The stock god retires! Buffett: The US fiscal policy strategy scares me, please be cautious in choosing currencies that won't depreciate!

The Berkshire Hathaway annual shareholder meeting in May 2025 is destined to go down in history. The legendary investor, "Oracle of Omaha" Warren Buffett, who is 95 years old, confirmed in person the end of an era—he will officially step down as CEO of Berkshire by the end of this year, handing over the helm of this trillion-dollar investment giant to his already designated successor. However, in addition to the historic moment of generational change, Buffett's message during the hours-long Q&A session, especially his rare stern warning about the current US fiscal policy and his deep concern about the risk of currency depreciation, sent shockwaves through the global investment community. This value investing guru, who has believed in the long-term prosperity of the United States all his life, bluntly said that he was "afraid" of certain practices in the United States, and warned investors: in this era of uncertainty, "please choose a currency that will not depreciate"! This statement is not only a wake-up call for traditional investors, but also a subtle echo of the current discussion about emerging assets such as cryptocurrencies as potential anti-inflation tools. The legend of a generation comes to an end.

Buffett clearly stated at the meeting that the board will officially appoint 62-year-old Greg Abel, Vice Chairman of Non-Insurance Operations, to succeed him as CEO before the end of the year. Although Buffett will remain as Chairman to provide assistance, the day-to-day operational power will be entirely handed over to Abel. He jokingly said that after stepping down, Abel will have plenty of room to utilize Berkshire's massive cash reserves to make his mark. At the meeting, Abel also publicly responded to questions about future capital allocation strategies. He emphasized that he would steadfastly adhere to the strong values and investment philosophy established by Buffett and his late partner Charlie Munger over the past sixty years, maintaining the company's reputation and a strong balance sheet. He views Berkshire's record cash reserves as a significant strategic asset and will continue to seek investment opportunities in excellent operating companies that can generate substantial cash flow, while also stressing the importance of properly understanding and managing risks. This statement aims to stabilize investor confidence and indicates that Berkshire's core investment philosophy will not easily change due to leadership transitions. As Buffett is about to hand over the reins, Berkshire's balance sheet also presents a striking phenomenon. According to the latest financial report, the company's holdings of cash, treasury bills, and other short-term investments have reached an astonishing $347 billion, setting a new historical record. Behind this is Berkshire's tenth consecutive quarter of "selling more than buying" in the stock market. In 2024 alone, the company sold over $134 billion worth of stocks, primarily reducing its holdings in its two largest investments—Apple and Bank of America. While Buffett praised Apple CEO Tim Cook at the meeting as the right successor to Steve Jobs, making a lot of money for Berkshire, the move-in shows that opportunities he thinks are worth buying are becoming scarce at current market valuations. Warren Buffett admits that finding a good place to buy is not an easy task, and the odds increase over time, but the process is not linear. He expects the timing to use this huge amount of cash to find great investment opportunities "likely to emerge in the next five years". Regarding the recent market fluctuations, Buffett appears quite calm, believing that what has happened in the past 30 to 45 days is really not significant, and points out that during his 60 years at the helm of Berkshire, the company's stock price has halved three times. Therefore, he stated that the recent trend in the U.S. stock market should not be viewed as a huge shift; this is not an extreme bear market or a similar situation. Core Warning

While expressing confidence in the long-term resilience of the U.S. economy (he reiterated the "American exceptionalism," believing that the U.S. has solved all the problems it has encountered in history), Buffett issued an unusually stern warning about current fiscal policy. He frankly stated that he feels "afraid" of the U.S. fiscal policy, with major concerns about the government’s continued massive fiscal deficits and the potential devaluation of the currency (U.S. dollar) that may result. As an investment giant managing hundreds of billions of dollars in assets, he is extremely sensitive to the risks of erosion of the purchasing power of fiat currency. In recent years, the U.S. government has implemented extremely loose fiscal and monetary policies to cope with the impact of the pandemic and stimulate the economy, resulting in a sharp increase in government debt and persistently high fiscal deficits. Although inflation has eased recently, it remains at a relatively high level. At the same time, after a period of strength, the dollar exchange rate is also facing downward pressure, with some market analysts predicting that the dollar may weaken further in the future. Globally, discussions around "de-dollarization" are also increasing. In this context, holding fixed income bonds (such as long-term government bonds) cannot provide adequate protection as their coupon value will be eroded by inflation and currency devaluation. Therefore, Buffett offered clear investment guidance: avoid holding currencies that may depreciate and emphasized the importance of "carefully selecting currencies that will not depreciate" when making investment decisions. The underlying message is that investors need to seek assets that can hedge against the risk of currency devaluation. Investor Insights

Buffett's retirement declaration and his stern warning about currency depreciation have profound implications for global investors, especially individuals and institutions seeking to preserve and increase their long-term wealth. When even the most recognized successful value investors express concerns about the future of fiat currency, ordinary investors should be more cautious in considering how to allocate their assets to cope with potential risks. Buffett's remarks undoubtedly reinforced the market's demand for inflation-resistant assets. Traditionally, gold has been seen as the preferred tool for hedging against currency depreciation. Although Buffett himself prefers high-quality equities that can generate sustainable cash flow, his emphasis on currency stability objectively enhances the appeal of hard assets like gold. Interestingly, Buffett's concerns about the devaluation of fiat currency are precisely the core argument held by many cryptocurrency (especially Bitcoin) supporters. One of the original intentions behind Bitcoin's design is to combat inflation and value erosion caused by the excessive issuance of currency by centralized institutions, through its fixed total supply cap (21 million coins) and decentralized characteristics. Despite Buffett himself repeatedly expressing disdain for cryptocurrencies like Bitcoin, calling them "rat poison squared" and stating that they have "no intrinsic value," his BNSF railroad company has piloted the use of Bitcoin for settling cross-border coal trades, while his energy subsidiary Naumann Holtke accepts Ethereum for equipment procurement payments. It can be said that Buffett accurately diagnosed the "disease" (fiscal deficit and currency devaluation risk) facing the current financial system. Although his "prescription" is to hold equity in quality companies and avoid holding weak currencies, supporters of cryptocurrency argue that "digital gold" like Bitcoin provides a brand new solution that is independent of the traditional system. Both share a common understanding of the problem, but have chosen entirely different paths for the solution. For investors, it is crucial to understand Buffett's concerns. Whether you agree with the value of cryptocurrencies or not, you need to face up to the long-term depreciation pressure that fiat currencies may face, and include assets in your portfolio that can effectively hedge this risk. This could include gold, certain commodities, high-quality multinationals (especially those with pricing power and a global presence), or for investors with a higher risk tolerance, a small allocation to cryptocurrencies after careful research and risk assessment. Conclusion: Future Challenges The retirement speech of the stock god may serve as a "terminal notice" for the dollar system. When the traditional investment guru begins to advocate for "currency diversification," it signifies a fundamental shift in the logic of global asset allocation. As Buffett said in his conclusion: "The essence of currency is trust, and when that trust gradually erodes within the traditional financial system, capital will naturally seek new anchor points." For ordinary investors, this may mean the end of an era — the era where merely holding dollars ensured peace of mind is quietly coming to a close, as warned by the stock god. For global investors, how can they protect their wealth in an era of potential currency depreciation? Is it to stick to traditional value investment and look for the "moat" company favored by Warren Buffett? Or embrace hard assets like gold? Or will they set their sights on new assets such as Bitcoin, which is controversial but is considered by some to be a "digital Noah's Ark"? This will be the question that every investor will have to face and answer seriously for years and decades to come. Warren Buffett's era is coming to an end, but the wisdom and warnings he left behind will continue to reverberate in the capital market. #Crypto Market Correction