For over six decades, Warren Buffett has steered this ship with a simple philosophy: buy great businesses, hold them forever, and never bet against America. The result? A compounding machine that has turned $10,000 in 1965 into more than $500 million today.
“Our goal is to buy really good businesses and big businesses and businesses where we like the management and businesses that we think we can grow over time. Berkshire is about building earning power…. and we try to do that every day, or every week, or every month. And we don’t get opportunities that often.” Warren Buffett
Let’s be clear: Berkshire doesn’t sell hype. It sells resilience.
The numbers speak for themselves. Since 1965, Berkshire’s compound annual growth rate (CAGR) has been an impressive 19.8%, almost double the S&P 500’s 10.2% (including dividends) over the same timeframe.
So, how does it work?
Berkshire owns a wide mix of businesses across insurance, rail, utilities, manufacturing, retail, and services. From GEICO and BNSF Railway to See’s Candies, Duracell, and Dairy Queen—it’s a real-economy empire. Add to that a $300B+ equity portfolio with monster stakes in Apple (26% of total holdings), Bank of America, Coca-Cola, and American Express and you start to see the scale. The top 10 stocks comprise 88% of the portfolio, with the top five accounting for 71%.
One of Berkshire’s most enduring advantages is its insurance float—hundreds of billions in premiums collected but not yet paid out. This gives Buffett and his team a low-cost source of capital to reinvest, fuelling further compounding. Layer on a decentralised operating model, where subsidiaries are run like owner-operated businesses and you get a culture of trust, frugality and performance without bureaucracy.
Then there’s the cash pile: $348 billion, the biggest of any public company in the U.S. It’s so big, Buffett recently said, “I’d rather have $100 billion in Japan than $20 billion here but size is our enemy.” Deploying that much capital into high-return opportunities is no small feat. In fact, Berkshire could afford to buy 479 of the 500 S&P companies outright with just its cash.
Berkshire’s DNA is fundamentally built upon three pillars: culture, capital and a deep sense of ownership. Buffett himself owns 13.7% of the company, worth roughly $144.4 billion. His wife owns another $2.4 billion. In total, insiders collectively hold 14%, or about $148 billion, in ownership. This isn’t a company run by distant executives chasing short-term bonuses—it’s run by people who are deeply invested. That alignment shows. The culture is built on frugality, autonomy, and trust—subsidiaries are run like independent businesses and shareholder interests are always front and centre. As Buffett often says, “You only have to get rich once. Don’t risk what you have and need for what you don’t.”
However it’s not without challenges. Growth has slowed—revenue CAGR over the last five years is only around 7% p.a. The valuation is rich too: Berkshire trades at 13x earnings and an eye-watering 85x free cash flow. That’s pricing in future growth that may never come and some investors are asking, What comes next?
The answer likely lies in capital allocation. Buffett has always emphasised that rationality and restraint matter more than spreadsheets. That mindset has kept Berkshire’s balance sheet bulletproof and while he’s cautious—especially about U.S. fiscal policy—he remains bullish on America. “Trade should not be a weapon,” he said recently, warning against protectionism and economic warfare.
Leadership is evolving, too. At age 94, Buffett will step down as CEO at the end of 2025, transitioning to Executive Chairman. Greg Abel takes over in January 2026, and while succession risk remains a concern, Abel is widely respected as a thoughtful and capable operator.
Looking ahead, Berkshire has modest growth potential—insurance premiums are projected to rise 5% annually, rail volume could grow 2–3% and renewable energy capacity at Berkshire Hathaway Energy is set to double by 2030. The equity portfolio continues to spin off cash, and if valuations reset, Berkshire will be ready to strike. As Buffett says, “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.”
Still, there are risks. The company’s complexity invites a “conglomerate discount” from investors. Its heavy concentration in a few names—especially Apple—adds vulnerability and even a company this great can’t outrun scale forever. As Buffett admits, “Size is becoming our enemy.”
Berkshire Hathaway offers investors long-term stability, world-class capital allocation, and a fortress balance sheet, making it an excellent choice for wealth preservation and steady compounding. While it may not be a flashy investment or provide quick returns, its enduring nature is a core truth: Berkshire is built to last.
What makes Berkshire truly great isn’t just its different businesses but its underlying philosophy. It’s all about staying rational when everyone else is panicking, knowing what you’re good at (and what you’re not) and having the guts to jump on opportunities when they pop up. Basically, the biggest investing edge you can have is a calm, patient mindset.
You only have to get rich once. Berkshire’s been showing us how to do that since 1965.
Awet Ghirmay, Head of Investment Research
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The value of investments and the income derived from them may fall as well as rise. You may not get back what you invest. This communication is for general information only and is not intended to be individual advice. You are recommended to seek competent professional advice before taking any action. All statements concerning the tax treatment of products and their benefits are based on our understanding of current tax law and HM Revenue and Customs practice. Levels and bases of tax relief are subject to change. This blog is based on my own observations and opinions.
