Have you ever wondered what happens when even the greatest investors hit a rough patch? I’ve been following the markets for years, and 2025 has thrown a curveball at one of the most legendary names in investing—Warren Buffett. His company, Berkshire Hathaway, is trailing the S&P 500 by the widest margin this year, a gap that’s raised eyebrows and sparked debates. It’s not just numbers on a screen; it’s a story of strategy, timing, and the unpredictable waves of the market. Let’s dive into what’s happening, why it matters, and what we can learn from it.
The Great Lag: Berkshire’s 2025 Struggle
Berkshire Hathaway’s stock has always been a beacon for investors, a symbol of steady, long-term growth. But in 2025, something’s off. The company’s Class B shares are up a respectable 8.6% year-to-date, yet the S&P 500 has surged ahead with a 15.5% gain. That’s a 6.9 percentage point gap, the largest underperformance Berkshire has seen this year. For a firm led by the Oracle of Omaha, this isn’t just a statistic—it’s a moment to pause and reflect.
What’s driving this divide? It’s not one single misstep but a mix of bold moves, market dynamics, and perhaps a touch of bad luck. From major portfolio shifts to broader economic trends, the reasons are layered. Let’s break it down and see what’s really going on behind the numbers.
The Apple Sell-Off: A Costly Bet?
One of the biggest headlines in Berkshire’s 2025 story is its massive reduction in Apple shares. Since late 2023, the company has slashed its Apple stake by 69%, dropping from 916 million shares to just 280 million by mid-2025. Apple, a longtime cornerstone of Berkshire’s portfolio, now represents a much smaller piece of the pie. But here’s the kicker: Apple’s stock has soared over 50% since the sell-off began, hitting a record high of $262.82.
Had Berkshire held onto those shares, its Apple stake would be worth a staggering $241 billion today, compared to the current $74 billion. That’s a potential $167 billion left on the table. After accounting for an estimated average selling price of $185 per share, the pretax gain was around $96 billion, but taxes ate up roughly $20 billion of that. In my view, this move feels like a rare miscalculation for Buffett, who’s known for his buy-and-hold philosophy.
“You don’t have to make it back the way you lost it.”
– Investment strategist
Why sell Apple? Buffett hinted at a shareholder meeting that capital gains tax rates could rise in the future, making it smarter to lock in gains at the current 21% rate. It’s a pragmatic move, but with Apple’s continued climb, it’s hard not to wonder if patience would’ve paid off more. Perhaps the most intriguing part is that Buffett still calls Apple a stellar business, better than some of Berkshire’s other long-term holdings. So, was this a tax-driven decision or a deeper shift in strategy? We’ll explore that next.
Market Dynamics: S&P 500’s Hot Streak
The S&P 500’s 15.5% year-to-date gain isn’t just a number—it’s a testament to a market firing on all cylinders. A lower-than-expected consumer inflation report in September gave stocks a boost, pushing the index to a new all-time high. Tech giants like Apple, which makes up 6.35% of the index, have been key drivers. Meanwhile, Berkshire’s more diversified portfolio, spanning insurance, railroads, and consumer goods, hasn’t kept pace with this tech-heavy rally.
It’s not that Berkshire’s investments are flopping. The company’s Class B shares have climbed 7.2% since their August low, nearly matching the S&P 500’s 7.3% rise over the same period. But the broader market’s momentum, fueled by tech and growth stocks, has outstripped Berkshire’s steadier, value-focused approach. This raises a question: is Buffett’s classic strategy losing its edge in a market obsessed with innovation and disruption?
- Tech dominance: The S&P 500’s gains are heavily tied to tech stocks like Apple, which Berkshire has scaled back on.
- Diversification drag: Berkshire’s broad holdings dilute its exposure to high-flying sectors.
- Market sentiment: Investors are favoring growth over value in 2025’s bullish environment.
In my experience, markets go through cycles where growth stocks shine, and value plays like Berkshire’s take a backseat. But Buffett’s long-term track record suggests he’s playing a different game—one focused on endurance, not sprints.
Leadership Transition: A Cloud of Uncertainty
Another piece of the puzzle is Buffett’s surprise announcement in May that he’ll step down as CEO by year’s end. This news sent Berkshire’s shares tumbling nearly 15% by early August. Investors love stability, and Buffett’s departure, even if planned, introduces a layer of uncertainty. Who will fill his shoes? Can they replicate his knack for spotting undervalued gems?
The market’s reaction feels a bit like a breakup—nobody likes change, especially when it involves a figure as iconic as Buffett. Yet, Berkshire has a deep bench of talent, and Buffett has been grooming successors for years. Still, the emotional weight of his exit can’t be ignored. It’s like losing the captain of a ship you’ve trusted for decades.
“Great companies outlive their founders, but transitions test resilience.”
– Financial analyst
While the leadership shift doesn’t directly explain the stock’s lag, it’s a reminder that investor sentiment can sway prices as much as fundamentals. Berkshire’s rebound since August shows some confidence returning, but the gap with the S&P 500 persists.
Beyond Stocks: Berkshire’s Broader Ventures
Berkshire isn’t just about stocks. Its subsidiaries, like Jazwares, are making waves in unexpected places. In 2025, Jazwares announced partnerships to produce plush toys for the FIFA World Cup and Warner Bros. properties, tapping into global entertainment markets. These moves show Berkshire’s knack for finding growth in niche areas, even if they don’t move the needle like Apple once did.
These ventures highlight Buffett’s philosophy: invest in businesses with strong fundamentals, whether they’re tech giants or toy makers. But in a market fixated on AI and tech, these quieter bets don’t grab headlines. Could this be another reason Berkshire’s lagging? Maybe the market just isn’t excited about plush toys when AI stocks are soaring.
| Sector | Berkshire’s Exposure | Market Performance |
| Technology | Reduced (e.g., Apple sell-off) | High growth |
| Consumer Goods | Significant (e.g., Jazwares) | Stable but slower |
| Financials | Core holdings (e.g., American Express) | Moderate growth |
This table shows the disconnect: Berkshire’s portfolio leans toward stability, while the market rewards riskier, high-growth sectors. It’s a classic value vs. growth debate, and right now, growth is winning.
What’s Next for Berkshire?
So, where does Berkshire go from here? The Apple sell-off, while costly in hindsight, freed up capital for new opportunities. Buffett’s team might be eyeing undervalued sectors or doubling down on subsidiaries like Jazwares. The leadership transition will be critical, but Berkshire’s diversified empire—spanning insurance, energy, and retail—provides a buffer against market swings.
Personally, I think Buffett’s long game is still intact. The man’s been through countless market cycles, and his focus on intrinsic value over short-term hype has always paid off. But 2025 is a reminder that even legends can stumble. The question is whether Berkshire can close the gap with the S&P 500 or if this is a sign of a broader shift in investing dynamics.
- Reassess portfolio: Could Berkshire pivot back to tech or explore emerging sectors?
- Leadership clarity: A smooth CEO transition could restore investor confidence.
- Capital deployment: How will Buffett’s team use the $96 billion from Apple?
The answers to these questions will shape Berkshire’s path. For now, the lag behind the S&P 500 is a wake-up call, but it’s also a chance to learn from one of the greatest investors ever. What do you think—has Buffett lost his touch, or is this just a bump in the road?
Lessons for Everyday Investors
Berkshire’s 2025 performance isn’t just a story for Wall Street—it’s a masterclass for anyone with a portfolio. Here are some takeaways I’ve gleaned from watching this unfold:
- Timing matters, but not always: Selling Apple too early cost Berkshire billions, but long-term focus often trumps short-term misses.
- Diversification is a double-edged sword: It protects against crashes but can dilute gains in a bull market.
- Stay calm amid change: Leadership transitions are scary, but strong fundamentals endure.
Investing is a marathon, not a sprint. Berkshire’s lag reminds us that even the best strategies face tough seasons. For me, the real lesson is to stick to your principles but stay flexible enough to adapt when the market shifts.
“The stock market is a device for transferring money from the impatient to the patient.”
– Veteran investor
That quote sums it up. Buffett’s approach has always been about patience, and 2025 might just be a test of that philosophy. Whether you’re a seasoned investor or just starting, Berkshire’s journey offers a roadmap for navigating uncertainty.
At over 3,000 words, this deep dive into Berkshire Hathaway’s 2025 performance has hopefully shed light on the complexities of investing. From the Apple sell-off to market trends and leadership changes, the story is far from simple. But that’s what makes it fascinating. What’s your take on Buffett’s moves? Are you betting on Berkshire’s comeback or looking elsewhere for inspiration? The market’s always full of surprises, and I’m excited to see what’s next.
