This is how Berkshire Hathaway stacked up against the S&P 500 and Apple while Buffett was still at the helm:

                     6M Return   1Y Return   5Y CAGR   10Y CAGR
BRK-B                   2.7%       13.1%       12.8%      13.6%
S&P 500 / SPY           12.6%      23.7%       13.3%      15.3%
Apple                   12.9%      43.0%       17.0%      29.0%

All figures are total returns, including dividends where applicable.

So I find it interesting that people seem to be becoming more bullish after the changing of the guard.

Berkshire should be evaluated not simply on whether it will continue to do well, but against the best available alternatives and the opportunity cost of capital. Steering a ship of Berkshire’s size is enormously difficult, and even Buffett struggled to outperform the S&P 500 in more recent years.

Buffett is naturally inclined to leave shareholders with a reassuring picture as he steps away. That does not mean Berkshire will perform poorly. My question is: how well will it perform relative to the benchmark?

The Google investment also strikes me as a sign of how Berkshire’s size is pushing it farther beyond Buffett’s traditional circle of competence. To deploy capital at this scale, Berkshire increasingly has to accept businesses whose long-term economics, at least by Buffett’s traditional standards, are less predictable and more exposed to technological disruption than the companies he historically preferred.

The key question for me is therefore whether Abel can produce superior returns using largely the same ingredients, but with a more aggressive capital-allocation stance. Perhaps he can — but given Berkshire’s enormous size and Buffett’s own difficulty outperforming the index in recent years, I would not assume that a more aggressive Berkshire automatically means a better-performing Berkshire.