Warren Buffett, 95, announced in May that he would be retiring from his role as CEO of Berkshire Hathaway at the end of 2025. He has now written a letter to Berkshire Hathaway shareholders outlining his plans, stating: “I will no longer be writing Berkshire’s annual report or talking endlessly at the annual meeting.”
Buffett ran Berkshire Hathaway for six decades.
Read the Letter in Full
To My Fellow Shareholders:
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.
Greg Abel will become the boss at year’s end. He is a great manager, a tireless worker, and an honest communicator. Wish him an extended tenure.
I will continue to talk to you and my children about Berkshire through my annual Thanksgiving message. Berkshire’s individual shareholders are a very special group that is unusually generous in sharing their gains with others who are less fortunate. I enjoy the chance to keep in touch with you. Indulge me this year as I first reminisce a bit. After that, I will discuss the plans for the distribution of my Berkshire shares. Finally, I will offer a few business and personal observations.
As Thanksgiving approaches, I’m grateful and surprised by my luck in being alive at 95. When I was young, this outcome did not look like a good bet. Early on, I nearly died. It was 1938, and Omaha hospitals were then thought of by their citizens as either Catholic or Protestant, a classification that seemed natural at the time.
Our family doctor, Harley Hotz, was a friendly Catholic who made house calls toting a black bag. Dr. Hotz called me Skipper and never charged much for his visits. When I experienced a bad bellyache in 1938, Dr. Hotz came by and, after probing a bit, told me I would be OK in the morning. He then went home, had dinner, and played a little bridge. Dr. Hotz couldn’t, however, get my somewhat peculiar symptoms out of his mind, and later that night, he dispatched me to St. Catherine’s Hospital for an emergency appendectomy. During the next three weeks, I felt like I was in a nunnery and began enjoying my new “podium.” I liked to talk – yes, even then – and the nuns embraced me. To top things off, Miss Madsen, my third-grade teacher, told my 30 classmates to each write me a letter. I probably threw away the letters from the boys, but read and reread those from the girls; hospitalization had its rewards.
The highlight of my recovery – which actually was dicey for much of the first week – was a gift from my wonderful Aunt Edie. She brought me a very professional-looking fingerprinting set, and I promptly fingerprinted all of my attending nuns. (I was probably the first Protestant kid they had seen at St. Catherine’s, and they didn’t know what to expect.)
My theory – totally nutty, of course – was that someday a nun would go bad and the FBI would find that they had neglected to fingerprint nuns. Obviously, my fantasy never materialized. Let’s look at a few other kids from that era, who grew up very nearby and greatly influenced my life but of whom I was for long unaware.
I’ll begin with Charlie Munger, my best pal for 64 years. In the 1930s, Charlie lived a block away from the house I have owned and occupied since 1958.
Early on, I missed befriending Charlie by a whisker. Charlie, 6 ⅔ years older than I, worked at my grandfather’s grocery store in the summer of 1940, earning $2 for a 10-hour day. (Thrift runs deep in Buffett’s blood.) The following year, I did similar work at the store, but I never met Charlie until 1959, when he was 35 and I was 28.
After serving in World War II, Charlie graduated from Harvard Law and then moved permanently to California. Charlie, however, forever talked of his early years in Omaha as formative. For more than 60 years, Charlie had a huge impact on me and could not have been a better teacher and protective “big brother.” We had differences, but never argued. “I told you so” was not in his vocabulary.
In 1958, I bought my first and only home. Of course, it was in Omaha, located about two miles from where I grew up, less than two blocks from my in-laws, about six blocks from the Buffett grocery store and a 6-7-minute drive from the office building where I have worked for 64 years.
Wait, there’s more.
In 1959, Don Keough and his young family lived in a home located directly across the street from my house and about 100 yards away from where the Munger family had lived. Don was then a coffee salesman but was destined to become president of Coca-Cola as well as a devoted director of Berkshire.
Like Charlie Munger, Don forever remained a Midwestern boy, enthusiastic, friendly, and American to the core.
Finally, Ajit Jain, born and raised in India, as well as Greg Abel, our Canadian CEO-to-be, each lived in Omaha for several years late in the 20th Century. Indeed, in the 1990s, Greg lived only a few blocks away from me on Farnam Street, though we never met at the time.
Can it be that there is some magic ingredient in Omaha’s water?
I lived a few teenage years in Washington, DC (when my dad was in Congress) and in 1954 I took what I thought would be a permanent job in Manhattan. There I was treated wonderfully by Ben Graham and Jerry Newman and made many life-long friends. New York had unique assets – and still does. Nevertheless, in 1956, after only 1½ years, I returned to Omaha, never to wander again. Subsequently, my three children, as well as several grandchildren, were raised in Omaha.
Looking back I feel that both Berkshire and I did better because of our base in Omaha than if I had resided anywhere else. The center of the United States was a very good place to be born, to raise a family, and to build a business. Through dumb luck, I drew a ridiculously long straw at birth.
Now let’s move on to my advanced age. My genes haven’t been particularly helpful – the family’s record for longevity was 92 until I came along. But I have had wise, friendly, and dedicated Omaha doctors. At least three times, my life has been saved, each with doctors based within a few miles from my home.
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.
But Lady Luck is fickle and – no other term fits – wildly unfair. In many cases, our leaders and the rich have received far more than their share of luck. Dynastic inheritors have achieved lifetime financial independence the moment they emerged from the womb. In contrast, others have arrived, facing a hell-hole during their early life or, worse, disabling physical or mental infirmities that rob them of what I have taken for granted.
I was born in 1930 healthy, reasonably intelligent, white, male and in America. Wow! Thank you, Lady Luck. My sisters had equal intelligence and better personalities than I but faced a much different outlook. 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.
Father Time, to the contrary, now finds me more interesting as I age. And he is undefeated; for him, everyone ends up on his score card as “wins.” When balance, sight, hearing and memory are all on a persistently downward slope, you know Father Time is in the neighborhood. I was late in becoming old – its onset materially varies – but once it appears, it is not to be denied.
To my surprise, I generally feel good. Though I move slowly and read with increasing difficulty, I am at the office five days a week, where I work with wonderful people. Occasionally, I receive a useful idea or am approached with an offer that we might not have otherwise received. Because of Berkshire’s size and because of market levels, ideas are few – but not zero.
My unexpected longevity, however, has unavoidable consequences of major importance to my family and the achievement of my charitable objectives. Let’s explore them.
What Comes Next
My children are all above normal retirement age, having reached 72, 70 and 67. It would be a mistake to wager that all three – now at their peak in many respects – will enjoy my exceptional luck in delayed aging. To improve the probability that they will dispose of what will essentially be my entire estate before alternate trustees replace them, I need to step up the pace of lifetime gifts to their three foundations. My children are now at their prime in respect to experience and wisdom, but have yet to enter old age. That “honeymoon” period will not last forever.
Fortunately, a course correction is easy to execute. There is, however, one additional factor to consider: I would like to keep a significant amount of “A” shares until Berkshire shareholders develop the comfort with Greg that Charlie and I long enjoyed. That level of confidence shouldn’t take long. My children are already 100% behind Greg, as are the Berkshire directors. All three children now have the maturity, brains, energy, and instincts to disburse a large fortune. They will also have the advantage of being above ground when I am long gone and, if necessary, can adopt policies both anticipatory and reactive to federal tax policies or other developments affecting philanthropy. They may well need to adapt to a significantly changing world around them.
Ruling from the grave does not have a great record, and I have never had an urge to do so.
Fortunately, all three children received a dominant dosage of their genes from their mother. As the decades have passed, I have also become a better model for their thinking and behavior. I will never, however, achieve parity with their mother.
My children have three alternate trustees in case of any premature deaths or disabilities. The alternates are not ranked or tied to a specific child. All three are exceptional humans and wise in the ways of the world. They have no conflicting motives.
I have assured my children that they do not need to perform miracles, nor should they fear failures or disappointments. These are inevitable, and I have made my share. They simply need to improve somewhat upon what is generally achieved by government activities and/or private philanthropy, recognizing these other methods of redistribution of wealth have shortcomings as well.
Early on, I contemplated various grand philanthropic plans. Though I was stubborn, these did not prove feasible. During my many years, I’ve also watched ill-conceived wealth transfers by political hacks, dynastic choices, and, yes, inept or quirky philanthropists.
If my children simply do a decent job, they can be certain that their mother and I would be pleased. Their instincts are good, and they each have had years of practice with very small sums initially that have been irregularly increased to more than $500 million annually—all three like working long hours to help others, each in their own way.
The acceleration of my lifetime gifts to my children’s foundations in no way reflects any change in my views about Berkshire’s prospects. Greg Abel has more than met the high expectations I had for him when I first thought he should be Berkshire’s next CEO. He understands many of our businesses and personnel far better than I do now, and he is a very fast learner about matters that many CEOs don’t even consider.
I hope that his health remains good for several decades. With a little luck, Berkshire should require only five or six CEOs over the next century. It should particularly avoid those whose goal is to retire at 65, to become look-at-me rich, or to initiate a dynasty.
One unpleasant reality: Occasionally, a wonderful and loyal CEO of the parent or a subsidiary will succumb to dementia, Alzheimer’s or another debilitating and long-term disease. Charlie and I encountered this problem several times and failed to act. This failure can be a huge mistake. The Board must be alert to this possibility at the CEO level and the CEO must be alert to the possibility at subsidiaries. This is easier said than done; I could cite a few examples from the past at major companies. Directors should be alert and speak up is all that I can advise.
Berkshire has less chance of a devastating disaster than any business I know. And, Berkshire has a more shareholder-conscious management and board than almost any company with which I am familiar. Finally, Berkshire will always be managed in a manner that will make its existence an asset to the United States. Over time, our managers should grow quite wealthy – they have important responsibilities – but do not have the desire for dynastic or look-at-me wealth.
Our stock price will move capriciously, occasionally falling 50% or so, as has happened three times in 60 years under present management. Don’t despair; America will come back, and so will Berkshire shares.
A Few Final Thoughts
One perhaps self-serving observation. I’m happy to say I feel better about the second half of my life than the first. My advice: Don’t beat yourself up over past mistakes – learn at least a little from them and move on. It is never too late to improve. Get the right heroes and copy them. You can start with Tom Murphy; he was the best.
Remember Alfred Nobel, later of Nobel Prize fame, who – reportedly – read his own obituary that was mistakenly printed when his brother died and a newspaper got mixed up. He was horrified at what he read and realized he should change his behavior.
Greatness does not come about through accumulating great amounts of money, great amounts of publicity or great power in government. When you help someone in any of thousands of ways, you help the world. Kindness is costless but also priceless. Whether you are religious or not, it’s hard to beat The Golden Rule as a guide to behavior.
I write this as one who has been thoughtless countless times and made many mistakes but also became very lucky in learning from some wonderful friends how to behave better. Keep in mind that the cleaning lady is as much a human being as the Chairman.
I wish all who read this a very happy Thanksgiving. Yes, even the jerks; it’s never too late to change. Remember to thank America for maximizing your opportunities. But it is – inevitably – capricious and sometimes venal in distributing its rewards.
Choose your heroes very carefully and then emulate them. You will never be perfect, but you can always be better.
