FROM THE BLOG

In some ways, the town of Omaha, Nebraska, remains much as it did 60 years ago. It hosts the College Baseball World Series each year, as it has since 1950, and ranks as the 41st most populous city in America, as it did sixty years ago as well. While some football fans still believe the town was incorporated in 2012 when Peyton Manning brought his audible of “Omaha, Omaha” to the Denver Broncos, public records show the town existed for at least 150 years before that.

A much more widely accepted inflection point came in 1965 when a struggling textile company moved its headquarters to Omaha, the hometown of its new controlling shareholder, Warren Buffett. Berkshire Hathaway would not succeed in the textile business as it turns out, but would become one of the most important companies in the world over the next 60 years, reaching a market cap of more than $1 trillion under Mr. Buffett’s leadership.

“I will bet on America the rest of my life. And I hope my successors at Berkshire do it too.”  – 2020 Berkshire Hathaway Annual Meeting

In November 2025, Berkshire Hathaway published a “Thanksgiving Message from Warren Buffett,” which disclosed Mr. Buffett’s plan to “go quiet” as Greg Abel (new CEO of Berkshire) takes on the responsibility of guiding Berkshire Hathaway this month. Mr. Buffett’s 60-year track record thus concludes with an astonishing 20% compounded annual return with him at the helm; roughly twice that of the S&P 500 over the same period.  A $10,000 investment in Berkshire back in 1965 would be worth over $60 million today.

Buffett’s journey with Berkshire is the stuff of legend and his secrets to investing have never been well guarded. He sought to avoid fads, made value-driven investments, exerted a great deal of patience, and focused on better understanding businesses rather than markets. He has often said, “All there is to investing is picking good stocks at good times and staying with them as long as they remain good companies.” Sounds easy, but of course it wasn’t always so.

“It’s only when the tide goes out that you learn who’s been swimming naked.” – 1992 Berkshire Hathaway Shareholder Letter

For instance, Mr. Buffett felt that he didn’t understand the business model of telecommunication companies in the late-1990s and for this reason, Berkshire made no meaningful investments within the dot.com area as the bubble was truly inflating. By December 1999, after Berkshire was down 23% in a year, the Nasdaq 100 doubled, investors grumbled, and Barron’s ran with a cover mirroring the sentiment surrounding many “value” portfolios at the time, “What’s Wrong, Warren?”

Of course, the tide did go out on the Tech bubble shortly thereafter, and many highly levered companies were shown to have been “swimming naked.”  Berkshire would go on to nearly double over the next decade, while the Nasdaq 100 fell nearly 50%.

“If you’re smart, you don’t need leverage; if you’re dumb, it will ruin you.” – 2019 Berkshire Hathaway Shareholder Letter

Buffett describes leverage not as a multiplier of returns, but as an amplifier of folly. It’s a line that echoes through decades of shareholder letters and annual meetings and may be the most prescient of his teachings. “A leveraged portfolio forces you to act irrationally when markets are irrational, as opposed to acting rationally when markets are irrational.”  Leverage doesn’t just magnify gains; it also weaponizes losses, compelling investors toward emotional sales at the worst moments.

“Our stock price will move capriciously, occasionally falling 50% or so as has happened three times in 60 years under present management. Don’t despair; America will come back, and so will Berkshire shares.” – 2025 Berkshire Hathaway Thanksgiving Message

At 95 years old with a 60-yr track record in his rearview mirror, Mr. Buffett’s musings on leverage are far from abstract philosophies. He navigated Long-Term Capital Management’s 1998 implosion, the dot.com collapse, 2008’s financial crisis, COVID-19, and numerous subprime volatility events in a position to be generally opportunistic upon asset price declines rather than capitulatory. At each turn, he left himself and his investors in a position to invest further in American ingenuity and exceptionalism at some of the darkest moments in modern market history, when others were forced to close shop. As he has said, in his lifetime, “It has never paid to bet against America.”

In his final letter to shareholders as CEO of Berkshire Hathaway, Mr. Buffett leaves us with these final thoughts: “Choose your heroes very carefully and then emulate them. You will never be perfect, but you can always be better.”

As Mr. Buffett moves from the spotlight to a more silent snap count, we could all do far worse than choosing the Oracle of Omaha as that which we emulate.

Later,

Paul Keeton
Chief Investment Officer

Posted by Prospera Financial