Prediction: Buying Berkshire Hathaway Stock Today Could Set You Up for Life

The news is finally official: Warren Buffett will step down as Berkshire Hathaway's (BRK. 04%) chief executive officer by the end of 2025. "There was no magic moment," Buffett told reporters. "How do you know the day that you become old. " If you think Berkshire Hathaway is no longer a good investment without Buffett at the helm, think again

He has been getting the transition ready for years

In many ways, little will change

The company will largely be headed by his handpicked successors, who are already employed by Berkshire

This team is responsible for some of its biggest investments

Could buying Berkshire stock still set you up for life

In fact, there are two reasons to remain excited over the long term

Berkshire needs fresh ideas for its growing cash pile The stock has been one of the best-performing investments of all time, posting double-digit percentage annual returns for decades at a time

While it hasn't been a major drain on returns yet, Berkshire's growing cash pile will increasingly become a blem when it comes to matching the market's returns

It's hard enough to beat the market year after year

It's even harder to do when a significant amount of your capital is tied up in cash

Fortunately, Buffett's investment team is ready for the challenge

Without them, it's possible that nearly half of Berkshire's valuation would be tied up in cash right now

Buffett had long avoided stocks this. "I know as much semiconductors or integrated circuits as I do of the mating habits of the chrzaszcz [a Polish beetle]," Buffett once said

Yet four years later, the company began loading up on Apple s

It wasn't Buffett, but rather two of his lieutenants: Todd Combs and Ted Weschler

These are the two figures widely believed to be responsible for the huge bet on Apple

It has netted Berkshire huge fits over the years, a testament to Combs' and Weschler's wess

With more cash than ever, Berkshire will need fresh ideas to keep its streak of high annual returns going

Fortunately, we already have evidence that the remaining team can put big money to work with fantastic results, a strongly optimistic sign for the decades to come

Image source: Getty Images 2

Berkshire's structural advantages remain in place Berkshire is in great hands when it comes to its investment capabilities

Weschler and Combs alone are already responsible for one of the biggest and most fitable bets in company history

But what the rest of the

On that front, everything remains in place as well

Perhaps the company's biggest advantage has been its organizational structure

At the core sits a portfolio of insurance es

While not hugely fitable, they generate a lot of investable cash

Buffett calls this excess cash "float. " Float is generated because insurance companies collect premiums on policies, but don't need to pay out that cash until a claim is filed

Decades ago, Buffett realized that this was essentially free investment capital

By this float, he has turned his company into what it is today

Beyond that, Berkshire does have a publicly traded portfolio

But it also owns a long list of private es

Each one, Buffett stresses, operates largely autonomously. "The important thing we do with managers is to find the. 400 hitters and then not tell them how to swing," he has said

Even after Buffett steps down, none of this will change

The company will retain the same structural advantages that have fueled its huge rise over the decades

So if you own s or are still thinking jumping in, Berkshire Hathaway remains one of the few "buy it for life" companies

Ryan Vanzo has no position in any of the stocks mentioned

The Motley Fool has positions in and recommends Apple and Berkshire Hathaway

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