Berkshire Hathaway is lagging behind the S&P 500 in 2025, with Class B shares dropping more than 12% since Warren Buffett announced a reduction in management roles.
This decline leaves Berkshire with only a 4.5% growth since the beginning of the year, while the S&P 500 has risen by 7%. This phenomenon has occurred over several consecutive weeks, signaling a prolonged downward trend for the first time in nearly three years.
MAIN CONTENT
Berkshire Hathaway has lost its competitive edge over the market due to its large scale and changing business environment.
Stable cash flow from Coca-Cola shares provides passive income of up to $816 million each year.
Warren Buffett acknowledges that the era of exceptional growth is over, focusing on sustainable profits and lower risks.
Why can't Berkshire Hathaway outperform the market as it did before?
In his 2023 letter to shareholders, Warren Buffett stated that Berkshire now only expects to perform slightly better than the average U.S. business, with lower capital loss risk. This assertion reflects a complex reality: the company struggles to generate significant breakthroughs when it owns too many assets and cash flows.
"I believe… that anything exceeding 'slightly better' is fanciful thinking."
Warren Buffett, Chairman of Berkshire Hathaway, 2023
The company's massive scale with over 60 subsidiaries across 40 industries has generated a cumulative profit of over 5 million % from 1964 to 2024, but it has also made breakthrough growth harder to achieve.
How did Berkshire go through a tough phase in 2025?
Since May 2025, Berkshire's Class B shares have consistently dropped, with 6 out of the last 7 weeks closing in the red, even falling below the 200-day moving average after 573 days of maintaining above this threshold – the longest streak since the stock's inception in 1996.
This might be the longest streak of monthly declines since June 2022, showing a clear shift in market behavior towards a stock that was once very stable.
How does the profit from Coca-Cola shares help Berkshire?
Investing in Coca-Cola remains Berkshire's largest source of passive income, as the company owns 400 million shares with a dividend of $2.04 per share per year. This generates $816 million in revenue annually, equivalent to over $93,000 per hour.
This is a source of funds that requires no direct management and is not dependent on fluctuations in the cryptocurrency market or high technology, contributing to Berkshire's financial stability.
Example of the profits Coca-Cola brings to Berkshire
Every day, Berkshire earns about $2.2 million in dividends from Coca-Cola. This stable income partly explains why Berkshire does not need to "chase" risky investment trends or new technologies.
"Coca-Cola is a simple, profitable, and global investment, so I haven't sold any shares for decades."
Warren Buffett, CEO of Berkshire Hathaway, 2024
Warren Buffett and his views on cryptocurrency
Despite the cryptocurrency boom in recent years, Warren Buffett remains skeptical and does not invest in this sector. He prioritizes maintaining traditional strategies and focuses on solid assets, consistent with a long-term risk-minimization philosophy.
The rapid development of the cryptocurrency market further highlights the performance gap between Berkshire and new technology-focused portfolios.
Frequently Asked Questions
Why did Berkshire's stock drop sharply from the beginning of 2025?
Berkshire's stock has declined due to the company experiencing a rare streak of declining months, influenced by its large scale and changes in investment strategy under Warren Buffett.
What other advantages does Berkshire have when it does not experience "breakthrough" growth?
Berkshire generates stable and passive profits from investments like Coca-Cola, helping to reduce risk and maintain steady cash flow.
What is Warren Buffett's view on the cryptocurrency market?
He does not invest in cryptocurrencies, continuing to focus on traditional assets with low risk and sustainable value.
Does the long decline in Berkshire's stock have any impact?
This is a significant change after many years of stability, indicating a period of adjustment and reshaping the company's strategic direction.
How important is Coca-Cola's dividend yield to Berkshire?
This is an annual passive income source of up to $816 million, helping Berkshire maintain solid finances without depending on risky investments.
Source: https://tintucbitcoin.com/berkshire-hathaway-giam-sau-vuot-sp-500/
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