No. of Recommendations: 33
“ Berkshire Hathaway BRK.A BRK.B stock over the past 20 years has almost precisely equaled the return of the S&P 500 SPX. Let that sink in for a minute. Berkshire Hathaway’s CEO, Warren Buffett, widely considered to be the most successful investor alive today, has merely matched the market’s return over the past two decades.”True enough.
Though it's possible one might want to consider the emphasis on the word "past".
It HAS been difficult to beat the S&P, but that does not necessarily mean that it will continue to be true in the same way.
After all, management is responsible for business results. Mr Market determines the price. The two can diverge over long periods sometimes.
Consider what management has achieved, without considering Mr Market's opinion of it:
http://www.stonewellfunds.com/BerkshireAndSpyValue...This graph is suitable for comparing the progress of the value of a Berkshire share to the progress of the value of the S&P
Index. It's not a graph of total return.
Warm red/orange colours = possible yardsticks of value for Berkshire
Cool greenish colours = possible yardsticks of value for the S&P 500
I made the spots bigger for the yardsticks that are the best metrics of value in each case.
Berkshire's value has risen quite a lot more than that of the S&P 500 in the last couple of decades.
Berkshire has become cheaper, and the S&P has become more expensive, so the market returns (once you add the dividends for the S&P) have been close to a tie.
Again, this doesn't say what will happen in future. But it's a deeper view of the past. Prices fluctuate.
As an aside, the 20 year mark is a particularly unlucky interval for Berkshire vs S&P price comparisons : )
Brk absolutely trounced the S&P in the period 20-23 years ago. And that wasn't back in the era of Berkshire's fast value growth, just Mr Market doing his thing.
Jim
