The end of an epoch. Warren Buffett retires.
Australian investors, engrossed in the 2025 Federal Election, may have missed a seismic shift in the global financial landscape: Warren Buffett, the legendary investor and CEO of Berkshire Hathaway, announced his retirement at the age of 94. On Saturday, during the company’s annual shareholder meeting in Omaha, Nebraska, Buffett revealed he would step down as CEO and chairman by the end of the year, handing the reins to Vice Chairman Greg Abel.
“The time has arrived where Greg should become the CEO of the company at year end, and I want to spring that on the directors effectively [of Berkshire Hathaway]”, adding, “I would still hang around and conceivably be useful in a few cases”, and, “I could be helpful, I believe, in that in certain respects, if we ran into periods of great opportunity, I think Berkshire has a special reputation that when there’s times of trouble for the government that we are an asset and not a liability.”
To a minutes-long standing ovation, the decision marks the end of a 60-year epoch during which Buffett not only transformed a struggling textile mill into a US$1.16 trillion conglomerate but also created many billionaires and millionaires who were either his shareholders or followers and students of his investment philosophy and aphorisms.
For investors worldwide, Buffett’s departure not only raises questions about the future of Berkshire Hathaway, but it also raises the question of who, if anyone, can replace his investment leadership as Wall Street’s dean of quality investing.
The end of an era
Warren Buffett, often called the “Oracle of Omaha,” has been a towering figure in investing for decades. Since taking control of Berkshire Hathaway in 1965, he delivered compounded annual gains of 19.8 per cent from 1965 to 2023, significantly outperforming the S&P 500. His investing strategy – buying, at a fair price, high quality companies with strong competitive advantages and monopolies, and holding them for the long term – became a blueprint for countless investors. From significant stakes in companies like Apple (NASDAQ: AAPL) and Coca-Cola (NYSE: KO) to wholly owned subsidiaries like Sees Candy, Geico and Dairy Queen, Buffett’s decisions have been closely watched and mimicked, often serving as a barometer for market confidence.
His retirement announcement, made at the very end of the 2025 Berkshire Hathaway annual meeting, shocked shareholders and the financial community. As reported by Reuters, Buffett stated, “I think the time has arrived where Greg should become the Chief Executive Officer of the company at year-end.” The news, which was unexpected, since Buffett had previously insisted he had no plans to retire received a standing ovation, reflecting his unparalleled influence.
Greg Abel: the successor
Buffett’s designated successor, Greg Abel, has been with Berkshire Hathaway for over two decades and was officially named the heir apparent in 2021. At 62, Abel oversees Berkshire’s non-insurance businesses, including BNSF Railway and Berkshire Hathaway Energy. Buffett strongly endorsed Abel, pledging to retain his entire fortune in Berkshire shares, stating, “I have no intention – zero – of selling one share of Berkshire Hathaway.” This commitment signals confidence in Abel’s ability to steer the conglomerate.
However, investors are cautious about Abel’s track record, particularly in capital allocation. While Abel is respected for his operational expertise, his investment acumen is less proven. A Telegraph article noted, “Many investors have said they believe Mr. Abel will do a good job running Berkshire, but it remains to be seen how good he will be at investing the company’s cash.” Berkshire’s cash pile, which soared to a record US$347.7 billion by the end of Q1 2025, presents both an opportunity and a challenge. Buffett himself acknowledged the difficulty of deploying such capital effectively, especially in a market where bargains are scarce.
Replicating Buffett’s market intuition is a tall order. Putting aside perhaps the track record of Renaissance Technologies’ Medallion Fund, which is renowned for returning more than 66 per cent annually before fees and 39 per cent after fees over a 30-year period from 1988 to 2018, few, if anyone, can claim the returns Buffett has generated over six decades.
Berkshire’s size will make it difficult to make new investments, and many believe Abel might focus more on operations than deal-making. Indeed, the final question by an AGM attendee went to this precise point and might have prompted Buffett to speak about his retirement.
Abel’s ability to navigate market volatility, especially amid economic uncertainties like President Trump’s tariff policies, will be closely scrutinised. While Buffett recently downplayed recent market volatility as “really nothing,” the next Berkshire CEO may face tougher environments, as Buffett himself warned.
But I cannot think of a single investment Buffett made in the last 30 years that was not questioned by investors or even criticised and mocked. Almost without exception, these turned out to be prescient and profitable – think of banks at the depths of the GFC, and subsequently train network operators, BYD (Build Your Dreams) (SHE:002594) (up 49.1 per cent year-to-date in 2025), and Berkshire’s major holding in Apple, which have driven significant returns.
While others may question Abel’s ability to match Buffett’s knack for identifying quality and undervalued assets, Buffett himself is not questioning his choice of replacement. And that’s the rub; Buffett has been right much more than he’s been wrong. Why should we question the decision to appoint Abel as CEO, arguably the most important and ultimate decision of Buffett’s entire career?
What are the implications for investors?
- Loss of a market oracle
Depending on whether or not Buffett retains a role at Berkshire or continues to offer market commentary, Buffett’s retirement removes a trusted source of investment ideas for both retail and institutional investors. His annual shareholder letters were packed with wisdom, and his portfolio moves were universally considered market signals. For instance, Berkshire’s increased stakes in Japanese firms like Mitsubishi and Mitsui, valued at US$23.5 billion by the end of 2024, prompted investors to explore similar opportunities.
Without Buffett’s guiding hand, investors may face greater uncertainty.
- Berkshire’s future performance
Berkshire Hathaway’s stock has outperformed the S&P 500 in 2025, rising 18.9 per cent while the broader index fell 3.3 per cent. Investors view it as a safe haven amid tariff-related disruptions. However, Buffett’s departure could introduce volatility at a time when trade wars are hurting the U.S. economy.
Predictably, analysts are divided on Berkshire’s trajectory under Abel. The challenge of managing Berkshire’s massive cash reserves, noting that Buffett avoided share buybacks in 2025 due to high valuations and rising federal costs for doing so, is of particular importance. Abel will need to find attractive investment opportunities or risk Berkshire becoming less dynamic. At the same time, however, one of Berkshire’s moats is its scale and stability. Abel doesn’t need to be a genius investor to keep it steady, but he will need deal-making prowess to ensure Berkshire’s ongoing growth.
- Impact on value investing
Buffett’s value investing philosophy enjoyed early success during an era of relatively stable markets. Today, rapid technological disruption poses new challenges. But it is important to acknowledge past technologies were also feared as disruptive.
Buffett has taken steps to protect his legacy, including transferring his US$160 billion wealth to a charitable trust to thwart activist investors. This move ensures Berkshire remains intact, but it doesn’t guarantee that value investing will remain dominant.
Some investors argue that Buffett’s principles – focusing on intrinsic value and long-term horizons – remain timeless. Others contend that Abel may need to adapt, perhaps by embracing growth-oriented sectors like technology, AI or even renewables if those businesses become the new leaders and monopolies.
- Market and sector ripple effects
Berkshire’s influence extends beyond its shareholders. Over time, announcements of major holdings in companies like Apple, Coca-Cola, and American Express (NYSE: AXP) have meant leadership changes rippled across sectors. Abel’s investment decisions could likewise affect market sentiment, particularly in consumer goods and technology. If Abel shifts Berkshire’s portfolio significantly, it could trigger volatility in these stocks.
Moreover, Buffett’s vocal opposition to tariffs highlights Berkshire’s exposure to global trade dynamics. His warning that “trade should not be a weapon” reflects concerns about economic disruptions. Investors in Berkshire and exposed sectors will need to monitor how Abel navigates these challenges, especially given Berkshire’s international investments like BYD and Japanese conglomerates.
What should investors do?
Remain disciplined: as I revealed in my book, Value.able, Buffett’s success stems from patience and a disciplined adherence to a simple investment philosophy and framework. Investors should continue to focus on quality and intrinsic value, even without Buffett’s direct influence. As an aside, I note, I have often published intrinsic value estimates such as this example for Nick Scali (ASX: NCK).
It will be useful to watch for Abel’s early moves, particularly how he deploys Berkshire’s cash. Share buybacks, new investments, or divestitures could signal his strategy.
And don’t forget to always learn. Learn from Buffett’s legacy: his shareholder letters and past interviews remain valuable resources. As Buffett advised young investors in a Fortune article, surround yourself with people you admire – a principle that applies to choosing investments, mentors and advisors.
For a step-by-step guide to Buffett’s intrinsic value approach to investing in high-quality businesses, be sure to read Value.able.
Warren Buffett’s retirement from Berkshire Hathaway marks the end of an epochal era for investors and is without question a watershed moment. Australian investors, distracted by the federal election, should turn their attention to this announcement and the accompanying caveats.
While Greg Abel steps into a formidable role, the loss of Buffett’s market intuition and leadership will be felt deeply, but Buffett’s legacy as the “Oracle of Omaha” will endure, and his comments about his future involvement during periods of market disruption, when opportunities to deploy large amounts of cash will present, are telling.
The Montgomery Small Companies Fund owns shares in Nick Scali (ASX:NCK). This article was prepared 5 May 2025 with the information we have today, and our view may change. It does not constitute formal advice or professional investment advice. If you wish to trade Nick Scali, you should seek financial advice.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
He is also author of best-selling investment guide-book for the stock market, Value.able – how to value the best stocks and buy them for less than they are worth.
Roger appears regularly on television and radio, and in the press, including ABC radio and TV, The Australian and Ausbiz. View upcoming media appearances.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
