Warren Buffett's "Last Letter" in Full: "I Was Just Lucky," But "Father Time" Has Caught Up

In his letter, Buffett used the British expression "I’m ‘going quiet’" to mark the end of his legendary 60-year investment career.

Written by: Ye Zhen

Source: Wallstreetcn

Buffett announced to his shareholders that he is about to "go quiet," marking the end of his illustrious sixty-year career at the helm of Berkshire Hathaway and ushering in a historic turning point for the corporate empire he built.

In the shareholder letter released on Monday, Buffett used the British expression "I’m ‘going quiet’" to announce a major transition in his career. The 95-year-old Buffett made it clear that he will step down as CEO at the end of this year and formally withdraw from the company's daily management.

Buffett also confirmed that the next annual company letter, which has attracted global investor attention, will be written by someone else. However, Buffett stated that he will continue to communicate with shareholders about his philanthropic endeavors through his annual Thanksgiving letter.

This succession plan has already impacted market sentiment. Since Buffett first announced his retirement plan in May this year, Berkshire’s Class A shares have fallen by about 8%. In his letter, Buffett said that to ensure a smooth transition for his successor Greg Abel, he will continue to hold "a considerable portion" of Berkshire’s Class A shares.

While announcing his personal role change, Buffett also used this letter to deliver his signature business maxims and ethical warnings. He harshly criticized the culture of greed in the corporate world, especially the unchecked competition over executive compensation, leaving a profound admonition for his successor and the entire business community.

Words of Wisdom for His Successor

In the letter, Buffett gave clear warnings to future leaders, focusing on corporate greed. He pointed out that executive compensation disclosure requirements have had unexpected negative effects, sparking a competition among corporate leaders to see "who earns more."

"What often troubles those very wealthy CEOs is that other CEOs become even wealthier," Buffett wrote. "Envy and greed go hand in hand." He emphasized that Berkshire should especially avoid hiring CEOs who expect to retire at 65, aspire to become "look-at-me-rich," or attempt to establish a "dynasty."

Adhering to Long-Termism

Buffett’s investment philosophy stands in stark contrast to the evolution of the financial industry in recent decades. In an era of speculative assets like cryptocurrencies and trading times measured in milliseconds, his advocacy of long-term value investing is particularly unique. His candid communication with shareholders, whether through annual letters or marathon Q&A sessions at the Omaha annual shareholder meeting, has become a hallmark of his tenure.

Since his first investment in the then-troubled textile company Berkshire in 1962, Buffett has developed it into a vast business empire spanning well-known consumer brands like Dairy Queen and Fruit of the Loom, as well as insurance, manufacturing, utilities, and one of North America’s largest railroads. He wrote: "Berkshire’s way of operating will always make it an asset to America and avoid activities that could reduce it to a supplicant."

Ongoing Philanthropy

While announcing his career transition, Buffett also announced his latest charitable donation. According to the letter, he has donated 2.7 million shares of Berkshire Class B stock, worth about 1.3 billions USD, to four family foundations managed by his children. This is in line with the charitable giving plans he has announced in his Thanksgiving letters in recent years.

Buffett first pledged in 2006 to donate all of his Berkshire shares to charity. Since then, he, Bill Gates, and Melinda French Gates jointly launched the Giving Pledge, advocating for the world’s wealthiest to donate more than half of their wealth to charity.

Click the link to read Buffett’s full letter to shareholders. Below is the English translation:

To all shareholders:

I will no longer write Berkshire’s annual report, nor will I speak at length at the annual meeting. In the words of the British, I will "go quiet."

Sort of.

Greg Abel will take over at the end of the year. He is an outstanding manager, a tireless worker, and a candid communicator. I wish him a long tenure.

I will continue to talk to you and my children about Berkshire’s situation through my annual Thanksgiving address. Berkshire’s individual shareholders are a very special group of people who always generously share their gains with those less fortunate. I enjoy the opportunity to stay in touch with you. This year, please allow me to reminisce a bit. Afterwards, I will talk about my plans for the distribution of my Berkshire shares. Finally, I will share some business and personal views.

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With Thanksgiving approaching, I feel both grateful and surprised to have lived to 95. When I was young, such an outcome seemed unlikely. Earlier, I almost died.

That was in 1938, when Omaha residents considered local hospitals to be either Catholic or Protestant, a classification that seemed natural at the time.

Our family doctor, Harley Holtz, was a friendly Catholic who always carried a black medical bag when making house calls. Dr. Holtz called me "Little Captain" and didn’t charge much for his visits. In 1938, I had a severe stomachache, and after examining me, Dr. Holtz said I’d be fine the next morning.

He then went home for dinner and played some bridge. However, Dr. Holtz couldn’t forget my rather odd symptoms and later that evening took me to St. Catherine’s Hospital for an emergency appendectomy. For the next three weeks, I felt like I was in a monastery and began to enjoy my new "pulpit." I liked to talk—yes, even then—and the nuns were very kind to me.

The best part was that my third-grade teacher, Miss Madsen, had all 30 classmates write me a letter. I probably threw away the boys’ letters, but I read the girls’ letters over and over; being hospitalized had its perks.

The happiest thing during my recovery—though the first week was still dangerous—was a gift from my beloved Aunt Edie. She brought me a very professional-looking fingerprint kit, and I immediately took fingerprints of all the nuns caring for me. (I was probably the first Protestant child they’d seen at St. Catherine’s Hospital, and they didn’t know what to expect from me.)

My idea—completely fanciful, of course—was that someday a nun would break the law, and the FBI would discover they had never taken the nuns’ fingerprints. The FBI and its director, J. Edgar Hoover, were already revered in 1930s America, and I imagined Mr. Hoover coming to Omaha to see my precious fingerprint collection. I also fantasized that J. Edgar and I would quickly catch and arrest the wayward nun. National fame seemed within reach.

Obviously, my fantasy never came true. But ironically, I later learned that I should have taken J. Edgar’s fingerprints, as he later fell from grace for abuse of power.

Well, that was Omaha in the 1930s, when my friends and I all longed for a sled, a bicycle, a baseball glove, and an electric train. Let’s look at a few other kids from that era who lived nearby and had a big impact on me, though I didn’t know of their existence for a long time.

Let’s start with Charlie Munger, my friend of 64 years. In the 1930s, Charlie lived just a block from the house I’ve lived in since 1958.

Earlier, I almost became friends with Charlie. He’s six and a half years older than me, and in the summer of 1940, he worked ten hours a day at his grandfather’s grocery store for $2 a day. (Frugality is a Buffett family tradition.) The next year, I did similar work at the store, but I didn’t meet Charlie until 1959, when he was 35 and I was 28.

After serving in World War II, Charlie graduated from Harvard Law School and settled permanently in California. However, he always regarded his early years in Omaha as an important stage of life. For over sixty years, Charlie has had a huge influence on me; he’s been a great teacher and a protective "big brother." We’ve had differences but never arguments. He never says, "I told you so."

In 1958, I bought my first and only house. Of course, it’s in Omaha, about two miles from where I grew up (roughly speaking), less than two blocks from my in-laws’ house, about six blocks from the Buffett grocery store, and just a 6-7 minute drive to the office building where I’ve worked for 64 years.

Let’s talk about another Omahan, Stan Lipsey. In 1968, Stan sold the Omaha Sun (a weekly) to Berkshire and moved to Buffalo ten years later at my request. At that time, a Berkshire subsidiary owned the Buffalo Evening News, which was in a life-and-death struggle with the city’s only Sunday newspaper publisher—its morning paper competitor—and we were losing badly.

Stan eventually developed our new Sunday product, and for several years, our previously loss-making investment yielded annual (pre-tax) returns of over 100%. In the early 1980s, this $33 million investment was significant for Berkshire.

Stan grew up about five blocks from my house. One of Stan’s neighbors was young Walter Scott. Walter, as you may recall, brought MidAmerican Energy to Berkshire in 1999. He was also a Berkshire director until his death in 2021 and a close friend of mine. For decades, Walter was a philanthropic leader in Nebraska, leaving a deep mark on Omaha and the entire state.

Walter attended Benson High School, which I also planned to attend—until 1942, when my father unexpectedly defeated a four-term incumbent in a congressional race. Life is always full of surprises.

Wait, there’s more.

In 1959, Don Keough and his young family lived in a house across the street from mine, about 100 yards from the Munger family’s old home. At the time, Don was a coffee salesman, but he later became president of Coca-Cola and a loyal Berkshire director.

When I met Don, he earned $12,000 a year, and he and his wife Mickey were raising five children, all of whom attended Catholic school (which wasn’t cheap).

Our families quickly became close friends. Don came from a farm in northwest Iowa and graduated from Creighton University in Omaha. Early on, he married Omaha native Mickey. After joining Coca-Cola, Don quickly became famous worldwide.

In 1985, while Don was president of Coca-Cola, the company launched the ill-fated New Coke. Don gave a famous speech apologizing to the public and reintroduced "old" Coke. This turnaround happened after Don explained that letters addressed to "the supreme idiot" quickly landed on his desk. His "retraction" speech is a classic and can be watched on YouTube. He cheerfully admitted that Coca-Cola products actually belonged to the public, not the company. Sales then soared.

You can watch a wonderful interview with Don on CharlieRose.com. (Tom Murphy and Kay Graham also have some great segments.) Like Charlie Munger, Don was always a true Midwesterner—enthusiastic, friendly, and thoroughly American at heart.

Finally, Ajit Jain, born and raised in India, and Greg Abel, our soon-to-be CEO from Canada, both lived in Omaha for several years in the late 20th century. In fact, in the 1990s, Greg lived just a few blocks from me on Farnam Street, though we never met at the time.

Is there something magical in Omaha’s water?

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I lived in Washington, D.C. for a few years as a teenager (when my father was in Congress), and in 1954, I found a job in Manhattan that I thought I’d do for life. There, Ben Graham and Jerry Newman were very kind to me, and I made many lifelong friends. New York has a unique charm—it still does. However, just a year and a half later, in 1956, I returned to Omaha and have never left since.

Later, my three children and several grandchildren grew up in Omaha. My children always attended public schools (graduating from the same high school, which produced my father (class of 1921), my first wife Susie (class of 1950), Charlie, Stan Lipsey, Irv and Ron Blumpkin, who played key roles in the development of Nebraska Furniture Mart, and Jack Ringwalt (class of 1923), who founded National Indemnity Company and sold it to Berkshire in 1967, forming the foundation of our vast property and casualty insurance business).

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Our country has many great companies, great schools, and great medical institutions. Every place has its unique strengths and talented people. But I feel very fortunate to have made many lifelong friends, met my two wives, received a good education in public schools, met many interesting and friendly Omaha adults as a child, and made all kinds of friends in the Nebraska National Guard. In short, Nebraska has always been my true home.

Looking back, I think Berkshire and I have done better largely because we are rooted in Omaha. If I had been born elsewhere, the outcome might have been very different. America’s heartland is a great place to be born, raise a family, and start a business. My birth was pure luck—I drew an extraordinarily long straw.

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Now, let’s talk about my old age. My genes haven’t done me much good—the family longevity record (of course, the further back you go, the fuzzier the record) was 92 until I broke it. However, I’ve had wise, kind, and diligent Omaha doctors, starting with Dr. Harley Holtz and continuing to this day. At least three times, my life was saved by doctors not far from home. (But I’ve stopped fingerprinting nurses. A 95-year-old can have many quirks... but there’s a limit.)

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Living to such an old age requires great luck, dodging banana peels, natural disasters, drunk or distracted drivers, lightning strikes, and so on, every day.

But Lady Luck is fickle and—there’s no other word for it—extremely unfair. In many cases, our leaders and the wealthy get far more luck than they deserve—and these lucky ones are often reluctant to admit it. Some privileged children are born with lifelong financial security, while others face hellish circumstances in childhood, or worse, are disabled and deprived of everything I take for granted. In many densely populated parts of the world, I might have lived a miserable life, and my sisters would have had it even worse.

I was born in America in 1930, healthy, smart, white, and male. Wow! Thank you, Lady Luck. My sisters were just as smart and had better personalities, but their life prospects were very different. Lady Luck has favored me for most of my life, but she doesn’t have time for people in their nineties. Luck has its limits.

Father Time, on the other hand, is just the opposite. As I’ve grown older, he’s found me more and more interesting. He is invincible; everyone ultimately ends up on his "winners" list. When your balance, vision, hearing, and memory all start to decline, you know Father Time is near.

I entered old age later than most—the onset of aging varies from person to person—but once it appears, it’s undeniable.

To my surprise, I generally feel good. Although I move slowly and reading is increasingly difficult, I still work five days a week at the office, surrounded by outstanding people. Occasionally, I come up with useful ideas, or someone brings us a proposal we might not have otherwise received. Because of Berkshire’s size and market conditions, good ideas are rare—but not nonexistent.

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However, my unexpectedly long life has had significant and inevitable effects on my family and the realization of my philanthropic goals.

Let’s explore them.

What’s Next

My children are all past normal retirement age, at 72, 70, and 67. Expecting them—all at their peak in many ways—to delay aging as I have is clearly unrealistic. To increase the likelihood that they will handle almost all of my estate before the trustees I designate replace them, I need to accelerate lifetime giving to their three foundations. My children are now at their peak in experience and wisdom, but not yet elderly. This "honeymoon period" won’t last forever.

Fortunately, adjusting course is easy to implement. However, there’s an additional factor to consider: I want to retain a significant number of "A" shares until Berkshire shareholders have as much confidence in Greg as Charlie and I do. That level of trust shouldn’t take long. My children already fully support Greg, as do Berkshire’s directors.

Today, these three children are mature, intelligent, energetic, and instinctively capable of managing a large fortune. They will be active long after I’m gone, which will be their advantage. If necessary, they can take both proactive and reactive measures to deal with federal tax policy or other factors affecting philanthropy. They will likely need to adapt to dramatic changes in the world around them. Posthumous remote control has never worked well, and I’ve never had that impulse.

Fortunately, all three children inherited dominant genes from their mother. Over the years, I’ve gradually become a better role model for their thinking and behavior. However, I can never compare to their mother.

My children have three alternate guardians in case of any accidental death or disability. These three alternates are not ranked and are not tied to any specific child. They are all outstanding people with a clear understanding of the world. They have no conflicting motives.

I have assured my children that they don’t need to perform miracles or fear failure or disappointment. These are inevitable, and I’ve experienced them myself. They only need to make progress over what is usually achieved by government activities and/or private philanthropy, while recognizing the shortcomings of these methods of wealth redistribution.

Earlier, I envisioned all sorts of grand philanthropic plans. Despite my stubborn nature, these plans ultimately didn’t materialize. In my long life, I’ve also witnessed politicians’ clumsy wealth transfers, family decisions, and, of course, incompetent or eccentric philanthropists.

If my children do well, they can be sure that both their mother and I will be pleased. Their instincts are good, and each has years of practical experience, starting with small amounts and gradually increasing to over $500 million a year.

All three enjoy working long hours to help others, just in different ways.

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My accelerated giving to my children’s foundations is by no means due to any change in my outlook for Berkshire. Greg Abel has far exceeded my expectations when I first thought he should be Berkshire’s next CEO. He knows much more about many of our businesses and people than I do, and he quickly grasps issues that many CEOs never consider. Whether you’re talking about a CEO, a management consultant, a scholar, or a government official, I can’t think of anyone better suited than Greg to manage your and my savings.

For example, Greg’s understanding of the potential returns and risks of our property and casualty insurance business far exceeds that of many long-term executives in the field. I hope his health remains good for decades. If we’re lucky, Berkshire will need only five or six CEOs in the next century. We should especially avoid those who only think about retiring at 65, want to become conspicuously wealthy, or want to establish a family dynasty.

An unpleasant fact is that sometimes, an outstanding and loyal CEO of a parent or subsidiary company will develop dementia, Alzheimer’s, or other debilitating and long-lasting illnesses.

Charlie and I have encountered this issue several times but took no action. Such failures can lead to big problems. Boards must remain vigilant at the CEO level, and CEOs must be vigilant at the subsidiary level. Easier said than done, and I can cite examples from major companies in the past. All I can advise is that directors stay alert and dare to speak up.

During my lifetime, reformers have tried to embarrass CEOs by requiring disclosure of the ratio of CEO pay to average employee pay. As a result, proxy statements quickly ballooned from about 20 pages to over 100 pages.

But these well-intentioned measures have not worked and have backfired. In my observation, in most cases, when CEO A sees what competitor B’s CEO is getting, he hints to the board that he should be paid more. Of course, he also raises directors’ pay and is very careful in selecting compensation committee members. The new rules breed envy, not restraint.

This upward spiral seems to have a life of its own. What often bothers very wealthy CEOs is that other CEOs become wealthier. Envy and greed always go together. What advisor would recommend drastically cutting CEO or board pay?

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Overall, the prospects for Berkshire’s businesses are slightly above average, with several sizable and relatively uncorrelated gems. However, ten or twenty years from now, many companies will outperform Berkshire; our size also brings disadvantages.

The likelihood of Berkshire suffering a catastrophic disaster is smaller than any company I know. Moreover, Berkshire’s management and board are more focused on shareholder interests than almost any company I’m familiar with (and I’ve seen quite a few). Finally, Berkshire’s way of operating will always make it an asset to America and avoid activities that could reduce it to a supplicant. Over time, our managers should become quite wealthy—they bear significant responsibility—but they do not aspire to establish hereditary wealth or pursue conspicuous riches.

Our stock price will be volatile, sometimes dropping by about 50%, as has happened three times in the 60 years under current management. Don’t lose heart; America will recover, and Berkshire’s stock will rebound.

Final Thoughts

Perhaps this is a self-serving observation. I am happy to say that I am more satisfied with the second half of my life than the first. My advice: don’t blame yourself for past mistakes—at least learn a little from them, then move on. It’s never too late to improve. Find the right role models and emulate them. You can start with Tom Murphy—he’s the best.

Remember Alfred Nobel? He later became famous for establishing the Nobel Prize and is said to have read his own mistakenly published obituary when his brother died and the newspaper got it wrong. What he read shocked him and made him realize he should change his behavior.

Don’t count on the newsroom to make a mistake: think about what you want your obituary to say, and then strive to live that life.

Greatness does not come from amassing great wealth, gaining massive exposure, or wielding great power in government. When you help others in thousands of ways, you help the world. Good deeds cost nothing but are priceless. Whether you are religious or not, as a code of conduct, the Golden Rule is hard to beat.

I write this as someone who has carelessly made many mistakes but has been lucky enough to learn from some wonderful friends how to be a better person (though still far from perfect). Remember, the cleaning lady and the chairman are both people.

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Happy Thanksgiving to everyone reading this. Yes, even to the troublemakers; it’s never too late to change. Don’t forget to thank America for giving you the greatest opportunity. But America, in distributing rewards—inevitably—is fickle, and sometimes even mercenary.

Choose your role models carefully, then emulate them. You’ll never be perfect, but you can always get better.