Berkshire post Buffet

For 20(?) years I’ve used berkshire hathaway as a balance to the rest of my tech heave portfolio. And buffet has been great but he and munger are gone now. I could get out now via an exchange fund but I would basically be betting that berkshire will underform the tech heave sp 500 by 0.53% if I do that.

So I asked chat gpt here’s the AI slop below.

Will Berkshire Hathaway Still Beat the Market After Buffett?

A question I’ve been thinking about while considering whether to exchange Berkshire Hathaway stock into a diversification fund:

Why assign something like a 40% probability that Berkshire still outperforms the market once Warren Buffett and Charlie Munger are gone?

Buffett and Munger were extraordinary outliers. Expecting their successors to replicate that performance seems unrealistic. But Berkshire is also not a normal company — it has structural advantages that could still generate some alpha.

Below is how I think about the question.

1. First principle: Buffett’s performance was statistically extreme

From 1965–2023 approximately:

Sustaining ~10% annual alpha for nearly 60 years is almost unheard of in financial history.

Implication:

Even if Berkshire’s next leaders are excellent, the base-rate expectation is regression toward the market average.

The real question therefore becomes:

Does Berkshire still possess structural advantages that could generate some modest alpha even without Buffett?

2. Greg Abel (future CEO)

Background

Greg Abel currently runs Berkshire’s non-insurance operating businesses and previously led Berkshire Hathaway Energy.

Under his leadership:

• MidAmerican / Berkshire Hathaway Energy grew from a ~$2B acquisition
• to a $100B+ enterprise
• with major expansion into renewables and infrastructure.

Strengths

Investors tend to view Abel as strong in three areas:

• operational discipline
• large-scale capital deployment
• internal credibility with Buffett

Buffett himself has repeatedly said:

“Greg understands capital allocation.”

That is a remarkable endorsement coming from Buffett.

Limitations

However, Abel is not Buffett.

He is:

• not a public equities investor
• not known for macro insight
• not a famous stock picker

Abel’s role will likely be more about capital allocation across Berkshire’s businesses, not selecting individual stocks.

Confidence: very high.

3. Todd Combs and Ted Weschler (investment managers)

These two investment managers already run a significant portion of Berkshire’s equity portfolio.

Estimated capital under management inside Berkshire:

They have been responsible for several notable investments widely believed to include:

• Apple position expansion
• Snowflake
• Amazon
• Charter Communications

Their historical records

Ted Weschler

• Ran Peninsula Capital
• Reportedly achieved ~30% annual returns over ~20 years

Todd Combs

• Ran Castle Point Capital
• Generated ~13–14% annual returns

Both are impressive investors, but neither has demonstrated Buffett-level results over decades with massive capital.

4. Structural advantages Berkshire still has

Even without Buffett’s stock picking ability, Berkshire retains several advantages that few companies possess.

Insurance float

Berkshire’s insurance subsidiaries generate enormous float.

Roughly: ~$160B+

This float effectively acts as low-cost leverage.

Most investment firms cannot replicate this structure.

Permanent capital

Unlike mutual funds or hedge funds, Berkshire never faces:

• investor redemptions
• quarterly capital flows
• forced selling

This allows Berkshire to hold investments far longer than typical asset managers.

Opportunistic crisis investing

During financial crises Berkshire has repeatedly negotiated unusually favorable deals:

These deals occur because Berkshire can deploy huge amounts of capital quickly.

Massive cash reserves

Berkshire currently holds roughly: $160B+ in cash and T-bills

In a financial crisis this becomes extremely valuable optionality.

5. Reasons Berkshire could underperform

There are also real structural headwinds.

Size

Berkshire’s market capitalization is roughly: ~$900B

At that scale it becomes difficult to find investments large enough to materially move the needle.

Apple concentration

Apple has represented roughly 40%+ of Berkshire’s public equity portfolio.

Future Berkshire performance is therefore heavily linked to Apple’s trajectory.

Cultural dependence on Buffett

Buffett shaped:

• Berkshire’s acquisition discipline
• its reputation for fair deals
• its investor trust

That reputation may weaken somewhat after he is gone.

6. A realistic probability model

Based on historical base rates for great investors and Berkshire’s structural advantages:

This leads to an expected alpha near zero but slightly positive, which is why I assign roughly a 40% chance that Berkshire still modestly outperforms the market.

Confidence: moderate (~60%).

7. The real decision framework

For investors deciding whether to hold Berkshire or diversify, the question becomes:

Do you believe Berkshire will beat the market by more than ~0.5% annually?

Why 0.5%?

Because that is roughly the annual cost of many diversification strategies such as exchange funds.

If Berkshire’s expected excess return is:

• >0.5% annually → holding Berkshire may be rational
• <0.5% annually → diversification may be preferable

8. My current view

My expectation for Berkshire over the next couple of decades:

In other words:

Berkshire will likely remain an exceptionally well-run conglomerate that performs roughly like the market, perhaps slightly better in some environments.

Which is still a remarkable outcome for a $900B company.

One final observation

Going forward, Berkshire’s biggest performance driver may not be stock picking at all.

It may simply be interest rates.

With over $160B in Treasury bills, every 1% increase in short-term rates generates roughly: ~$1.6B additional annual earnings

That dynamic did not exist during the zero-rate era — and it may shape Berkshire’s future returns more than most investors realize.