Warren Buffett announced his retirement just three months ago, and Berkshire Hathaway is experiencing the most severe valuation shock in nearly 35 years. Is Berkshire, having lost the aura of the stock god, really no longer worth investing in? (Background recap: Berkshire's Q1 holdings revealed: Buffett cleared out Citigroup, reduced financial stocks, and significantly increased his stake in this brewery, drawing attention to mysterious holdings) (Background context: Buffett has net sold stocks for 11 consecutive quarters! Berkshire's Q2 financial report shows a 59% drop in net profit, with Kraft Heinz's $3.8 billion impairment becoming a landmine) The stock god Warren Buffett announced his retirement just three months ago, and Berkshire Hathaway is experiencing the most severe valuation shock in nearly 35 years. According to Google Finance data, Berkshire Hathaway's stock price stood at $540 on May 2, but has now fallen to $467, a decline of 13% over three months, with its market value shrinking to $1.01 trillion (evaporating $130 billion), in stark contrast to the continued rise of the S&P 500 index during the same period. Once regarded as a market safe haven, Berkshire has suddenly lost that layer of 'Buffett premium,' which seems to symbolize a turning point in an era as investor confidence wavers. The aura fades: three months of evaporating premium Over the past few decades, Buffett's stable value investment philosophy has brought additional valuation to Berkshire. However, CFRA analyst Cathy Seifert pointed out that this 'Buffett premium' quickly contracted after the announcement of the stock god's retirement; Berkshire's underperformance relative to the S&P 500 index is second only to the performance during the early days of the pandemic in 2020. In the past, even when the U.S.-China trade war in 2018 caused global turmoil, Berkshire was still considered a 'safe haven.' Now, with the loss of Buffett's aura, its safe haven property is gradually fading, suggesting that Berkshire's valuation can no longer rely solely on the reputation of the stock god and must return to fundamentals and the new management strategy. Strong operations but difficult to resist investment impairment However, looking only at its core business, Berkshire has not actually declined. Public data shows that in the second quarter, Berkshire's railway, utility, manufacturing, and retail sectors experienced an 8% growth in operating profit after excluding exchange rate effects. However, due to the decline in common stock investment income and the impairment of Kraft Heinz stock, Berkshire's operating profit fell by 4% compared to the same period last year, down to approximately $11.16 billion, with net profit plummeting by 59%. This financial report revealed that even the most stable operations cannot fully withstand the impact of a single large investment failure. Additionally, Berkshire's cash position currently stands at $344 billion, accounting for about 30% of total assets, and has net sold stocks for 11 consecutive quarters. Market sentiment shifts: a gap between tech enthusiasm and value stocks Another pressure on Berkshire's stock price comes from a shift in investor preferences. Bill Stone pointed out that market funds are flowing into 'fast-growing tech stocks,' rather than the traditional value investment targets that Berkshire excels in. As popular trends focus on AI, cloud computing, and semiconductors, the sectors held by Berkshire, including railroads, insurance, and consumer brands, may appear to lack greater imagination for investors. Abel takes over: facing dual challenges of capital and narrative Buffett's successor, new Berkshire CEO Greg Abel, faces two daunting tasks: first, managing a massive cash flow; second, rebuilding Berkshire's market narrative without the support of the 'stock god' aura. When faced with investor skepticism, Abel must prove that Berkshire can still create excess returns amid macro headwinds. Analysts note that he has three paths ahead: continue to seek targets that meet traditional value criteria; increase exposure to new economy industries; or adopt a more aggressive capital return strategy. Each step is related to the balance between 'value investing' and 'market growth.' Abel's decisions will also affect whether Berkshire can write a new legendary story in the post-Buffett era. Related reports Buffett liquidates Brazilian cryptocurrency-friendly bank Nu Holdings 'profit of $250 million,' Berkshire's cash reserves reach a record high of $347.8 billion Buffett admits: truly feeling old, thinking and reading becoming more difficult... first talk about resigning as Berkshire CEO Saying goodbye to the stock god! Buffett announces he will step down as Berkshire CEO by the end of 2025, Greg Abel takes over "Can Berkshire survive without Buffett? After retirement, market value evaporated by $130 billion, can Abel continue the investment legend?" This article was first published in BlockTempo (the most influential blockchain news media).

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