Why Warren Buffett is still relevant even as he turns 95
Warren Buffett is one of the world’s most successful and widely known investors. At 95, he remains highly influential.Nati Harnik/The Associated Press
This Saturday, Warren Buffett will celebrate his 95th birthday. Despite being well into his golden years and his plans to step down as chief executive officer of Berkshire Hathaway Inc. BRK-B-N by the end of 2025, he remains a force very much relevant to investors today.
Here are four reasons why, after his nearly 70 years of professional investing.
Leadership of Berkshire Hathaway
As chairman and CEO of Berkshire Hathaway, Mr. Buffett’s stewardship of the massive holding company has turned a small and humble Massachusetts-based textile manufacturer into one of the most valuable corporations in the world. Mr. Buffett has built a diversified conglomerate that encompasses a broad range of industries, from insurance and energy to retail and manufacturing.
Last year, Berkshire Hathaway’s stock market capitalization breached US$1-trillion for the first time, making it the first non-technology company to achieve that level of success. It is not only the largest investment holding company in the world, but also the 10th-largest company in the entire world.
Under Mr. Buffett’s leadership, Berkshire Hathaway’s stock price has grown exponentially, demonstrating the enduring effectiveness of his approach to capital allocation. His decision-making process – which emphasizes careful evaluation and long-term commitment – continues to influence executives across various industries.
Mr. Buffett will remain chairman of Berkshire’s board after company vice-chairman Greg Abel, left, takes over as CEO.Matthew Putney/The Associated Press
Even as Mr. Buffett’s age becomes increasingly a topic of discussion, the leadership structure at Berkshire Hathaway has been carefully designed to ensure seamless continuity. Mr. Buffett will remain chairman of the board when company vice-chairman Greg Abel takes over as CEO.
Mr. Buffett has expressed confidence in his successors, and continues to delegate responsibilities, ensuring that the company remains unwaveringly on course. This long-term planning and governance model have set an example for many companies that are looking to ensure stability through generational leadership transitions.
Impressive long-term record
It is widely accepted that the S&P 500 Index INX is one of the most difficult stock indexes to match or beat. Over the past 60 years, Mr. Buffett’s investments have earned double the return of the S&P 500. Double.
Given this incredible performance, it is not surprising that his strategies are closely tracked, meticulously scrutinized and effectively mimicked by countless investors who seek to experience even a fraction of the Oracle of Omaha’s success.
Ability to adapt
In nature, species that cannot adapt to changes in their environment, such as climate change or habitat loss, may eventually face extinction. The Darwinian concept of “adapt or die” highlights the importance of flexibility and innovation in the face of challenges. It underscores that clinging to outdated practices or failing to recognize new realities can lead to stagnation, or worse, outright failure.
Mr. Buffett has a proven ability to adapt. During his lengthy investment career, he has witnessed a plethora of trends – meme stocks, cryptocurrencies and artificial-intelligence-driven algorithms just to name a few. Nevertheless, Mr. Buffett’s philosophy of patience, caution and long-term thinking continues to generate wealth, and that makes him relevant.
Moreover, Mr. Buffett’s ability to adapt to changing times and circumstances is evident in his strategic investments in the tech sector, such as Berkshire Hathaway’s stake in Apple Inc. He once avoided technology stocks, stating they were outside his “circle of competence.” But he has recognized the importance of technological innovation to the productivity of society, and incorporated technology to a greater degree into his portfolio.
Doing so demonstrates Mr. Buffett’s ability to evolve, while synonymously remaining true to his core principles. Somewhere, Charles Darwin is smiling.
Commitment to philanthropy
What’s more awe-inspiring: the ability to generate unimaginable wealth, or the decision to give virtually all your wealth away?
Arguably the most important reason that Mr. Buffett remains relevant today is due to his commitment to philanthropy, and the example that he is setting for those who study him.
In 2006, Mr. Buffett pledged to give away the vast majority of his wealth to charitable causes, primarily through the Bill and Melinda Gates Foundation. His focus on giving back, and his call for other billionaires to do the same through the Giving Pledge, has made him a respected figure in the business and philanthropic communities.
So, when we study Mr. Buffett decades from now, his legacy will not just be as a talented and passionate investor, but as someone who committed himself to making the world a better place. This is both incredibly relevant and timeless.
While the financial world has evolved significantly since Mr. Buffett started investing in the 1950s, his principles continue to be a guiding force for investors and business leaders alike. Even as he approaches the later years of his career, Mr. Buffett’s voice and legacy will continue to shape the world of finance for generations to come.
Happy birthday, Warren.
Robert Gill is a portfolio manager with Fairbank Investment Management.