Buffett quits as CEO, leaves a shining example

Warren Buffett, 94, CEO of Berkshire Hathaway for 65 years, has become a byword for investment genius. So, when he announced that he would step down as CEO at the end of 2025, and Vice Chairman Greg Abel will take over, there was not so much apprehension as there was speculation about the future.

This was partly reflected in the tributes that American business honchos had paid Buffett on his announcement. Jamie Dimon, CEO of JP Morgan Chase & Co, summed it up when he said, “Warren Buffett represents everything that is good about American capitalism and America itself – investing in the growth of our nations and its businesses with integrity, optimism and common sense.” It is indeed the case that Buffett remained steady even as the American market and economy passed through phases of turmoil, steep fall in growth as well as windfalls.

Buffett did not get overexcited and overoptimistic when the going was good, and he did not lose heart when things turned difficult. And also he did not look beyond America for investment opportunities.

It is true that he did not found any companies, did not directly run businesses. But he invested in companies and businesses which seemed to run well. One of them was Microsoft. So, Buffett displayed judgment, which turned out to be both shrewd and prudent. He did not put all his eggs in one basket as it were. Berkshire Hathaway has invested in 189 enterprises.

Buffett spread his investment, and it was a clever portfolio management. And he did not speculate and go into the stock market. He invested in the economy directly by investing in companies. And he remained a stable investor through stress and storm that open markets are subjected to. Dimon is indeed right when he says that Buffett represents all that is good in American capitalism.

Buffett at another level might seem an exception because capitalism in America and across the world is going through a bad phase of deceleration, and even crisis of confidence. People are hesitating to invest even as business prospects seem to be shrinking for various reasons.

Even as investments have entered the pause phase, consumption has declined too. The middle classes are spending less and are contributing to the economic slowdown. In many ways, Buffett’s steadiness could serve as a good example for many of the market players both in America and in the rest of the capitalist economies of the world.

One of the big lessons that Buffett leaves behind is: stay invested. Even as he steps down as CEO of Berkshire Hathaway, he is keeping his shares in the company. And his reason: “The decision to keep every share is an economic decision because I think the prospects of Berkshire will be better under Greg’s management than mine.”

It is his declaration of confidence in his successor and a reassurance to all the shareholders in the company. It is a known fact that one of the important aspects of the market is confidence in the market. He is sticking to his lifelong practice of prudence.

President Donald Trump should indeed be looking to Warren Buffett for making a success of Making America Great Again (MAGA) instead of looking to irrationally exuberant market players like Elon Musk. America will not become great by forcing manufacturers to make in America. The solution lies in what works in the American markets, and the success of Buffett’s investments should make that clear. Americans need to invest better to make the economy strong. A captain of good business like Buffett shows that it is important to be sober and rational in making economic decisions.