Warren Buffett to step back

Warren Buffett has announced, at the age of 94, that he will step down from his position as CEO of Berkshire Hathaway at the end of 2025. He has held that position for an amazing 60 years and steered his business, along with his long-time partner Charlie Munger, from its roots as a failing textile company in 1965 to the US$ 1.2 trillion investment business it is today. (Berkshire Hathaway is now the eighth biggest business in the US)

During those 60 years, he has delivered close to a 20% compound annual growth rate, approximately doubling the S&P 500 return over the same period.

Although he was a student of Benjamin Graham’s value investing approach, he cultivated and developed it into an investment art form fit for any economic and market environment. His disciplined valuation approach, which eschewed market trends and timing and instead focused on what might be regarded as unfashionable corporate fundamentals, valuation, and patience, was delivered through a unique corporate vehicle, neither mutual fund nor hedge fund. This afforded Buffett the perfect structure in which to deploy his long-term patient capital approach and which protected the vehicle from investor redemptions when short-term performance pressures built. The irony of his unrivalled success should not be lost on the current crop of momentum, day and high frequency traders, in which patience and valuation are seen as outmoded and irrelevant.

“The stock market is a device for transferring money from the impatient to the patient.”
–– Warren Buffett

I owe the great man a debt of gratitude. Throughout my career as an investor, I have learned more from him than from any other writer, commentator, or colleague. He made investment, which at times felt arcane, complex, and impenetrable, into something straightforward, relatively simple, and accessible. But he also knew that following this investment approach required hard work, patience, and sometimes a generous helping of bravery, all of which, unfortunately, are so often missing in today’s investment industry.

I will miss him, but I hope to continue to learn from what he achieved and from his many well-documented insights into the ever-fascinating world of investment.