“I will no longer be writing Berkshire’s annual report or talking endlessly at the annual meeting. As the British would say, I’m ‘going quiet.’ Sort of,” Buffett wrote.
Buffett will step down as Berkshire Hathaway’s Chief Executive Officer by the end of this year, handing over the reins to his long-time deputy, Greg Abel. Here are 5 key takeaways from the letter.
1. Warren Buffett paid a touching tribute to his long-time friend and business partner, Charlie Munger, recalling their six-decade bond that shaped much of Berkshire Hathaway’s legacy. Describing him as a mentor, teacher, and protective “big brother,” Buffett said Munger’s influence spanned more than 60 years. “We had our differences but never an argument,” Buffett wrote, adding that phrases like “I told you so” were simply not part of Charlie’s vocabulary.
Buffett shared how their paths nearly crossed in the 1940s. Munger had worked at his grandfather’s grocery store in Omaha a year before Buffett did, but the two didn’t actually meet until 1959, when Buffett was 28 and Munger was 35.
2. The 95-year-old reflected fondly on his lifelong connection with Omaha, the city he has called home for nearly his entire life. Wondering playfully if “there’s some magic ingredient in Omaha’s water,” Buffett reminisced about his brief time away, his teenage years in Washington, D.C., while his father served in Congress, and a short stint in New York in 1954, where he worked under his mentor Ben Graham. Buffett noted that his children and grandchildren were all raised in Omaha, attending the same public schools that educated generations of his family and many figures who would later play key roles in Berkshire Hathaway’s success, including Charlie Munger, Stan Lipsey, and the Blumkin family of Nebraska Furniture Mart fame.“Looking back, I feel that both Berkshire and I did better because of our base in Omaha than if I had resided anywhere else,” he said. “Through dumb luck,” he wrote, “I drew a ridiculously long straw at birth.”3.) Buffett reflected on the role of luck in a long and full life, acknowledging that reaching old age often depends as much on chance as on choice. “Those who reach old age need a huge dose of good luck, daily escaping banana peels, natural disasters, drunk or distracted drivers, lightning strikes — you name it,” he wrote.
After decades of fortune favouring him, Buffett admitted that time now has the upper hand. “Lady Luck continued to drop by during much of my life, but she has better things to do than work with those in their 90s. Luck has its limits,” he said.
4.) Buffett added that while new investment ideas are rarer these days, given Berkshire’s vast scale and current market conditions, they still come along occasionally, enough to keep his legendary curiosity and enthusiasm alive. Ideas are few – but not zero, he added. Buffett shared a candid glimpse into his present life, noting with humility and humour that he still feels surprisingly well despite the passage of time. “Though I move slowly and read with increasing difficulty, I am at the office five days a week, where I work with wonderful people,” he wrote.
5.) Buffett reminded shareholders that volatility is part of Berkshire Hathaway’s long-term story. “Our stock price will move capriciously, occasionally falling 50% or so, as has happened three times in 60 years. Don’t despair; America will come back and so will Berkshire shares,” he wrote.
Buffett also expressed complete confidence in his successor, Greg Abel, who will take over as CEO by the end of the year. He said Abel has exceeded even his own high expectations, possessing a deep understanding of Berkshire’s diverse businesses and teams. “I can’t think of a CEO, management consultant, academic, or government official that I would select over Greg to handle your savings and mine,” Buffett said. Praising Abel’s grasp of both the opportunities and risks in Berkshire’s property and casualty insurance operations, Buffett added that he hopes Abel’s health “remains good for several decades,” noting that with a bit of luck, Berkshire may need only a handful of CEOs over the next hundred years.