Warren Buffett, world’s greatest investor, announces retirement at 94

The age of 94 is probably not a bad time to retire, but for the millions of avid admirers of Warren Buffett it is still too soon. At the just concluded annual meeting of his company Berkshire Hathaway in its headquarters in Omaha, United States, Buffett sprang a surprise when he announced he is going to ask the Board to relieve him as chief executive officer. By the end of this year, the man he had already selected to succeed him, Greg Abel, will take over.

Buffett is considered the greatest investor of this era and his record shows just why. When he took over Berkshire, it was a textile company in trouble. Even the takeover was happenstance. He started buying its stocks after seeing an opportunity to make a limited profit, but in a moment of pique against the management—they offered a buyback at a price slightly lesser than what was promised to him—he decided to just own it in 1965. He converted it into a conglomerate. If you bought a share of Berkshire Hathaway in 1965 at US$19, it would be worth more than US$800,000 now. Converting it into Indian rupees means Rs 1600 would have become over Rs 6.5 crores in 60 years.

This was achieved through what is known as value investing, looking for good companies available at reasonable prices and then holding them for a long time as they grew. Eventually, Berkshire started owning most of the businesses it invested in, which gave Buffett further control over its growth. Essential to his investing philosophy was to only buy what he understood, to only deal with honest managements and to not chase quick profits. In this he found an alter-ego in his long-time business partner Charlie Munger, who joined the Board in 1978.

Buffett also had a knack for seeing bubbles in the market early on and then increasing cash reserves so that when the inevitable crash happened, he got to buy more at cheaper prices. He did this in 1987 after the Black Monday global crash. Today, Berkshire Hathaway has record cash reserves which leads many to infer that Buffett is anticipating a downturn.

As Berkshire grew bigger, the avenues for investments decreased because small investments wouldn’t move the needle. Even then Buffett has an astounding record. US$1 billion invested in Coca-Cola is up by 25 times. In recent times, they made phenomenal profits from investing in Apple.

One reason for Buffett’s retirement is the death of Munger in 2023 at the age of 99. Another is that a succession before his own passing will mean more stability for Berkshire. Greg Abel is Canadian born and came to Berkshire when it took over an energy utility. Abel currently oversees all the non-insurance businesses of Berkshire. He is not an investing genius like Buffett but someone who is good at acquisitions. More importantly, Buffett found that he fit in with the ethos of the company and would maintain continuity.

BerkshireGreg AbelretirementsuccessionValue InvestingWarren Buffett