Berkshire Hathaway 2025: Why Cash, Diversification, and Patience Are the Real Secrets to Success

Why This Blog Matters for Investors

As an investing teacher, I constantly stress three core principles: keep cash, stay diversified, and invest for the long term. Yet, most investors resist these ideas, chasing short-term gains or putting all their eggs in one basket. Berkshire Hathaway’s extraordinary success story is the ultimate rebuttal-proving that these timeless principles, when applied consistently, build enduring wealth and resilience.

Leadership Transition: The End of an Era, A New Beginning

After 60 years at the helm, Warren Buffett, the Oracle of Omaha, announced he will step down as CEO of Berkshire Hathaway at the end of 2025. Greg Abel, long seen as Buffett’s heir apparent, will take over, promising continuity in culture and investment philosophy.

“I believe the moment has come for Greg to assume the role of chief executive at year-end.” - Warren Buffett

Abel brings a more hands-on management style and a proven track record in Berkshire’s non-insurance operations, including utilities, railroads, and retail. He is expected to maintain Berkshire’s core principles: long-term value investing, independence, and integrity.

Berkshire’s Business Empire: The Power of Diversification

Berkshire Hathaway is a sprawling conglomerate with over 80 subsidiaries across industries. Its major holdings include:

Berkshire Hathaway Revenue by Segment (2024)

Note: These are the largest segments by product/service. Other segments (Insurance, Railroads, etc.) may be grouped differently in other sources. 

For a more complete breakdown in total revenue: 

Berkshire Hathaway Public Stock Portfolio (Top Holdings, 2025)

Financial Performance: A Decade of Growth

Revenue Trends (2014–2024): 9.1% CAGR

Visual: Line chart showing steady revenue growth, with a notable spike in 2023 and 2024.

Profit Trends

• Operating Earnings (2024): $47.44 billion, up 27% from 2023.
  
  

• Net Income (2024): $89 billion (all-time high).
  
  

• Insurance Segment: 51% growth in operating earnings, driving overall results.
  
  

World Rankings

• Market Cap: In INR we can say near to 99 Lakh Cr which is 5X to RIL & equal to India’s TOP 10 Company Combined Market Cap. 

• Revenue: 31 lakh Cr which is 3X To RIL & equal to equal to India’s Top 5 Companies.  

• Profits: 7 lakh Cr which is 9X To RIL & equal to equal to India’s Top near to 15 Companies. 
  
  

The Strategic Power of Holding Cash

As of Q1 2025, Berkshire Hathaway’s cash and short-term investments have ballooned to a record $347.7 billion-nearly 29% of its total assets. This is more than double its historical average.

Cash as a Percentage of Total Assets

Why Is Berkshire Holding So Much Cash?

• Defensive Buffer: Cash provides a cushion during market downturns, allowing Berkshire to avoid forced selling and even capitalize on distressed opportunities.
  
  

• Opportunistic Flexibility: When others are panicking, Berkshire can deploy capital quickly to acquire undervalued businesses or stocks at attractive prices.
  
  

• Income Generation: Even in low-rate environments, Berkshire’s cash earns billions in interest annually from safe, short-term Treasuries.
  
  

“We’ve built up a significant amount of cash, and that’s a real asset. We intend to deploy it wisely. We also view it as a strategic resource, especially in difficult times, so we don't have to rely on anyone else, whether it's a bank or another party.” - Greg Abel

The Strength of Diversification

Berkshire Hathaway’s portfolio spans insurance, railroads, energy, manufacturing, retail, and more-over 80 subsidiaries across dozens of industries. This diversification is not random; it’s calculated and strategic.

• Risk Mitigation: When one sector struggles, others can thrive, smoothing overall returns and reducing volatility.
  
  

• Stability in Turbulent Times: During the 2025 market slump, while the S&P 500 fell, Berkshire’s diversified structure helped its stock rise 16% year-to-date2.
  
  

• Avoiding Over-Diversification: Berkshire doesn’t spread itself too thin. Each investment is carefully selected for quality and long-term potential.
  
  

The Long-Term Mindset

Buffett’s famous mantra: “Our favorite holding period is forever.” Berkshire’s success is built on patience, discipline, and a focus on intrinsic value.

• Compounding Returns: By holding investments for decades, Berkshire benefits from the power of compounding, turning modest gains into massive wealth.
  
  

• Ignoring Short-Term Noise: Buffett’s value investing approach means ignoring market fluctuations and focusing on the long-term prospects of each business.
  
  

• Strategic Acquisitions: Berkshire’s most successful investments-GEICO, BNSF Railway, Duracell-were all acquired with a long-term view.
  
  

Berkshire Hathaway: The Proof Is in the Portfolio

Recent Developments and Outlook

• Q1 2025 Results: Operating earnings fell 14% due to a sharp drop in insurance underwriting profits and FX headwinds. Cash hoard reached $347.7 billion.
  
  

• Future Strategy: Abel’s focus will be on maintaining Berkshire’s long-term investment approach, active management, and capital allocation.
  
  

• Challenges: Some business segments are under pressure; tariffs and global economic uncertainty could impact future results.
  
  

Visual Resources for Investors

• Downloadable Spreadsheet of Berkshire Portfolio: https://docs.google.com/spreadsheets/d/19Ro2Z0swQvYHrClTz0dInHmOQU8Ypaw7ICIVwIxfA8Q/edit?usp=sharing

• Downloadable PPT:
  
  

Summary: What Should Investors Do?

Berkshire Hathaway remains a global powerhouse, with a diversified portfolio, strong financials, and a leadership transition that promises continuity. While short-term headwinds exist, the company’s long-term track record and disciplined approach offer stability and growth potential for patient investors.

Key Action Items:

• Monitor Deployment of Cash: Watch for large acquisitions or investments as opportunities arise.
  
  

• Focus on Long-Term Value: Berkshire’s strategy remains focused on compounding wealth over decades.
  
  

• Stay Informed: Follow updates from Greg Abel and the new leadership team as they take the reins.
  
  

“Diversification, a margin of safety, and a long-term orientation: Berkshire Hathaway is the textbook case for why these principles work.” - Your Investing Teacher

Always with You

Profit From IT (Piyush Patel)