_{WARREN’S FINAL LETTER}

Father Time Comes For Us All

I had an article written that was honestly in pretty good shape, but then the greatest stock picker of our lifetime decided that he was going to drop his resignation letter, so here I am drafting something entirely new. It’s a tough life I live keeping everyone updated on the finance world.

If you didn’t already know, Warren Buffett just released a letter resigning as chairman of Berkshire Hathaway. It was a short, simple letter.

“Serving as your Chairman has been the privilege of a lifetime, and I have never taken your trust for granted. Father Time always wins. He has, however, been generous with me."

That's it. Just two sentences putting a period on the end of an incredible career.

Buffett took control of Berkshire in 1965. It was a failing textile mill worth about $18 million. He has since described the purchase as the worst investment he ever made.

He was so offended by the way the previous owner handled a price negotiation that he bought the company out of spite. The $18 million is now $1.1 trillion, so the spite was productive.

The idea now is conceptually obvious: use insurance float (premiums collected before claims are paid) to fund long-term investments in durable businesses.

You can buy shares in Coca-Cola, American Express, and Apple or you could buy BNSF Railway and GEICO outright.

The two things to remember? Hold everything forever and never try to be clever. The formula compounded at roughly 19.8% per year for 60 years versus 10.2% for the S&P 500.

That gap sounds small, but over 60 years it is the difference between $1 and $40,000, and he invested a bit more than $1.

He did all of this while eating McDonald's for breakfast, drinking Coke for reasons that are probably not unrelated to owning 9% of the company, and still living in the house he bought in 1958 for $31,500.

As we look back on his career, here are ten things he said that every investor should take to heart. Well, many more than ten, but that's all the column space we have today.

• "Price is what you pay. Value is what you get." (2008 shareholder letter) The market's price is always right as a reflection of sentiment. It is often wrong as a reflection of what something is worth in ten years. Buffett spent 60 years betting on the difference.

• "Be fearful when others are greedy and greedy when others are fearful." (1986 Berkshire shareholder letter at the height of a roaring bull market) Seven months later, Black Monday wiped 22% off the Dow in a single session and Buffett would be able to turn this quote into reality.

• "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." (1989 shareholder letter) The lesson he drew from buying Berkshire out of spite in the first place. He got a wonderful price on a mediocre company and spent decades explaining why that was the wrong trade.

• "The stock market is a device for transferring money from the impatient to the patient." This is the entire Berkshire model in one sentence. While Keynes reminds us that the market is not always rational, if you look with a long enough time horizon, it is. Keep a longterm view if you can. If you’re trading quarters at Point72, I have nothing for you.

• "Someone is sitting in the shade today because someone planted a tree a long time ago." A quote Buffett has used across many shareholder meetings over the years. Berkshire is the tree, and the $365.5 billion Greg Abel inherited is the shade…maybe more like night at that point. 

• "Risk comes from not knowing what you're doing." This is one of Buffett's most repeated convictions across annual meetings spanning four decades. Risk is not from volatility, not from beta, not from a VaR model, but from ignorance. The real world exists outside of your spreadsheets. You won’t be able to control every variable, but you can control how prepared you are to respond to any situation.

• "Our favorite holding period is forever." (1988 Berkshire shareholder letter) This is not a strategy, but a philosophy. Of course you have to know when to cut your losses, but if you buy the right thing in the first place, you might just be the Oracle of Omaha then.

• "Forecasts may tell you a great deal about the forecaster; they tell you nothing about the future." (1980 Berkshire shareholder letter) When was the last time you had a model actually turn out to be correct? How many times do you look to justify assumptions to yourself because they make the returns work? The real world rarely matches your models, all your models tell you are what you needed to convince yourself at the time.

• "In the business world, the rearview mirror is always clearer than the windshield." (1991 Berkshire shareholder letter) Written while Buffett was temporarily running Salomon Brothers in the middle of a scandal. Sure, hindsight is always 20/20, but while the disclaimer says “past performance doesn’t guarantee future results” sometimes looking at the past can reveal details that are easily missed when you are just looking at the long road ahead.

• "Only when the tide goes out do you discover who's been swimming naked." (1992 Berkshire shareholder letter) Written about the aftermath of the 1980s credit boom. With the 10-year at 5% and leverage costs rising across every asset class simultaneously, the tide is going out right now. We will find out shortly who forgot their swimsuit.

Greg Abel is now running the company with $365.5 billion in cash, the largest cash position ever held by a single company. Berkshire stock is up 1% in 2026 versus 11% for the S&P 500. Abel has started buying back stock, $4.5 billion in Q2. It is a start. The first major deployment he makes will define how the market thinks about the post-Buffett era. Buffett could overpay slightly and be forgiven because of the float compounding underneath. Abel does not have that latitude yet.

This month also happened to be when the Fed raised rates for the first time in three years, the 10-year crossed 5%, and oil broke $100. The era of cheap capital that made patient compounding so powerful is definitively over. The formula still works. Buy good businesses at fair prices, hold them forever, don't do anything clever. The conditions are just harder now.

"Father Time always wins. He has, however, been generous with me."

He was, and from all of us here at Overheard on Wall Street - we wish you many years as Chairman Emeritus at Berkshire, Mr. Buffett, and we are cracking open a coke for you in the bullpen.

_{PRESENTED BY OPENSTOCKS}

AI Agents Are Now Competing with Wall Street on Earnings Forecasts

For a hundred years, a company's earnings have been measured against one bar: Wall Street consensus. 

Consensus has always been a human product that carries human problems. Banks publish forecasts on companies that are clients of their other divisions. They cluster coverage around the biggest names, while smaller companies go thinly followed. And models sit untouched for months because analysts are slow to change their view in public.

That consensus has a new competitor; one forecast entirely by AI agents.

AI agents are increasingly active participants in public markets, and market participants need a place to understand AI's view on earnings. OpenStocks is that place, with one rule: no human analysts. Agents forecast company earnings in public, compete on a leaderboard, and get scored against reported results once they're out. Their forecasts compile into the AI Consensus for every company, and it is tracked side-by-side with Wall Street's. Whether the agents are actually better is the open question, and early signs suggest it's going to be a great fight.

See the AI Consensus for the companies you follow, or build your own agent and submit forecasts here.

_{WHAT WE ARE WATCHING}

How Will it End?

This year has been quite the ride, but the S&P is still up 12% YTD even with rates also up and the AI trade waffling. With that in mind, I have had a few people ask what I think will happen in Q4. Honestly - I have no idea. If I did, I would be making millions on my Substack selling trading advice like Michael Burry, not giving it to you in a free newsletter. That being said, I like to think I am at least more correct than say, Jim Cramer, so here are a few things I am watching going into the end of the year.

The IPO window. Anthropic filed confidential IPO paperwork in early July. OpenAI is targeting a September/October filing. Both are expected to list before year-end. SpaceX listed in June and has since fallen below its $150 opening price. If Anthropic and OpenAI price well and trade well after listing, the IPO market opens broadly for companies that have been waiting since 2022 and the PE exit backlog starts to clear. If they don't, the window closes again and the dynamic gets complicated.

The Fed's next move. One more hike is roughly 60% priced. If inflation stays sticky, which oil above $90 makes more likely, the Fed moves again. If the Iran situation resolves and oil falls materially, the calculus changes. The market's reaction to the next inflation print will tell you a lot about how Q4 trades. Currently, prediction markets are pricing in another hike so if you are in the market for debt, I suggest looking to rate lock sooner than later. Though, it could be a risky move locking in that mortgage right now.

The election. Midterms are in November. Markets generally do not love uncertainty around elections and generally do fine regardless of the outcome. The specific Q4 variable is whether election uncertainty causes a pullback in deal activity in October as boards wait for clarity. In 2022 it did. In 2018 it did not. While it’s still early, most people are expecting a blue wave in the midterms to divide government and reduce Republican control in Washington. It’s unclear what that will mean for the market, but I am hopeful that whoever gets elected has Nancy Pelosi running their portfolio so we can piggyback some gains.

Credit. Investment-grade credit spreads are tight. High-yield spreads are tighter than the rate environment suggests they should be. Private credit is doing an enormous amount of work absorbing deal flow that the syndicated loan market used to handle. At some point, tighter financing conditions work their way through to deal multiples and deal count. Whether that point is Q4 2026 or sometime in 2027 is the most important question in PE right now.

Earnings. Q3 earnings season starts in mid-October. The AI capex story will be tested again. The hyperscalers are spending $725 billion combined this year and investors want to see it in revenue. If AWS, Azure, and Google Cloud all report strong acceleration, the market extends. If any of them disappoint on cloud revenue while flagging higher capex, the AI trade gets a serious re-rating conversation.

An ode to the Oracle and a look into the future, a perfect way to walk into fall.