Posted:November 17, 2025
Categories: Asset Allocation, Stock Market, Stocks
The legendary investor Warren Buffett penned his last letter this past week, officially riding off into the Nebraska sunset and into retirement. He will go down in history as one of the most successful and influential investors of all time. You can read his letter here: Buffett’s Last Letter.
In his final letter to investors, Buffett describes many times he’d been “lucky” in various ways during his lifetime to date. He states:
“Looking back, I feel that both Berkshire and I did better because of our base in Omaha than if I had resided anywhere else. The center of the United States was a very good place to be born, to raise a family, and to build a business. Through dumb luck, I drew a ridiculously long straw at birth…I was born in 1930, healthy, reasonably intelligent, white, male, and in America. Wow! Thank you, Lady Luck.”1
The “luck” of his timing is quite clear. America emerged from both World Wars as the great victor, just as Buffett started his career. The economic environment immediately following World War II was inherently conducive to sustained growth, offering investors like Buffett stability and immense opportunity. Buffett’s “luck” lies in the fact that his disciplined value investment philosophy was uniquely suited to capitalize on the exponential long-term growth afforded by the stable structure of the post-WWII American economy.
Concentrate to Build Wealth
I wrote about Buffett back in February, noting:
“Buffett’s portfolio is mostly invested in private companies, with 60% of it being in what he calls non-marketable companies. Another term for this is “private equity.”2
Figure 1: Berkshire Hathaway’s Asset Allocation
Source: Morningstar
Buffett has done an incredible job of investing both in a concentrated fashion and in a diversified manner across various industries. Entrepreneurs and business owners, through time, have built wealth through concentration. Historical examples include John D. Rockefeller (Standard Oil), Andrew Carnegie (Carnegie Steel), and the Waltons (Walmart). Recent examples include Elon Musk (Tesla, SpaceX), Bill Gates (Microsoft), Mark Zuckerberg (Facebook), and Jeff Bezos (Amazon). The high reward of entrepreneurship comes with high risk. Most companies fail. Concentration can destroy a person financially, especially if they are not psychologically primed for risk or cannot handle sleepless nights.
Buffett proved that you can concentrate to build wealth and diversify to preserve it. He had the unique ability to spot a company leader with a compelling idea, product, or service. Many times, he would either fully acquire a business or buy a significant stake in one and let the CEO continue to run it. He made a series of concentrated bets on people and products he understood.
“There is a difference between a manager running a company that is not his own and an owner-operated business in which the manager does not need to report numbers to anyone but himself, and for which he has a downside.”3
Most of us will never be Warren Buffett, Jeff Bezos, or Andrew Carnegie. For those with the ability and risk tolerance, owning a business and concentrating wealth are proven strategies. Private business ownership is a key factor driving wealth and income at the upper end of the wealth spectrum. One study found that 63% of households with $500,000 or more in discretionary income derived their wealth from their own business or a business they joined early on. Further, another study noted households with a net worth between $10 million - $100 million held 31% of their assets in business interests. For the one percenters, those with a net worth over $100 million, business interests represent their single largest asset holding.4
Most of us mere mortals don’t have this luxury or “luck”. A good-paying job, sensible investments, and a reasonable savings rate can help individuals who don’t make concentrated bets prepare for retirement. This is why investing in the stock market for the long term, as Buffett does, works. It just does. Working for a company and maxing out a 401(k) plan year after year is an equally solid strategy. Throw in some cash, a few bonds, some gold, and own your own home. Save. Invest. Own assets. You’ll do just fine.
Buffett’s Patience
Investing in the stock market can be an emotional roller coaster. Positive markets are the norm, with an occasional credit-induced selloff that can test the best of us. Buffett noted this idea in his letter:
“Our stock price will move capriciously, occasionally falling 50% or so as has happened three times in 60 years under present management. Don’t despair; America will come back, and so will Berkshire shares.”
A $10,000 investment in Berkshire Hathaway at the beginning of 1995 was worth $437,000 as of the end of October 2025. This is good for a robust 12.6% annual return. But that path wasn’t always rosy. For a visual representation of this, see Figure 2, which shows the growth of the stock from 1995 along with the 10 largest drawdowns during this timeframe, which range from a 12% pullback during the Asian Financial Crisis in the late 1990s to a 45% pullback during the 2008-2009 Global Financial Crisis.
Figure 2: Berkshire Hathaway Inc., 1995–2025
Source: TradingView and Portfolio Visualizer
Conclusion
Millions of other Americans were born at the same time as Buffett and with many of the same, and at times, even greater advantages. Yet, there is only one Warren Buffett. Give him all the credit he deserves. He squeezed more out of life than most. We can learn many things from his journey, including the power of entrepreneurship, saving, investing, and patience. I’ll miss his annual letters as they were always filled with nuggets of wisdom. I thought it prudent to conclude with his words:
“I wish all who read this a very happy Thanksgiving. Yes, even the jerks; it’s never too late to change. Remember to thank America for maximizing your opportunities. But it is – inevitably – capricious and sometimes venal in distributing its rewards. Choose your heroes very carefully and then emulate them. You will never be perfect, but you can always be better.”
References
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