The Raw Compounding Record
Berkshire Hathaway's letters state the headline without decoration. Between 1965 and 2024, per-share market value compounded at 19.9 percent annually against 10.4 percent for the index with dividends reinvested, a cumulative gain above 5,500,000 percent versus roughly 39,000 percent for the index. Compounding at that rate turns 10,000 dollars invested in 1965 into more than half a billion today, and no management fee was ever charged for the service.
Drawdowns came anyway, roughly 50 percent in 1974 and again between 1998 and 2000, and the stock lagged the index badly during technology manias. The 2024 vintage narrowed the margin to nearly nothing, with Berkshire up about 25 percent against a similar index return. Sixty years of outperformance traces to roughly a dozen decisions made at moments of maximum pessimism, from American Express in 1964 to money-center banks in 2020.
Insurance Float as the Engine
The business most observers miss is insurance. Buffett bought National Indemnity in 1967 for 8.6 million dollars and discovered that premiums arrive long before claims are paid. That pool of other people's money, called float, grew past 170 billion dollars by the end of 2024. When underwriting stays disciplined, the float costs nothing, so Berkshire is effectively paid to hold ammunition for crashes.
GEICO, controlled outright by 1996, and the Gen Re acquisition of 1998 scaled the same idea across auto and reinsurance. Ajit Jain, who joined in 1986, built the reinsurance operation into one of the largest catastrophe capacity providers in the world from a single desk. Cost matters more than size, though: float won from underpriced risks is a liability wearing a costume, and Gen Re needed years of surgery before it stopped bleeding. Underwriting profit in most recent years means customers effectively paid Berkshire to hold that 170 billion, a subsidy no hedge fund or commercial bank enjoys.
The Buffett Indicator
In a 2001 Fortune essay, Buffett revived a ratio his mentor Benjamin Graham would have recognized: total stock market capitalization divided by gross domestic product. He called it the best single measure of where valuations stand, playing with fire above 200 percent and finding the best values near 70 or 80 percent. The ratio crossed 200 percent of American GDP during 2024 and 2025, and Berkshire's cash position above 300 billion dollars at points in 2025 suggests the current management reads its own gauge seriously.
Indian readers can run the same math domestically, where market capitalization to GDP crossed 100 percent during the 2024 rally, historically rich territory but far from American extremes.
Succession and the Two Share Classes
Greg Abel, who ran Berkshire Hathaway Energy, was named successor years ahead of need and formally took the chief executive seat on January 1, 2026, after Buffett announced the handover in May 2025. Class A shares, the most expensive stock listed in New York, have traded above 700,000 dollars each. Class B shares, created in 1996 and split 50-for-1 in 2010, cost a few hundred dollars and carry 1/1,500th of the A economics, so any account size can own the company. Charlie Munger, the vice chairman who died in November 2023 at ninety-nine, had been the sounding board behind five decades of decisions, and his absence made the succession question concrete rather than theoretical.
What KaewCapital Clients Can Take From It
The transferable ideas are process rather than stock picks: buy durable cash flows at sensible prices, fund patience with float or salary, and keep enough liquidity to act when others cannot. KaewCapital portfolios apply the float lesson directly, holding short-dated instruments against long-dated equity positions so cash needs never force sales at the wrong moment. KaewCapital research notes track the Berkshire filings each February, and the annual letter remains the cheapest investing education in print. Read the insurance section first, the equity portfolio second, and skip the mythology entirely.