Warren Buffett’s retirement announcement in early June 2025 marked more than just the end of an era — it triggered a wave of uncertainty. Berkshire Hathaway’s Class B shares ($BRK.B) had just reached an all-time high, only to drop 15% in the weeks following the news. This sudden shift raises a critical question: Are we witnessing the end of Berkshire’s long-standing outperformance relative to the S&P 500?

Historical Outperformance — but Fading in the Modern Era

For decades, Berkshire Hathaway delivered excess returns through disciplined capital allocation, acquisition of profitable businesses, and strategic positioning during market downturns. However, in recent years, that gap has narrowed. Since the beginning of the 2020s, BRK.B returned approximately +44%, while the S&P 500 returned around +47% — led by tech giants like Nvidia, Apple, and Microsoft. These figures suggest that even before Buffett’s departure, Berkshire was losing ground.

Market Response: A Steep Drop Reflecting Uncertainty

The chart accompanying the announcement tells the story succinctly. Berkshire’s stock surged to record highs, only to enter a sharp and sustained decline following Buffett’s exit. A 15% drawdown is not just a blip — it reflects a significant shift in sentiment. Investors aren’t merely adjusting to a new CEO; they’re questioning the company’s strategic continuity in a post-Buffett era.

Can Greg Abel Fill the Void?

Buffett’s heir apparent, Greg Abel, has been positioned for years to take the reins. As Vice Chairman of Non-Insurance Operations, he is well-versed in Berkshire’s inner workings and widely respected internally. However, markets are driven by perception as much as fundamentals. Buffett wasn’t just a CEO — he was the brand, the strategist, and the steward of capital. It remains unclear whether Abel can inspire the same investor confidence or navigate as deftly through shifting macroeconomic tides.

Structural Advantages Remain Intact

Despite the stock’s decline, Berkshire’s fundamentals remain robust. The company holds over $150 billion in cash, operates highly profitable subsidiaries like GEICO, BNSF, and Berkshire Hathaway Energy, and boasts one of the most diversified and flexible investment portfolios in the world. These structural advantages give it resilience. But the real question is whether such a portfolio can continue to outperform in a market increasingly dominated by fast-growth, tech-driven narratives.

Has the S&P 500 Become the Better Option?

The S&P 500, particularly post-2020, has delivered strong returns led by disruptive innovation and digital transformation. Berkshire, historically hesitant to enter tech-heavy sectors, only recently began allocating capital to companies like Apple and Amazon — and still on a limited scale. Investors seeking broad exposure to cloud computing, AI, fintech, and cybersecurity may find the index more attractive than Berkshire’s value-focused, capital-intensive holdings. As the S&P 500 tilts further toward technology and growth, its appeal to long-term investors has arguably increased.

Emotional Markets, But Rational Over Time

The reaction to Buffett’s retirement may be driven by emotion, but markets tend to normalize over time. We’ve seen similar cases where legendary leaders left their firms — think Steve Jobs (Apple) or Bill Gates (Microsoft). Initially, stocks faltered. But with effective transitions and strategic continuity, those companies soared to new highs. Berkshire’s ability to follow suit depends on transparent leadership, stable investment philosophy, and a continued commitment to shareholder value.

What Comes Next?

The question of whether Berkshire Hathaway’s days of market-beating performance are behind it does not have a binary answer. Much depends on two critical vectors: first, the ability of its new leadership to maintain — and evolve — the investment approach; second, the prevailing market conditions and the sectors driving future returns. If capital continues to flow disproportionately into high-growth technology, Berkshire may lag. But if economic volatility or valuation re-ratings favor defensive, cash-heavy conglomerates, the firm could regain its edge.

At its core, Berkshire remains a unique vehicle — a holding company with scale, liquidity, and diversification that few others can replicate. Buffett’s departure might be the end of one era, but it could also be the start of a more modernized Berkshire — one that still plays offense when others panic.