“I shall not look upon his like again,” declares Hamlet, ruminating over the loss of his father at the beginning of the play. Since Warren Buffett announced his retirement from Berkshire Hathaway this month, financial commentators have been asking themselves the same question: can anyone live up to Buffett’s successes?
And they are remarkable. Buffett started to use Berkshire Hathaway — a New England textile business — as his investment vehicle in June 1965. Over the next 60 years he managed to compound the Berkshire share price at 20 per cent a year, a rate twice that of the S&P 500, a fantastic record, as we have spent the past two weeks hearing about.
To determine whether or not someone can match Buffett’s record we first need to examine how he achieved it. Buffett was a good stockpicker, but this alone does not account for Berkshire’s performance, and in any event it was not solely his ability which drove this aspect of its returns. He was able to forge an effective partnership with Charlie Munger, Berkshire’s vice-chair, who died in 2023. Munger must have some of the credit for turning Buffett from an investor obsessed with valuation — that led to him controlling an ailing textile company — into a quality investor who sought good businesses which could compound in value. He also helped educate the Sage in the use of float.