If This Warren Buffett Stock Plunged by 99% Today, It Would Still Have Outperformed the S&P 500 Since 1965

Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) was a struggling textiles manufacturer when Warren Buffett acquired a controlling stake in 1965. After deciding its core business was no longer viable, he turned it into a holding company for his various investments.

Buffett retired from his role as Berkshire's CEO at the end of 2025, capping off a stellar 60-year run during which the company's shares significantly outperformed the broader market. In fact, if Berkshire stock plunged by 99% today, its remaining return would still be higher than the gain in the S&P 500 (SNPINDEX: ^GSPC) index since 1965. Here's how Buffett and his team created so much value.

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Berkshire's incredible returns

Buffett used very simple criteria when selecting stocks and potential acquisitions during his 60-year tenure as CEO of Berkshire. He looked for companies with steady growth, consistent profits, and strong management teams, but he particularly liked those with shareholder-friendly initiatives such as stock buyback programs and dividend schemes, because they helped compound his returns much more rapidly.

Berkshire now operates several wholly owned subsidiaries in the insurance, logistics, and utilities industries, and it uses their steady, reliable cash flow to invest in other businesses. The conglomerate has purchased entire companies, including Duracell and Dairy Queen, outright, but it also owns minority stakes in more than 40 different publicly traded companies through its $317 billion stock portfolio.

Berkshire's top five stock positions are Apple (NASDAQ: AAPL), American Express, Bank of America, Coca-Cola, and Chevron, and they alone represent 63% of the value of its entire portfolio. Buffett always ensured Berkshire was exposed to a diversified group of industries, but he clearly wasn't afraid to swing for the fences when good opportunities came around.

Apple is a great example. Buffett and his team invested $38 billion in the iPhone maker between 2016 and 2023, which is more than they have ever parked in any other stock. Going into 2024, that position was worth more than $170 billion and made up more than half of Berkshire's portfolio on its own. Buffett then started selling Apple stock to cash in some profits and reduce risk, and by the end of 2025, he and his team had offloaded around 73% of Berkshire's position.

Big wins like that helped fuel Berkshire's market-beating growth. The conglomerate has delivered an average annual return of 19.7% since 1965, outpacing the S&P 500, which climbed 10.5% per year over the same period. But the difference is far more pronounced in dollar terms, thanks to the magic of compounding.

Had you invested $1,000 in Berkshire stock 60 years ago, it would be worth $48.5 million today, whereas the same investment in the S&P 500 would have grown to just $399,702 over the same period. That truly highlights the magic of compounding. In fact, if Berkshire stock plummeted by 99% today, your $48.5 million fortune would shrink to just $485,000, but that's still more than you'd have if you backed the S&P 500 in 1965 instead.

Buffett stepped down, but his influence will remain

Buffett might not be Berkshire's CEO anymore, but he continues to serve as the company's chairman so he will still have some influence over the conglomerate's investment strategy. Plus, his chosen successor for the CEO role, Greg Abel, has been with Berkshire since 1999. He was appointed vice chairman of non-insurance operations in 2018 and he worked closely with Buffett, so he is very well prepared for the top job.

Plus, Berkshire has never been in a better financial position. Buffett and his team have been net sellers of stocks for the last few years, so the conglomerate is currently sitting on a whopping $381 billion in cash. There are 477 companies in the S&P 500 that Berkshire could buy outright with that cash pile, so Abel has everything he needs to succeed in the post-Buffett era.

In a recent interview with CNBC, Buffett said Berkshire has the best chance of being here 100 years from now than any other company he can think of. As long as Abel champions the same formula which made the conglomerate so successful to date, I would have to agree with that statement.

Bank of America is an advertising partner of Motley Fool Money. American Express is an advertising partner of Motley Fool Money. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, and Chevron. The Motley Fool has a disclosure policy.