Renowned investor Warren Buffett officially announced that he will step down as the chief executive officer (CEO) of Berkshire Hathaway at the end of the year, while the market is tense about how to prepare for the 'post-Buffett era.' He was an irreplaceably successful investor.
According to foreign media outlets including the Financial Times (FT) and The Wall Street Journal (WSJ), Buffett stated at the Berkshire Hathaway shareholders' meeting held on the 3rd in Omaha, Nebraska, that he would step down from his role as CEO at the end of this year.
Buffett's successor is already appointed vice chairman Greg Abel. Abel is regarded as someone who faithfully inherits Buffett's philosophy while currently overseeing the institutional sector unrelated to insurance. However, experts assert that no matter how capable he is, it is practically impossible to replicate Buffett's investment achievements from this era.
Columnist Jason Zweig, in a piece he contributed to the WSJ titled 'Why Warren Buffett Will Never Appear Again,' identified three reasons why Buffett was unparalleled: 'people,' 'era,' and 'structure.' First, he dedicated his entire life to the stock market after purchasing his first stock at the age of 11 and studying corporate reports. In his youth, he was so engrossed in reports that he would bump into furniture, and even at amusement parks while his children played, he would sit on a bench reading financial statements. Warren Buffett was a man obsessed with stocks, and he enjoyed that obsession.
Zweig further analyzed that Buffett's investment performance was the result of continuous learning, pattern recognition based on vast amounts of data, and superhuman memory, rather than luck. He analyzed over 100,000 financial statements over decades and could recall nearly verbatim the sentences he read in books from decades prior. Many point out that such abilities are difficult to replicate in today's era of ubiquitous artificial intelligence.
The timing of Buffett's activity was also crucial. He began his career when the stock market was still inefficient, before large institutional investors and index funds flowed in. He accumulated enormous compound revenues by purchasing small, undervalued corporations that were off the market's radar. Among the corporations he invested in, there were many 'hidden gems' where the value of their underlying assets exceeded their stock prices.
Above all, the last pillar of Buffett's success is the unique structure of Berkshire Hathaway. Unlike funds, the publicly traded holding company Berkshire Hathaway is not swayed by the inflow and outflow of capital. Most funds fluctuate in financing based on performance, but Berkshire Hathaway can maintain its investment strategy independent of market cycles because external investors do not come in or go out. Additionally, it operates without performance fees or management fees, so it is evaluated solely based on investment performance.
However, there is still potential for Berkshire Hathaway to grow in the future. Even before his retirement, Buffett said, 'As long as good conditions are provided, we are ready to invest at any time using our cash,' while still holding over $330 billion in cash. However, Buffett himself admitted, 'It is becoming increasingly difficult to find deals that would move the needle.'
The FT evaluated, 'While Buffett's era is coming to an end, the investment philosophy he left behind remains valuable.' It emphasized that Buffett's approach—exploiting market fear during crises, believing in the power of compounding, and valuing a simple and restrained life—will serve as guidance for investors even in the AI era. Although his snowball has stopped, the hill and snowfield to roll that snowball still exist.