The Legend of Berkshire Comes to a Close! Buffett's Last Shareholder Letter in 60 Years: Live a Worthy Life

Warren Buffett has led Berkshire Hathaway for over 60 years since 1965. This week, he officially wrote his last annual letter to shareholders, reiterating that he will step down as CEO at the end of the year, with Greg Abel taking over. The 95-year-old Buffett reflected on the growth years in Omaha, his 64-year partnership with Charlie Munger, and the accelerated plan for lifetime gifts to the foundations of his three children.

60 Years of Legendary Farewell and Successor Greg

(Left is Buffett, right is Munger, source: X)

Warren Buffett bluntly stated at the beginning of his shareholder letter: “I will no longer write Berkshire's annual report, nor will I speak at length at the annual shareholder meeting. As the British say, I am 'becoming more silent.'” Greg Abel will become the boss at the end of the year, and Buffett praised him as an outstanding manager, a tireless worker, and an honest communicator.

Buffett stated that he wants to retain a large amount of “A” shares until Berkshire's shareholders have the same sense of reassurance about Greg that Charlie and he have enjoyed for a long time. This level of confidence should not take long to achieve, as his three children are already 100% supportive of Greg, and so are Berkshire's directors. Buffett emphasized that Greg's performance has exceeded the high expectations set initially, and his understanding of many businesses and personnel far surpasses his own; he cannot think of any CEO he would choose over Greg to handle the savings.

Greg Abel's Advantages

· A deep understanding of the upward potential and risks of Berkshire Hathaway's insurance/accident insurance business far exceeds that of many senior executives.

· Learns at an extremely fast pace and has a deep understanding of matters that many CEOs have never even considered.

· In good health, Buffett hopes he can maintain a good condition for the next few decades.

Buffett reminds that Berkshire should only need five or six CEOs in the next century, especially avoiding those whose goal is to retire at 65, become “look how rich I am” or create a dynasty.

Munger's Lifelong Impact: From 'Cigar Butt' to Great Businesses

Charlie Munger passed away peacefully in a California hospital in November 2023 at the age of 99. This Berkshire Vice Chairman and Buffett's closest partner for 64 years profoundly changed Buffett's investment philosophy. In his letter to shareholders, Buffett recalled that the place where Charlie lived in the 1930s was only a block away from the house he has owned and lived in since 1958, and the two almost became friends in childhood.

In 1971, Munger persuaded Buffett to acquire See's Candies for a price equivalent to three times its net worth, which was considered a “high price,” far exceeding what Buffett was accustomed to paying. Over the next few decades, See's generated approximately $2 billion in cumulative profits for Berkshire. Buffett wrote in 2015: “This acquisition ended my pursuit of 'cigar butt' investing—buying mediocre companies at cheap prices—and allowed me to start seeking out wonderful businesses at fair prices. Charlie has been urging me to learn this lesson for years, but I have been a slow learner.”

Buffett referred to Munger as the “abominable no-man” because he rejected potential investments. However, Munger's obsession with engineering and technology also led the technology-fearful Buffett to place big bets on electric vehicle manufacturer BYD and Israeli machine tool manufacturer Iscar. In his letter to shareholders, Buffett wrote: “For 64 years, Charlie has had a tremendous impact on me. He is the best teacher I could have and the most protective 'big brother' I could ask for. We have our differences, but we have never had a fight. The phrase 'I told you so' is not in his dictionary.”

Munger himself is an outstanding investor. From 1962 to 1969, the S&P 500 Index averaged an annual increase of 5.6%, while Buffett's partnership had an average annual return of 24.3%, and Munger's performance was even better, with an average annualized return of 24.4%. Before he joined Berkshire as vice chairman in 1975, his portfolio had an average annual increase of 19.8% over a 14-year history, while the S&P 500 Index only grew by 5.2%.

Buffett's Life Wisdom and Philanthropic Plans

The 95-year-old Buffett stated in his shareholder letter: “As Thanksgiving approaches, I am grateful and surprised that I have had the fortune to live to 95.” He recalled the experience of almost dying at the age of 8 in 1938 due to acute appendicitis, spending three weeks hospitalized at St. Catherine's Hospital. His family doctor, Dr. Harry Hots, could not forget his rather peculiar symptoms while playing bridge that evening, and he took him to the hospital later that night for emergency surgery.

Buffett stated that his genes are not particularly helpful, and the longevity record in his family was 92 years before he came along. But he had a wise, kind, and diligent doctor in Omaha, who saved his life at least three times, each time relying on a doctor just a few miles from home. Regarding old age, Buffett wrote: “Those who live to an old age need a great deal of good luck, dodging banana peels, natural disasters, drunk or distracted drivers, and lightning strikes every day. But Lady Luck is fickle and extremely unfair.”

Due to his unexpectedly long life, Buffett stated that he needs to accelerate the gifting process to the foundations of his three children while he is still alive. His children are all beyond the normal retirement age, reaching 72, 70, and 67 years old, respectively. Buffett wrote: “My children are now at their peak in experience and wisdom, but they have not yet entered old age. That 'honeymoon period' will not last forever.” The three children now possess the maturity, wisdom, energy, and intuition to allocate a vast fortune; they will also have an advantage, as they will still be alive to implement proactive and reactive policies when Buffett is long gone.

Final Advice and Life Philosophy for Investors

Buffett left several profound life lessons at the end of his letter to shareholders. He recalled the story of Alfred Nobel, the founder of the Nobel Prize, who reportedly read his own obituary (the newspapers mixed him up with his brother's death) and was shocked by what he read, realizing he should change his behavior. Buffett wrote, “Don’t expect the newsroom to get it wrong: Decide how you want your obituary to be written and live a life worth writing about.”

He emphasized: “Greatness does not come from accumulating vast amounts of money, immense prestige, or powerful authority in government. When you help others in any of the thousands of ways, you are helping this world. Kindness is cost-free, yet priceless.” Buffett suggested finding the right heroes and emulating them, recommending starting with Tom Murphy.

Regarding Berkshire's prospects, Buffett stated: “The probability of Berkshire experiencing a catastrophic disaster is smaller than any company I know of. The way Berkshire is managed will forever make its existence an asset to America. Our stock price will be volatile, occasionally dropping by around 50%, as has happened three times during the 60 years under the current management. Don't despair; America will come back, and Berkshire's stock will come back as well.”