Warren Buffett to Retire at End of 2025, Reflects on Investing Lessons and Berkshire Hathaway's Growth
Warren Buffett is set to retire at the end of 2025 after leading Berkshire Hathaway since 1965. Under his stewardship, Berkshire Hathaway grew from a struggling northern textile company with $25 million in shareholder equity to a vast empire valued at more than $1 trillion.
Buffett's capital allocation strategy has centered on acquiring 100% of good businesses at reasonable prices, free from institutional constraints on capital deployment. He has advocated a two-pronged investing approach, which he terms the “bisexual” strategy: taking stakes in wonderful listed companies while also buying similar businesses outright.
In 1998, Buffett acknowledged that the acquisition of General Re, which cost Berkshire 272,000 Berkshire shares, was a terrible mistake, noting that shareholders surrendered far more value than the company gained. He has cautioned that most acquisitions tend to damage shareholder value and pointed out a CEO tendency to overpay driven by “animal spirits and ego.”
Buffett also highlighted Berkshire's involvement with derivatives, holding 251 contracts, and warned that derivatives are financial "weapons of mass destruction." Berkshire’s insurance float, especially through Geico, has been a critical funding source for investments; the company has faced significant losses from events such as Hurricane Andrew in 1992, while also recognizing risks from super-catastrophe exposures.
He framed the fear and greed dynamic as a constant in markets back in 1986 and advised investors to be fearful when others are greedy and vice versa, emphasizing the difficulty of timing markets.
Succession planning has been a continuous focus since 2005, with Berkshire's board identifying potential successors. Buffett himself noted in 2007 that he did not expect to continue managing Berkshire Hathaway after his death.
