As the billionaire retires, he leaves memorable advice from his annual letters that include pithy takes on bubbles, discipline and long-term goals

Warren Buffett, the billionaire investor who is retiring at the end of 2025, has entertained and educated shareholders in his Berkshire Hathaway conglomerate for many years with his pithy annual letters outlining the firm’s performance.

Every year since 1965 he has updated his investors on the journey as Berkshire morphed from a “struggling northern textile business” with $25m of shareholder equity when he took over, to an empire worth more than $1tn.

Though the price I paid for Berkshire looked cheap, its business – a large northern textile operation – was headed for extinction.

My error caused Berkshire shareholders to give far more than they received (a practice that – despite the biblical endorsement – is far from blessed when you are buying businesses).

Woody Allen once explained why eclecticism works: ‘The real advantage of being bisexual is that it doubles your chances for a date on Saturday night.’

When such a CEO is encouraged by his advisers to make deals, he responds much as would a teenage boy who is encouraged by his father to have a normal sex life. It’s not a push he needs.

Andrew destroyed a few small insurers. Beyond that, it awakened some larger companies to the fact that their reinsurance protection against catastrophes was far from adequate. (It’s only when the tide goes out that you learn who’s been swimming naked.)

In our view, however, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.

Participants seeking to dodge troubles face the same problem as someone seeking to avoid venereal disease: it’s not just whom you sleep with, but also whom they are sleeping with.

From this irritating reality comes the first law of corporate survival for ambitious CEOs who pile on leverage and run large and unfathomable derivatives books: modest incompetence simply won’t do; it’s mind-boggling screw-ups that are required.

When downpours of that sort occur, it’s imperative that we rush outdoors carrying washtubs, not teaspoons. And that we will do.

Naturally, I was delighted to attend Mrs B’s birthday party. After all, she’s promised to attend my 100th.

She sold me our interest when she was 89 and worked until she was 103. (After retiring, she died the next year, a sequence I point out to any other Berkshire manager who even thinks of retiring.)

The candidates are young to middle-aged, well-to-do to rich, and all wish to work for Berkshire for reasons that go beyond compensation.

(I’ve reluctantly discarded the notion of my continuing to manage the portfolio after my death – abandoning my hope to give new meaning to the term ‘thinking outside the box’.)