Yang Delong, Executive General Manager of Frontopen Fund, expressed during a speech that last year during the shareholder meeting, he shared a viewpoint. At that time, Warren Buffett officially announced at the shareholder meeting that he would retire by the end of the year and hand over the CEO position to Greg Abel. "I said at the time that this would bring two changes: first, Berkshire Hathaway's stock price would peak and then decline; second, the number of attendees would decrease year by year, possibly ending up with just a few shareholders remaining."
Why would such changes occur? This essentially stems from the personal charisma of the "Oracle of Omaha," Warren Buffett. After Buffett announced his retirement last year, the stock market plummeted on Monday, which actually reflects the market's acknowledgment of Buffett's personal investment prowess. Buffett once humorously remarked, "If one day the media reports that I have died, and Berkshire Hathaway's stock price surges, that would be awkward; a sharp decline in the stock price would be the true tribute to me."
From the announcement of his retirement last year to now, Berkshire's stock price has fallen by more than 20%, while the S&P 500 index has hit a record high. The market has essentially voted with its feet.
Yang believes the primary reason for this stock decline is the gradual erosion of the "Buffett premium," though it has not completely disappeared yet—because Buffett still serves as chairman and goes to the office daily. Even if Abel has his own ideas and wishes to adjust the investment portfolio, he currently dares not make significant moves. He is still in a phase of following established practices; for any major decisions, he would certainly seek the elder's opinion first. Therefore, the Buffett era is not entirely over; about half of the Buffett premium has faded, but it hasn't vanished completely.
Everyone hopes Buffett could live to 200, so they can attend the shareholder meeting every year. However, if one day Buffett completely steps away from the company's operations and the Buffett premium fully disappears, Berkshire's stock price might experience an even larger decline—that is inevitable.
In his view, Abel is just an ordinary person, not a stock market god. To draw an analogy, Buffett has reached the status of a stock market deity, while Abel is more like a fund manager, specifically one focused on sector investments. Asking a fund manager to elaborate on investment philosophy is indeed a tall order.
During his opening remarks at today's meeting, Buffett stated that Abel is his perfect successor. This statement was, to some extent, meant to reassure shareholders and also to bolster and support Abel—a point everyone likely understands. At today's shareholder meeting, attendees genuinely felt that it was indeed Berkshire Hathaway's gathering, as all content revolved around the company's various business operations, resembling more of a corporate roadshow.
"So, I think it's normal for everyone to feel down at this shareholder meeting; I feel the same way. But as long as Buffett appears at the venue next year, I will definitely come, and I also hope Sina will continue to host this reception as long as Buffett is around. If Buffett no longer attends, then I certainly won't come either; there would be little point. This highlights the irreplaceable nature of the stock market god, Warren Buffett," he said.
Yang Delong stated that what Buffett has brought us is most importantly a change in investment philosophy, not specific stock-picking methods.
Speaking about value investing, Yang mentioned that back in 2019, he attended the shareholder meeting with Lin Yuan. As everyone knows, the liquor industry is currently sluggish, especially with Wuliangye Yibin Co.,Ltd. making a surprisingly unexpected move recently. "It's not appropriate to comment on individual companies, but I estimate there might be risks in the liquor industry next week," he said.
He recalled that Lin Yuan once asked him a question: "For Kweichow Moutai's shareholder meeting, it's convenient to fly there—just two hours—so attending every year is normal. But Omaha is too far; you're probably still jet-lagged, right? Must be extremely tired. You just arrived the night before last, after a 23-hour flight with a layover in San Francisco, sitting on a bench at the airport for five hours. Coming here not only doesn't earn you money but also costs airfare. Going once is enough; why come every year?"
"I told him that coming to see Buffett every year isn't about meeting the man in person, but rather hoping that through the Buffett shareholder meeting—this global gathering of investors—we can reaffirm belief in value investing. In the A-share market, there is now great skepticism toward value investing, especially over the past few years when many so-called value investors have performed poorly, and quite a few public fund managers have seen their results completely wiped out," he said.
In reality, even in the U.S., Buffett faces skepticism every five years. Looking at the performance over the past 10 or 20 years, Berkshire Hathaway's stock price has consistently underperformed the S&P 500. However, during bear markets, people sigh, 'Buffett is still Buffett.' Because those speculators who were once rampant, the 'Wall Street boys,' eventually crash—since those wildly hyped companies always fall back. During bull markets, many feel Buffett is just average, with annual returns barely reaching 20%.
Over the past few years, the philosophy of value investing in the A-share market has been greatly challenged. Nowadays, some even use it as an insult: 'You're a value investor; your whole family are value investors.' Why? Because value investing implies poor performance in recent years. Last year, those who recklessly speculated in tech stocks doubled their money, and even quantitative funds now account for half of the billion-yuan private equity firms, with seven out of the top ten being quantitative funds. Value investing can't even beat quantitative strategies.
He admitted that his purpose in attending the Buffett shareholder meeting this time is to help everyone understand: practicing value investing doesn't guarantee short-term profits nor overnight wealth, but it can truly make you a friend of time, achieving long-term wealth growth through accumulation over time.
Buffett has demonstrated over 61 years that even with an annualized return of just 19.9%—though achieving this rate is difficult—if you can earn money steadily over the long term, the final returns can be astounding, reaching 60,000 times. Most retail investors chase tech stocks during bull markets; many double their money in a year, some even triple it. But when a bear market arrives, those who claim to be stock gods will inevitably suffer heavy losses, even blowing up their accounts.
Yang Delong noted that as long as Buffett is around, Abel won't make mistakes because he will certainly heed the elder's advice. However, if one day Buffett completely steps away from the company or passes away, whether Abel can overcome human greed and fear and achieve investment prowess comparable to Buffett's remains questionable. This is also why Berkshire's stock price has been declining—shareholders are selling first to wait and see whether Abel will be the next Buffett or just an ordinary investment manager. If he is merely an ordinary manager, the Buffett premium on Berkshire's stock will likely decline significantly further.
Comments