Warren Buffett is warning investors against piling into a traditionally safe area of the stock market
From Yahoo Finance: 2025-05-05 19:02:00
Warren Buffett warns investors that the electric utility sector is no longer as reliable as it once was due to the growing risk of wildfires. Companies like Hawaiian Electric, PG&E, and Edison International have seen plunging stock prices in recent years due to these risks.
Buffett highlighted at Berkshire Hathaway’s annual shareholder meeting that the utility sector, traditionally seen as a safe haven, now carries increased risks. He pointed to wildfires as a key reason for caution, citing examples like Hawaiian Electric and Edison in California’s current wildfires situation.
Shares of Hawaiian Electric tumbled 76% in August 2023 amid fears of liability for deadly Maui fires, while PG&E faced billions in payouts and a 95% stock price crash for starting wildfires. Edison International also saw a 37% drop over liability concerns for the Palisades fire in 2025.
Berkshire Hathaway Energy, Buffett’s conglomerate, isn’t immune to these risks, with Berkshire Energy declining in value over societal factors. CEO Greg Abel echoed concerns, emphasizing ongoing efforts to reduce wildfire risks despite no quick fixes. PacifiCorp, a Berkshire Hathaway Energy subsidiary, paid over $1 billion in settlements for wildfires, posing a challenge for a low-return utility business.