Warren Buffett Retires After Transforming Berkshire Hathaway into a $1 Trillion Empire
Warren Buffett announced his retirement at the end of 2025, concluding a remarkable career during which he transformed Berkshire Hathaway from a $25 million shareholder-equity textile business into a $1 trillion empire.
In 1982, Buffett emphasized the principle of capital allocation, advocating for buying 100% of good businesses at reasonable prices without institutional constraints on capital deployment. He learned from past mistakes, such as the 1998 acquisition of General Re, which he paid for with 272,000 Berkshire shares and later called a terrible error.
Buffett's investment strategy has been two-pronged: taking stakes in exceptional listed companies and aiming to acquire similar businesses outright. He noted that cycles of fear and greed are recurrent in markets, making it highly challenging to time opportunities effectively.
He also warned that many acquisitions can harm shareholders and that CEOs might be driven by ego and animal spirits. These dynamics are illustrated by Berkshire's insurance float and exposure to super-catastrophe risks, including the 1992 losses from Hurricane Andrew.
Buffett highlighted the dangers of derivatives as time bombs, cautioning in 2002 about their risks; at that time, Berkshire held about 251 derivatives contracts that were mispriced at inception.
His long-term goals included outperforming the S&P 500 by maintaining dry powder and strategically deploying capital when valuations fall — a scenario he described as "when it rains gold."
Since 2005, Berkshire Hathaway has pursued succession planning with identified potential successors. In 2007, Buffett signaled his reluctance to continue managing the portfolio after his death, emphasizing the importance of relying on experienced managers to lead the company forward.
