Warren Buffett's retirement creates a buying opportunity

Warren Buffett’s tenure at Berkshire Hathaway  (BRK.B)  is ending, and the market is starting to absorb this monumental departure. 

Over almost six decades, Buffett converted a struggling textile firm into a financial behemoth, posting compounded profits approaching 19.8% yearly since 1965, dwarfing the larger market. 

During his tenure, Berkshire’s stock increased by over 4,400,000%, while the S&P 500 increased by around 31,000%. 

Berkshire Hathaway’s newest report shows a 19.9% compounded yearly increase from 1965 to 2024, compared to 10.4% for the S&P 500, and 5,502,284% versus 39,054%.

Warren Buffett is one of the few on Wall Street who commands an unheard-of degree of respect. He was essentially a “one of one” for a long time, but since then, the concept of investors doubling as celebrities has caught on. 

Charlie Munger, Peter Lynch, Ray Dalio, Bill Ackman, and Cathie Wood are good examples of investors whom nearly all investors closely observe, and they are, in many ways, the heirs to the legacy of Warren Buffett.

Buffett offered more than performance reports through his shareholder letters — he laid bare his investment philosophy. The unique thing to note about these letters was that the advice in them was of a timeless quality. 

You have tariffs, trade tensions, and AI this year. In 2008, meanwhile, you had to contend with the global financial crisis, and Berkshire emerged from that crisis as well. Character is revealed not in words alone but actions, especially under pressure.

Our favorite holding period is forever, Buffett wrote in one of his letters, rejecting the urge to swing trade and championing patience. 

He cautioned: “In a bull market … avoid the error of the preening duck that quacks boastfully after a torrential rainstorm,” warning investors against overconfidence. 

And in his 2025 letter, Buffett reminded readers: “If your employees … wish to give … we believe they should use their own money, not yours” — a call for integrity and discipline in governance. 

However, with Buffett stepping down and Greg Abel taking over as CEO, the time has come for a change. When Edward Jones recently raised BRK.B’s rating because of its $350 billion cash pile and cheaper valuation, the issue is whether this new age will live up to the reputation. 

Buffett’s timeless rules may be the best way for investors to find a place to start.

Why analysts are turning bullish on Berkshire Hathaway 

Edward Jones has raised Berkshire Hathaway’s Class B shares to a buy rating, noting a rare combination of attractive value and financial strength. 

And analyst James Shanahan cited the company’s approximately $350 billion cash position and recent share price volatility as grounds to act, marking out an attractive entry strategy.

We believe that the current share price represents an attractive entry point for long-term investors, Shanahan wrote in a note to clients.

He said the current amount of cash “could prove to be a strong earnings catalyst, should the company invest heavily in operating companies, individual stocks and/or Berkshire’s own shares.”

More Warren Buffett:

• Warren Buffett’s Berkshire exits 17-year stake
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• Warren Buffett’s net worth: A look at his fortune as he prepares to retire

Following the news, Edward Jones added BRK.B to its Focus List, indicating that it sees both defensive strength and long-term potential. With shares selling at around 1.5 times estimated book value (down from 1.8x before Buffett’s retirement announcement), several Wall Street analysts see the current drop as an opportunity rather than a warning sign. 

Over the last five years, Berkshire Hathaway Class B stock is up around 137%. Although these are not Nvidia  (NVDA)  numbers, they are, in effect, solid stats. The main issue for the investment giant seemed to be the loss of the titan, Buffett, who looms large over the legacy of the financial world.

Related: Warren Buffett makes worrisome car insurance prediction

Starbucks  (SBUX)  encountered a similar problem. Howard Schultz transformed the coffee business into a powerhouse, yet execution risks seldom went away when he wanted to take a step back, despite his leading the transformations. 

Starbucks’ newest CEO Brian Niccol has shown mixed results. But those are the problems a company is likely to face when confronted with the loss of an iconic leader.

Related: Warren Buffett’s net worth: A look at his fortune as he prepares to retire

Buffett vs. Abel: Can the heir keep the empire on track?

Warren Buffett isn’t leaving Berkshire completely; he will still be the company’s chairman. But after decades of one person in charge, Greg Abel, the company’s vice chair and chosen successor, is now in charge of day-to-day operations.

Abel has been in charge of operating much of the company for years, although he doesn’t talk about it much. People who know the firm feel he is the best candidate, since he understands how the company is structured and how to allocate resources.

Related: This bold Oracle move could be the beginning of something big

Still, it’s not simple to follow in Buffett’s footsteps. The “Oracle of Omaha” is a phrase that describes Berkshire’s culture, which is a blend of discipline, freedom, and a focus on the long term. He converted a textile company that was about to go out of business into a $900 billion giant in little over 60 years.

Buffett has said that Abel is “the right person to succeed me,” and at a 2021 shareholder meeting, he said, “The culture is embedded in him.” That support is important, but investors will still want to see confirmation that the strategy works with new leadership.

The major test? What Berkshire will do next with its $350 billion in cash. If Abel sticks to the plan — buying carefully, avoiding fads, and planning for the long term — he may win over naysayers the same way Buffett always did: by showing them results.

Related: Warren Buffett’s best investments: 5 companies that rewarded him enormously

What Berkshire could do with $350 billion

Berkshire holds the biggest cash pile in corporate America, and it could be one of its most undervalued assets.

That war chest, which is about $350 billion, allows Greg Abel a lot of freedom.  Shanahan said this might lead to “investments in operating companies, individual stocks, and/or Berkshire’s own shares.” There are good things about each choice.

It seems like acquisitions are back on the agenda. Buffett complained about prices that were too high for years and didn’t get involved. If the markets turn shaky, Berkshire may act quickly and purchase high-quality firms at low prices.

Another lever is buybacks. Buffett has already bought back more shares in recent years when their prices fell below their true worth. If BRK.B continues low, Berkshire may speed up its own stock as an investment.

Then there’s the stock portfolio, which is already full of big names like Apple  (AAPL) , Bank of America  (BAC) , and Coca-Cola  (KO) . Berkshire might put money into investments it already has or make new ones in areas where it anticipates long-term growth.

What you need to know is Berkshire isn’t merely coasting into the post-Buffett era; it has cash as dry powder and a strict script. 

It’s getting ready to move, and it might change the next chapter of corporate America.

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