Warren Buffett stepped down as CEO of Berkshire Hathaway at the end of 2025, capping a 60-year tenure that delivered an average annualized return of nearly 20% for the conglomerate’s stock portfolio. Over the same period, the S&P 500 returned roughly 10% per year, underscoring Berkshire’s outperformance. Buffett’s final shareholder letter emphasized the inevitability of mistakes and the importance of promptly correcting them, a theme he repeatedly highlighted through 16 admissions of ‘errors’ or ‘mistakes’ between 2019 and 2023.

Since Buffett assumed leadership in 1965, Berkshire Hathaway’s diversified holdings have grown far faster than the broader market. The firm’s strategy of holding high-quality businesses over decades produced compounded gains that doubled the S&P 500’s returns. Key drivers included substantial stakes in financial, consumer, and industrial companies, combined with conservative use of leverage and a focus on free-cash-flow generation.

Under Buffett’s final stewardship, Berkshire Hathaway was a net seller of equities for three consecutive years, with the value of shares sold exceeding purchases each year from 2023 through 2025. This selling coincided with the S&P 500’s forward price-to-earnings multiple expanding from 15.5x in October 2022 to 22.2x by early 2026—above its five-year average of 20.0x and ten-year average of 18.7x. Historical data show that forward P/E ratios above 22x have been followed by average annual returns below 3% over the next three years.

Throughout his career, Buffett urged investors to ‘be fearful when others are greedy, and be greedy when others are fearful.’ With bullish sentiment near multi-year highs and elevated market valuations, Berkshire’s actions and Buffett’s writings suggest a cautious stance. While no one can predict short-term market movements, the firm’s disciplined approach to capital allocation and emphasis on purchasing businesses at reasonable valuations remain central to preserving shareholder value in potentially overextended markets.