A Turning Point for Berkshire—From Legendary Leadership to Market Uncertainty

July 2025. For decades, Warren Buffett stood as the face and spirit of Berkshire Hathaway, his unique blend of value investing and steady stewardship delivering unrivaled returns for shareholders. But following Buffett’s recent announcement of his succession plans at the May 3rd annual meeting, the conglomerate has entered uncharted waters. Since that day, Berkshire’s stock has dropped over 12% and now trails the S&P 500’s return for 2025. For the first time in recent memory, investors are confronted with fundamental questions about the company’s future: Can Berkshire outperform without Buffett at the helm? Will the management transition preserve the culture, discipline, and value creation that defined an era?

 Weak Performance, Lagging the S&P 500

Berkshire Hathaway’s B shares have posted negative returns in six of the last seven weeks, heading for a third straight month of losses. Since May 3rd, the stock is down more than 12%, pulling its year-to-date gain to just 4.5%—compared to a 7% gain for the S&P 500 over the same period. This reversal marks the company’s longest losing streak since June 2022 and, notably, the first time in years that Berkshire has slipped below its 200-day moving average, ending a record 573-day run above this technical benchmark.

The technical breakdown is more than symbolic. It signals that investor confidence, long buoyed by Buffett’s presence, has been shaken, and that the market is reevaluating Berkshire’s premium over the broader market.

Strategic Analysis: Scale, Succession, and the Limits of Size

In his 2023 annual letter, Buffett himself tempered expectations, warning that the conglomerate’s sheer scale makes it “very hard to move the needle” with new investments. Today, Berkshire is a behemoth, spanning more than 60 operating companies across 40 industries, and managing cash balances in the hundreds of billions. That scale, once a competitive advantage, now complicates the search for meaningful acquisitions and above-average returns.

The conglomerate’s model—disciplined capital allocation, long-term holdings, and financial conservatism—still works, but in an era of rapid technological change and rising competition, it’s harder to maintain the outperformance of years past. Buffett was candid: with the current mix of businesses, Berkshire “should do a little better than the average American company, but anything beyond that is wishful thinking.”

Benchmark Comparison: The Golden Age Behind?

From 1964 to 2024, Berkshire Hathaway’s total return was a staggering 5,502,284%, roughly double the S&P 500’s average annual return over the same period. This long-term track record made Berkshire the gold standard for value investors—reliable, resilient, and seemingly immune to short-term market swings.

Yet in the 2020s, and especially post-2020, Berkshire has struggled to keep up with the technology-heavy S&P 500. The company’s reluctance to overexpose itself to high-growth tech names may have protected it during downturns, but it has also limited its upside as the market’s leadership has shifted.

2025 is the first year in recent memory where Berkshire is decisively lagging the S&P 500 for multiple months. For many investors, this marks a crucial test: will Berkshire remain a market leader, or settle into a role as a solid—but unexciting—diversified holding?

Investor Sentiment: The Challenge of Confidence and Leadership Change

The stock’s underperformance is no coincidence. Buffett’s departure is more than a managerial event—it’s a psychological shock for the market. Both institutional and retail investors are now asking whether the new leadership (led by Greg Abel and others) can maintain the rigorous discipline, patience, and vision that defined Buffett’s era.

This uncertainty has contributed to a shift in capital flows, as money moves from Berkshire into index funds and, in particular, tech and growth sectors seen as the engines of future returns.

Core Dilemmas: Financial Prudence vs. Growth—Is “Good Enough” Enough?

Berkshire remains profitable, stable, and exceptionally well-diversified. But in a market increasingly dominated by technology, fintech, and disruptive business models, the company’s traditional approach no longer guarantees outperformance. The new management promises “a little better than average” results—hardly a negative outlook, but a far cry from the mythic returns of the Buffett era.

Investors must now grapple with whether Berkshire’s size and conservatism provide meaningful downside protection, or simply anchor returns at a lower level. The dilemma is clear: is the price of stability a permanent loss of competitive edge?

The Long-Term Record: Legendary—but Can It Be Repeated?

Berkshire’s history is unmatched. Under Buffett’s stewardship, the company compounded value for shareholders far beyond what any index or peer could deliver. Its approach—buying high-quality businesses, holding them for decades, and minimizing leverage—created a unique financial fortress.

Yet as Buffett himself warned, the future may not look like the past. The combination of huge cash balances, limited acquisition targets, and market saturation make outperformance increasingly elusive.

Outlook: Stability or Slow Decline?

The coming years will be a critical test for Berkshire Hathaway. Can Greg Abel and his team maintain the discipline and culture that built Berkshire’s reputation, while adapting to new market realities? Will the company’s immense cash pile become an asset or a liability as it seeks new growth opportunities?

Berkshire’s strength remains its diversity, balance sheet, and resilience in downturns. But to justify a premium, it must either accelerate growth or innovate its investment approach—without sacrificing the prudence that defined its legacy.

Conclusion: A Defining Moment for Berkshire—Between Nostalgia and New Realities

Buffett’s departure marks the end of an era and the start of a crucial transition for Berkshire Hathaway. Investors can no longer rely on the memory of historic returns alone—they must look for evidence that the company’s culture, risk controls, and business model can thrive without the “Oracle of Omaha.” The stock’s recent underperformance is not a sign of collapse, but it is a wake-up call for shareholders to reassess their expectations and risk profiles.

Ultimately, Berkshire’s place in the market will depend on whether it can balance tradition with innovation, and whether the next generation of leadership can carve a new path—one that honors Buffett’s legacy while embracing the demands of a rapidly evolving financial world.