The Oracle has spoken and this time, with a succession plan, a warning about PE in insurance, and a reminder that good things come to those who wait.
The big news was that Warren Buffett announced that Greg Abel is set to become CEO at the end of this year. When asked about succeeding Buffett and his approach to capital allocation, Abel joked, “So um this bar is not too high.” Buffett offered to be the Munger to Abel’s Buffett.
As expected the $300 billion cash pile got its fair share of attention. With respect to that cash pile, Buffett made clear the massive cash pile isn't a strategic hedge or a handoff gift for Abel—just a reflection of how few opportunities meet his bar: understandable, attractively priced, and safe. ‘We’d spend $100 billion in a second,’ he said, ‘but things don’t come in an orderly fashion—and they never will.’
Buffett reminded us that for most investors a simple, passive investment strategy that stays the course will work extraordinarily well, but his job is to do better, so at times he’s made a lot of money by not being fully invested and waiting.
When it comes to waiting, Buffett reminded us that patience is what allows us to be prepared to act. The dichotomy of being abundantly patient, but being prepared to act quickly when others can’t (think during the GFC). He talked about his 5 second mind and ability to say no or yes to an opportunity quickly, something that only comes from a deep understanding of the types of investment opportunities that meet his criteria: “the main thing you have to do is you have to be willing to hang up after 5 seconds and you have to be willing to say yes after 5 .Absolutely."
In something I wasn’t expecting, Buffett and Jain talked about Private Equity’s expansion into insurance, noting the risks they take through leverage and credit risk. Reminding everyone that insurance is a business where you get the gains up front while the losses may not show up for years and that things could “end in tears”.
Buffett also spent some time discussing U.S. exceptionalism and while I won’t delve into his comments on trade (they are everywhere), Buffett expressed belief that the stability of the U.S. currency and the societal stability it affords are true American assets. Declaring the U.S. to be “the best place to and time to be alive by miles..”
Perhaps my favorite line of the entire meeting was when Buffett was discussing the uneven nature of investment opportunities and comparing it to the increasing probability of death with age, that if you wait long enough, like death a good investment opportunity is certain. Buffett then mentioned that age records are held by females, and added, "I tried to get Charlie to have a sex change so he could test out whether but uh he did pretty well for being a male I'll put it that way."
The Real Investment Is In Life
As always Warren Buffett provided lasting wisdom for the audience. He reminded us that investing success requires a balance of patient preparation and the decisive willingness to act quickly when a true opportunity presents itself. But in true Buffett fashion, his remarks highlighted that a fulfilling life and successful career are deeply influenced by choosing admirable people to associate with, fostering trust, maintaining a rational, long-term perspective focused on underlying value, and embracing hard work and continuous curiosity. That’s a message that, like Buffett, will surely have a long shelf life. (You can find more wisdom from Buffett in today’s XTOD’s)
Some Things Need To Expire
And one of those things is the continual “enshittification” of the customer experience offered by most large companies. If you’re unfamiliar with the term, it’s a real word that is in the dictionary, and describes the process that ensues once a company has a network effect that is locked in they stop serving the customer and start to claw back all of the value for themselves. Think of, say a cable provider and your experience with said provider.
Perhaps taking advice from Buffett’s most recent shareholder letter, Lyft’s CEO, David Risher, tackled an unattractive truth: “the rideshare experience had become worse than it was a decade ago.” In Lyft’s annual shareholder letter, Risher discussed the “enshittificaiton” process, “the ongoing degradation of a once-great product or experience, often in the blind pursuit of profit.” Risher believes one of the reasons for this enshittification tendency is that we operate under an additive bias: humans like to add things to solve problems rather than taking things away. The result is we end up with products and features that offer “dubious value”.
Risher’s solution is “Falcon Mode”, the ability to maintain a broad, high-level perspective, but being able to “swoop down” into the details to determine the real customer pain points. It’s about really engaging in the customer experience so you can turn vicious cycles into virtuous ones.
Just like Buffett would opine, you have to get past the noise, the superficial and get to the essential elements.
One Last Note From The Oracle As We Start The Week
Buffett: "nobody knows what the market is going to do tomorrow, next week, next month. And nobody knows what business is going to do tomorrow next week or next month," people still spend time talking about it. They do this "because it's.. it's easy to talk about and... it has no value". Buffett added, "I've never found anybody I wanted to listen to on the subject"
Jobs Data Recap (ICYMI)
Seemingly old news now, but Friday’s Jobs numbers beat expectations, coming in at +177K with the unemployment rate holding at 4.2%. Within the data there were some signs of the impact of immigration policy and tariffs with jobs slowing in areas impacted by both of those policy topics.
All Eyes On The Fed - But Really On Tariffs
The FOMC meets this Wednesday in what will likely be another snoozer of an episode for the Powell Rangers as rates are a lock to be held at 4.25% to 4.50%. Nonetheless we enter the week with the S&P on a 9-day winning streak and back to 5,687. The 2Y yield at 3.83% and the 10Y at 4.31%. On the week ahead we get:
Monday: Drink Tequila, ISM Services, 3-year auction
Tuesday: 10-year auction
Wednesday: FOMC Decision
Thursday: BoE Decision, jobless claims, productivity
Friday: Fedspeak
And now proceed to enjoy your tariffed tequila for Cinco De Mayo. Or as Buffett might put it: drink the tequila, but know what’s in the bottle.
XTOD’s:
XTOD: Markets are pricing H4L island again with rising two year yields and rising stock prices.
XTOD: WB on leadership and organisational culture: “Many people want to be managed, need help in being managed. Some don’t. Some you just leave alone.”
“People want a manager that they admire. And they’re not going to admire them if those people profess to behave in one manner and behave in another.” “It’s easier, and this is a sad thing, for an organisation to see its quality move downward than it is upward.” “Once you start deviating downward, it is really contagious and it is hard to rebuild.” “You really need someone that behaves well on top and is not playing games for their own benefit.”
XTOD: Warren Buffett at Berkshire Hathaway's 2025 annual shareholder meeting ⟶ "check your emotions at the door when you invest." #BRK2025
Becky: “Has the recent market volatility presented Berkshire with opportunities?”
WEB: “Well, I can give you a good answer to the second part which is no. What has happened in the last 30, 45 or 100 days, whatever you want to pick up, this is really nothing.
There's been three times since we acquired Berkshire when $BRK has gone down 50% in a very short period of time. During these three different times nothing was fundamentally wrong with the company at any time. But this currently? Is not a huge move.
The Dow Jones average was 381 in September of 1929 it got down to 42 so that's like going from 100 to 11. This right now has not been the dramatic bear market or anything of the sort […] If it makes a difference to you whether your stocks are down 15% or not you need to get a somewhat different investment philosophy because the world is not going to adapt to you, you're going to have to adapt to the world.
And you will see a period in the next 20 years that will be what somebody in the market described one time as a “hair curler” compared to anything you’ve seen before. I mean that just happens periodically. The world makes big, big, big mistakes and surprises happen in dramatic ways and the more sophisticated the system gets the more these surprises can be out of right field.
That's just part of the stock market and that's what makes it a good place to focus your efforts if you've got the proper temperament for it. And it’s a terrible place to get involved if you get frightened by markets that decline and get excited when stock markets go up. I don't mean to sound particularly critical. I mean I know people have emotions but you gotta check them at the door when you invest.”
XTOD: “Pain is inevitable. Suffering is optional. Say you’re running and you think, ‘Man, this hurts, I can’t take it anymore. The ‘hurt’ part is an unavoidable reality, but whether or not you can stand anymore is up to the runner himself.”
― Haruki Murakami, What I Talk About When I Talk About Running
XTOD: Markets will recover long before things are clear and people will say "wow, amazing, so strange, makes no sense" even though that's the entire 200 year history of the stock market.
https://x.com/dampedspring/status/1918979907356373423
https://x.com/safalniveshak/status/1918723203675140136
https://x.com/patient_capital/status/1918696648324116787
https://x.com/tferriss/status/1917955950763290996
https://x.com/morganhousel/status/1918407981110313110
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