Berkshire Hathaway is very important — for both its sheer size and its symbolic position in American business. It is worth over a trillion dollars, making it the 11th most valuable company in the US. The 10 larger companies are all in tech, and all of them (save, arguably, Apple) have been boosted recently by AI or Elon Musk mania. Berkshire stands for an older, more prudent and far-seeing form of corporate capitalism, based not on technological revolution but enduring economic truths. At a feverish moment like this, Berkshire’s example matters.
However, the idea that the Berkshire model has an edge in long-term value creation is increasingly difficult to maintain. If you compare its rolling 10-year total returns with the S&P 500, the period in which Berkshire consistently beat the index ended in mid-2012. Since then, the two pass the lead back and forth, with the S&P outperforming when animal spirits are strong, as they are now, and Berkshire doing a shade better when sentiment is weak, as in April of last year. Fundamentally, it’s been a 14-year draw, which is starting to be a long time, even by Berkshire’s standards.
Warren Buffett, not only the greatest investor but the most charismatic corporate leader of our time, stepped down as CEO six months ago, replaced by Greg Abel. So it is time to ask an old question again: what — beyond symbolism — is the point of Berkshire?