Buffett’s Quiet Goodbye, and the Lessons You’ll Ignore

THE YOUNG INVESTOR

becoming a great investor one mistake a time

Welcome to This week’s edition of Market Bites

Grab a cup of coffee, get comfortable, and catch up on financial markets.

I’ve been doing the reading and scrolling, to bring you the most relevant updates.

Before we dive-in, take a look at:

MARKETS YEAR-TO-DATE

Warren Buffet to Retire at 95

There was no big speech. No ceremony. No moment of silence.

Instead, Warren Buffett did what he’s always done:

He dropped the most important news of the weekend quietly, at the end of a long Q&A session.

Announcing he’s stepping down as CEO of Berkshire Hathaway at the end of the year.

Even Greg Abel, his successor, was caught by surprise on stage, in real time.

With that comes to an end one of the greatest compounding runs in financial history:

5.5 million percent in returns! 

That’s an annualized return of nearly 20%, roughly double the market, for six decades.

Not only is Buffett the the best investor of our times. He became the conscience of capitalism. He shaped an entire generation of investors and corporate managers.

These days it is common to hear CEOs and CFOs rattle on about “creating shareholder value”, dividends and buybacks. To the point its cliché.

But this dogma doesn’t exist all over the world.

Buffett had a lot to do with American exceptionalism. To shareholders benefit.

As Andrew Ross Sorkin put it:

Taking into account the announcement, Berkshire’s cash holdings (which keep going up), might also be tied to the succession plan, not just market conditions.

The Myth We Can’t Stop Chasing

Many investors will try to engineer what made him great.

But here’s the truth: You can’t replicate it.

Not the structure. Not the returns. Not the world he played in.

As Barry Ritholtz put it:

“You’re not Buffett. And neither am I.”

Attempting to emulate Buffett, and Munger, is a rookie thought.

Especially from your E*TRADE account or your JP Morgan self-directed IRA.

Instead, as investors we should focus on the principals he recommended:

• Bet on America: Maintain confidence in the U.S. economy's long-term prospects.

• Manage Your Own Behavior: Emotional discipline is crucial in investing.

• Own Broad Indexes: For most, diversified index funds are the most effective investment vehicles.

And of course to do that, you have to be able to tune out the noise. Which in todays information overload reality is getting harder to do everyday.

Putting your head in the ground might have been possible in 1980 when everybody just read the WSJ, and got a yearly portfolio performance review on the email.

But not today.

That’s why I started The Young Investor.

Not to give you predictions or play guru.

But to help you actually make sense of markets.
To skip the sales pitch, dodge the misinformation, and cut through the noise.

To read between the headlines.
To call out the narratives, and question them.

Sometimes? Even laugh at the narrative 😆 

Because Buffett taught us that most of the time very little of the short-term noise really matters.

If there’s one thing you can emulate from him, is his ability to stick with a rational investing plan…long enough for it to compound.

That’s the part every investor, including you and me, start questioning the moment markets get weird.

One Last Omaha Moment

To finish on a funny note.

Near the end of the Q&A, a shareholder stood up and asked Buffett about Berkshire’s recent acquisition of Portillo’s Hot Dogs.

Buffett looked a little confused, smiled, and passed the mic to Greg Abel, who also looked completely lost at the question.

“I might have to phone a friend,” he laughed, glancing around the stage.

For a few awkward moments, it seemed like neither Buffett nor his handpicked successor knew they’d recently bought a hot dog chain.

Then a message arrived on Greg’s phone.

Mystery solved!

“That’s Berkshire Partners,” he clarified. “Different firm. Not us.”

Buffett chuckled next to him. The room burst out laughing.

And just like that, the last annual meeting with Warren Buffett as CEO of Berkshire Hathaway ended on a mix-up about chili dogs.

🤣 🤣 

Stocks Keep Going Up 😁 

Markets have been quietly grinding their way back.

Just a nice, steady rebound. The kind that makes doomer narratives feel a little awkward.

Volatility’s crashed. Risk appetite’s creeping back.

Part of the secret sauce is Trump. Who continues to promise imminent trade deals and talk up the stock market.

I think he remembered how to make his voters happy 🤣 

If this keeps up, April might end up looking like nothing more than a garden-variety dip in a long-running bull market.

But, plenty of people are still calling for another leg down.

Recession warnings. Sticky inflation. “Something’s gotta break” energy.

It’s all still out there.

So how do you play it?

Stay long. Stay patient.

But also? Be honest with yourself.

If April made you sweat. If there was a position you really wished you didn’t hold when everything was crashing, now’s your second chance to clean it up.

Reduce that position. Diversify your portfolio a little bit more.

The objective: have the portfolio that you will hold no matter what happens, not which one gets you the highest returns.

INTERESTING CHARTS of the week

Hedge fund managers deliver pretty good returns and plenty of alpha, the problem is that nearly all of that is wiped away in fees & taxes for most investors:

Over in oil & gas, things are rough, with crude oil prices dropping fast.

The driver? Saudi Arabia pushing OPEC to boost supply for the second time this year.

Everyone smart I know thinks crown prince MBS is doing it to win over Trump. What he wants in return? We’ll find out soon enough.

The job market for new college graduates has been getting worse over the last couple of years.

Could ai be cutting the need for some entry level jobs?

PARTING WISDOM

from URSULA K. LE GUIN:

The woman behind the QUOTE → Ursula K. Le Guin wrote sci-fi and fantasy that asked simple but powerful questions, about how we live, who has power, and what could be different. Her books like Earthsea won multiple Hugo and Nebula awards, as well as a National Book Award.

thanks for reading and have a great weekend,

Al Atencio