Farewell to the sage

Published in The Sunday Times on 1st June 2025.

Such is the challenge of writing an investment column without mentioning Warren Buffett, that a few years ago, the Sunday Times business editor asked me to ease off on the Buffett references.

Sadly, this will likely be one of my last columns to mention the so-called Sage of Omaha. At Berkshire’s shareholder meeting this month, Buffett announced that he will retire at the end of the year, at the ripe old age of 95.

Despite having written about Buffett and Berkshire many times, oddly, I don’t think that there is much to be learned from his approach. In fact, his consistent advice to the average investor is to buy index funds, which is quite something, coming from the world’s most renowned stock picker.

Nor do I think there is much that the average professional investor can learn from Buffett. The way he structured his investment vehicle militates against capital being withdrawn at short notice—a perennial problem for fund managers, whether due to poor relative performance or market calamities which prompt people to sell. 

Buffett’s capital is truly patient and long-term. Moreover, he secures low-cost, long-term leverage from insurance float, amplifying his returns with less risk than other sources of leverage. Neither long-term capital nor low-cost leverage are features that many asset managers can boast. And so, the search for repeatable lessons quickly runs cold.

In addition, markets have changed a lot in the 60 years since Buffett first started Berkshire. Buffett’s motherhood and apple pie approach—buy safe, quality stocks at reasonable prices—can be replicated cheaply with factor exchange-traded funds. I also believe the tolerance for ultra-long-term investing is lower today than it was a couple of generations ago. The idea of buying a few dozen stocks in large public companies and holding them for decades would be a hard sell today. 

Matt Levine, a Bloomberg columnist has a wonderful take on this. He says that there are lots of Buffett acolytes, but distinguishing the skilful from the lucky is impossible with the Buffett long-term buy-and-hold approach. If you flip a coin 10 times in a row and it lands on heads 8 times, you might have coin flipping skills, or you may have just gotten lucky. The only way of distinguishing the Buffetts from the ‘Bluffetts’ is to increase the number of decisions. 

If you flip a coin 10,000 times and it lands on heads 5,500 times, it’s much more likely that you are good at flipping coins than lucky. And so, it’s difficult to distinguish between the lucky and the skilled, unless we have lots of decisions to evaluate. Matt Levine suggests that today’s Buffett is more likely to be found at multi-strategy hedge funds or proprietary trading firms. It’s not going to be found in buying Apple and being right for a decade. 

But a sixty-year career, longer if you include his pre-Berkshire partnership, has served up some timeless advice which the average investor would do well to adhere to. 

The investment world is full of platitudes. Is there a word less likely to set the heart racing than “patience”? But for me, this is the most enduring lesson I draw from Buffett. 

My favourite quote from Buffett, among many, came in late 2008, at the tail end of the great financial crisis. He was being interviewed on a business channel and the reporter asked why so many of the FED and Treasury’s attempts to arrest the crisis had, thus far, not worked. His response was : ‘Some things take time and can’t be hurried up. You can’t have a baby in one month by getting nine women pregnant’. 

In a world geared towards being right this instant, patience has become something of a superpower. Market down cycles seem to last a day longer than our tolerance for bearing them, so there’s much to laud. But critically, if you are going to play the stock picking game, patience is not enough as Buffett’s experience with IBM and then Apple underscores. 

He was patient with IBM, but it was a disaster. He stuck with it for 6 years, but eventually admitted that he misjudged the company’s long-term competitive position. His subsequent investment in Apple in 2016, right after IBM, was an unbelievable triumph. 

I don’t think the average investor could have replicated this success.        

I suspect many will continue to persist with stock picking and/or stock pickers - as we seem to have an unshakeable faith in active management. Just as well, as the market can’t be entirely passive. But set expectations accordingly. Buffett was a statistical unicorn in the world of investing. We may see the likes of him again, but identifying him or her won’t be easy.  
  

Source: Data is sourced from Bloomberg as at market close 31st December, returns are based on total indices in local currency terms, unless otherwise stated.

Gary Connolly is Investment Director at Davy. He can be contacted at gary.connolly@davy.ie or on X at @gconno1.