsory reading for any investor who wants to better understand business, finance and investing.
Which, along with the extraordinary wealth made for long term shareholders, will be his long-lasting legacy. The common sense approach he has used for all of that time – finding great businesses, paying decent prices and aiming to hold for the long term – stands in stark contrast to the hyper-trading, computerised analysis and short-termism of much of the stock market today. But then… so do his results.
Of course, we must mention his long-time friend and business partner Charlie Munger, here. They were a formidable duo, until Munger died late last year. Buffett, the kind uncle with an iron fist in a velvet glove. Munger, the irascible, straight-shooting one who had no time for velvet!
But both men shared the same investing approach. They had no need for complex formulas, analyst meetings or keeping-up-with-the-Jones'. They just did what they thought made sense, paying scant (well, no) regard to what others thought.
Time and again, Berkshire was criticised as being out of touch, too old-fashioned, and not fit for the modern world. Time and again, well, time proved Berkshire right.
No, Buffett isn't perfect. He's made mistakes, most of which he's characteristically owned up to.
But his investing approach has proved timeless, and his example is publicly available for us to review and, if we choose, to follow. The latter is what I've tried to do with my investing, both publicly and privately. To be clear, I am no Warren Buffett – there's only one of those. But I've tried to incorporate his lessons in how I approach my craft. Because, well, why wouldn't you, given that success?
Oh, some will tell you that 'this time it's different'. And the specifics often are.
But the underlying reality? The principles? The value of his approach?
They're the same as they ever were, as Buffett has shown, over and over.
And if you had that example, and education… and you ignored it, figuring you knew better?
The word for that is, I think, hubris.
That's not to say you can't be successful using a different approach. Many have been, for sure.
But that's different from actively dismissing his style of investing. Again, that's just hubris.
And so?
And so, we have another seven-odd months of Buffett at the helm of Berkshire. And then, he'll hand over to long-time operations lieutenant, Greg Abel.
(He's also committed to giving almost all of his $260 billion wealth to charity, on his death!)
But we will always have access to his words, deeds, and track record, as an investor and as a teacher.
And for all of the famous Buffett quotes, which I'll share with you at some later dates, perhaps my favourite (and one I have on a t-shirt, because I'm an investing nerd) is a twist on the old Greek proverb "A society grows great when old men plant trees in whose shade they shall never sit".
Buffett said "Someone's sitting in the shade today because someone planted a tree a long time ago".
We are very fortunate that Warren Buffett has spent a career planting trees for the investors who have followed him.
That forest will be his legacy when he finally hangs up the calculator.
Bravo, and thank you, Uncle Warren.
Fool on!
