Warren Buffett is stepping down as CEO of Berkshire Hathaway (BRK-A, BRK-B) after leading the company to a mind-boggling run of stock outperformance against the S&P 500 (^GSPC).
From 1965 to 2024, Berkshire Hathaway stock has returned 5,502,284%. In that same time period, the S&P 500, with dividends included, has provided a return of 39,054%. Berkshire Hathaway’s compound annual gain over that period tallied 19.9%. The S&P 500’s return was 10.4%.
Digging into the details of Buffett’s outperformance, most of Berkshire Hathaway’s gain came in the first 20 years since Buffett took control of the company. Berkshire’s consistent resilience compared to the broader market also stands out. In the 13 times the S&P 500 closed the year lower over the past 60 years, Berkshire fell more than the benchmark index only twice.
“The long-term trend is up,” Buffett said at Berkshire Hathaway’s annual shareholders meeting on Saturday.
During the meeting, Buffett addressed Berkshire Hathaway’s growing pile of cash. At the end of the first quarter, Berkshire had amassed a cash pile of $347.7 billion. Buffett noted that his confidence in raising cash and not feeling the need to be fully invested at all times is one reason he’s been successful over such a long period.
“We would rather have conditions that have developed where we would have, like, $50 billion or something like that,” he said. “But that just isn’t the way the business works.”
Buffett added that if he made investments simply for the purpose of getting Berkshire’s cash holdings down to $50 billion, “That would be the dumbest thing in the world to invest in that manner.”
On Saturday, Buffett announced he planned to step down from his role as Berkshire Hathaway’s CEO and pass his role onto Greg Abel.
“I think it’s the time has arrived where Greg [Abel] should become the chief executive officer of the company at year-end,” said Buffett, who was chairing his 60th annual meeting. “And I want to spring that on the directors, effectively, and give that as my recommendation.”
Berkshire Hathaway’s board unanimously approved the move on Sunday. Abel will become CEO on Jan. 1 2026, and Buffett will remain chairman of the board of directors.
Berkshire Hathaway chair Warren Buffett at Berkshire Hathaway’s annual shareholder meeting in Omaha, Neb., on May 4, 2019. (Reuters/Scott Morgan) · REUTERS / Reuters
On Saturday, longtime Berkshire Hathaway (BRK-B, BRK-A) CEO Warren Buffett said he plans to recommend to the company’s board that Greg Abel take over at the end of the year. Abel was named Buffett’s successor in 2021.
The announcement came at the end of another annual meeting that saw Buffett warn on Trump’s expansive tariff plans and talk down this year’s market volatility, among other things.
As for where this leaves Buffett and Berkshire, Buffett said he has no plans to sell Berkshire stock as a result of the change and won’t be far away if needed.
“I would still hang around, and could conceivably be useful in a few cases, but the final word would be what Greg said, in operations, in capital deployment, whatever it might be,” Buffett said.
Berkshire Hathaway stock slipped early Monday morning after closing on Friday at a record high. Shares have gained over 17% this year versus a 3% drop for the S&P 500 (^GSPC).
How investors react to this weekend’s news will likely shape the market discussion in the week ahead. But given Berkshire is the seventh-largest company in the S&P 500 with a market cap north of $1.1 trillion, how the stock trades could influence the broader market too.
A streak on the line
Stocks wrapped up last week on a high note, with the S&P 500 marking its longest winning streak since November 2004 as the index erased all of its post-“Liberation Day” losses, bolstered by a solid April jobs report and fresh optimism around US-China trade talks.
The Dow Jones Industrial Average (^DJI) also rose 3% on the week, and the tech-heavy Nasdaq Composite (^IXIC) gained 3.4%.
This market rally and investor optimism will be tested by the Federal Reserve.
The central bank will announce its latest policy decision on Wednesday, and while no changes are expected, how Fed Chair Jerome Powell outlines the Fed’s thinking in the face of a shifting outlook will be the week’s key economic event.
Read more: How the Fed rate decision affects your bank accounts, loans, credit cards, and investments
The weekly update on jobless claims on Thursday and activity checks from the manufacturing sector on Monday will also feature on the calendar.
Earnings season remains busy, with results from Ford (F), Palantir (PLTR), Disney (DIS), and AMD (AMD) among the most notable set for release.
So far this earnings season, analysts have lowered second quarter EPS estimates for S&P 500 companies by 2.4% — a larger-than-usual reduction as companies weigh concerns over tariffs and a potential economic slowdown, according to FactSet.
Story Continues
Recession fears are rising after first quarter GDP contracted for the first time in three years, but economists caution an official downturn may not be declared for months — or even years.
While two consecutive quarters of negative GDP growth is often treated as a rule of thumb for a recession, it’s not the official definition, and it doesn’t always hold up.
