Buffett To Retire as CEO
On May 3, 2025, Warren Buffett announced (at the end of the Berkshire Hathaway annual meeting) he would be stepping down as CEO of the organization. Tom, Tim and Brendan spent some time this week discussing some topics of note about Buffett and his investing success, and what that means to you as an individual investor.
Takeaways:
– Most of Warren Buffett’s net worth came after the age of 65, showing the power of long-term compounding.
– Successful investing is more about temperament and patience than intelligence—being able to endure volatility rather than trying to outsmart everyone else.
– “Don’t interrupt the compounding”—leave good investments alone rather than constantly checking or changing them.
– Having cash reserves is crucial both for emergencies and for capitalizing on market opportunities during downturns.
– For most individual investors, index funds may be more appropriate than trying to pick stocks like Buffett, who had extraordinary dedication, memory, and focus on company research.
Buffett To Retire as CEO – Timestamps
00:03 The Power of Patience and Compounding
01:31 Buffett’s Investment Philosophy
02:29 Buffett as a Unique Investor
03:09 Practical Lessons from Buffett
07:49 The Importance of Cash Reserves
08:51 Asset Allocation Principles
Buffett To Retire as CEO – Links
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Watch this episode (Buffett To Retire as CEO: What’s Next?) on our YouTube Channel
Wall Street Journal article (paywall): “Why There Will Never Be Another Warren Buffett”
Buffett To Retire as CEO – Transcript
One of the greatest stats that I’ve heard is that most of his net worth came after the age of 65, and that just goes to show that the longer you can let your money compound, the better off you’re going to be. I think in general, our entire generation, multiple generations right now are just far too impatient and they want to see results yesterday.
They want to get “get rich quick” type of thing. That’s really not possible, in any sense, let alone with Warren Buffett’s level of success.
Jason Zweig on the Wall Street Journal wrote a nice article this morning, Monday, about Warren Buffett and three reasons why there will never be anybody like him ever again. And one of those things was the time period that he came up in and the market environment that he got his start in and got to now. They said that he bought his first stock when he was 11 years old.
It was just a habit or a hobby for him at that point. Obviously it grew into a long successful career, but like I just said, he’s in his 90s now. That’s such a long time to be investing, to be in the markets, and like you said, the big portion of his wealth really only came in the back half of that. So, and that still is such a long time from his 60s to his 90s.
Nothing happens overnight. I think one of the things that Buffett has been credited with saying was why couldn’t more people do what he’s done, and it was something along the lines of because nobody wants to get rich slowly.
Just to your points about that. Another general truism about investing from Buffett that I’ve always liked is he said something along the lines of like that investing is not a game where the guy with the 160 IQ beats a guy with the 130 IQ.
That once you have average intelligence and you’re doing reasonable things, it’s really more about your temperament and just being able to hang in there and kind of endure the volatility that comes with equity investing.
As opposed to trying to outsmart everybody else out there. And a lot of the things that he said are kind of like, you read them and you know that they’re true. But then in practice it just seems like human beings, all of us, for whatever reason, just can’t follow them.
Or at least not consistently enough to have really good results over time.
I think he was giving a graduation speech years ago. Where he told the folks in the audience, imagine that you have a punch card where you only have a certain number of punches that you can make on the card. Kind of like a railroad ticket I used to have, when I would go to work (in the city).
If you think about your investment decisions that way, where I’m only going to get to punch this card 15 or 20 times – in your life.
It kind of makes you stop and think about which way you want to go.
And bundled with that thought is the idea that he is now telling the next generation of family and friends, they really should shy away from picking stocks. And go more towards the index funds.
Which I think makes a lot of sense, but it is counter to how he made his money.
I just think we need to recognize that things are different.
This is also a dude who buys businesses, not invest in their stocks for the most part. Like, obviously Berkshire, notably has investments in things like Apple and other companies that they don’t own outright. But the business that produces cash for the reinvestment that Buffett has used buys entire companies and we’re not in positions to do that.
I think if I have an issue with “Buffett-isms,” if we’ll call them that, is that they can kind of be like a Rorschach test. They can be what anyone wants to see in them.
So you could take what I think are two specific lessons from what Warren Buffett has done over time – or anybody for that matter.
When I think the most valuable stuff that Buffett has given to individual investors are just the general “truisms” about investing; as opposed to the specific lessons of like, “hey, concentrate and buy Geico stock when it’s below its book value!” Like that’s not what you should be learning from Warren Buffet, I don’t think at least.
But some people will see it that way, and I suppose that’s up for them to interpret.
There’s another part of that article from Jason Zweig that kind of speaks to that a little bit. And he broke down who Warren Buffett was as a person. And I think – if you think about what he did, and how obsessed he is (and was) with markets. And how much he read!
Zweig profiled how he would go to the amusement park with his kids. And while they were in line he would be reading corporate earnings sheets from all these different companies. He would just be reading about the markets and different companies and their financial records and financial statements all hours of the day.
He hardly took trips. He worked all the time. And he has this crazy photographic memory – he can just remember all of these numbers and data points about companies and stuff.
So like he is a unicorn!
Like, trying to pick stocks like you’re Warren Buffett… I don’t think that the average person can do something like that!
Or wants to do something like that.
He was talking about how little of a personal life he had. Because he was always at the office, he was always reading about all of these companies, like Brendan said, that he wanted to buy (or that he wanted to invest in). And if you take the very specific lessons from that, it’s like, “oh well, I need to do that too…”
I don’t know many people out there who would want to do that – or could possibly, realistically do that.
There may never be another person like Warren Buffett. So trying to be like Warren Buffett is a moot point.
If you want to be reading corporate filings instead of spending time with your family, then God bless!
But I’m not sure you need to aspire to that to learn something from Warren Buffett.
He and Charlie Munger both had a line that I have used on easily a half a dozen of these videos. “Don’t interrupt the compounding!” Which honestly, when you’re dealing with human beings, is one of the hardest things.
One of the hardest points to get across to folks is that if you’ve put money into a good investment, leave it alone.
Leave it alone. You don’t have to rip it up.
The analogy I had – when I was a broker at Lehman Brothers – was “say Mr. Jones, you wouldn’t plant a tree and then go rip it out by the roots a month from now, just to see if it’s growing? You gotta leave it alone.”
And that speaks to what we do now with folks too. We’ve talked about it a lot in the past. Where you want to set an allocation based on a bunch of financial planning work and background research on people and their goals – and what the money is made for…
…and not guesses about the short term. That’s another thing I think laudable about Warren Buffett. He’ll never sit there and try to tell you – for certain – that he knows what’s coming next.
It’s that we DON’T KNOW what’s coming next.
We know in general that market declines are going to happen.
We can’t predict them.
But we need to be prepared for them.
Because there’s no way to get the equity returns that you want, without sitting through them.
Or if somebody’s trying to tell you that there is, then they’re lying to you.
I think there was a quote in the article, and I might be paraphrasing here, but he said something along the lines of like, “if you find an outstanding company with outstanding management, the ideal holding period is …forever.”
Right.
Right.
You know, you find something good enough that you want to buy, that has good management and people in place, hold on to that.
But even that, it’s like you don’t have to take that as literally as it’s been said.
Like he’s talking again about – a company – that he wants to buy.
You know what you could ALSO do – is you could buy the S\&P 500. Which is going to give you the aggregate performance of the 500 biggest companies in the United States.
And say, “hey, do I think their management is smart enough to get me through “fill in the blank” economic crisis?
Sure.
OK, well then I’m gonna continue holding them. Even if things feel worse this week, than they did last week.
Which is likely going to occur – dozens of times – throughout the course of even a year or two.
One more thing I’ll add about Buffett. Was that, in the worst of times, this guy always seemed to have the cash.
And so he had the flexibility to take advantage of some really opportune times in market history.
The quote that he gave to a reporter in 1974, they asked him how he felt with this market down as much as it was. And his quote was, “I feel like an oversexed guy in a whorehouse.”
And then in 2008, the banks were failing here in the United States, all of them, they all needed bailouts, and a lot of these Wall Street firms turned to Warren Buffett for money.
Well, he pretty famously wrote an Op-Ed in The New York Times, in October of 2008 saying “Buy American, I am.”
And obviously there was like a 3 to 5 month period following that, where he looked like an idiot. But he came out ahead in the long run.
But to your point, you need to have the cash to be capable of capitalizing on those sort of opportunities.
To give yourself the margin, to not have to worry like others may have to.
I think we live in a universe now where everybody wants to optimize every single cent that they’ve got in their money market or savings account or brokerage account. And you have to have cash available to DO things, if that’s what your prerogative is.
You can’t be 100% invested if you’re always going to be looking for opportunities.
You’re going to be a forced seller, at probably the worst times – when markets are down, if you don’t have cash available.
And so, we spend a lot of time talking about having a proper asset allocation.
This is exactly what he followed. Not only did he really do his homework, in terms of researching the investment opportunities that he had. But he always focused on having cash available. And I think that’s a part that a takeaway from Buffett that a lot of people have missed!
You have to have some type of cash reserve – at all times – for emergencies, or for “emergency opportunities.”
I think like you said, a lot of good lessons to learn from Warren Buffett. Some specific, some not very specific.
So no better time than now to talk about him, as he steps down from a prolific career as the CEO of Berkshire Hathaway.
He can have a Cherry Coke every day now.
