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The week's question
In March 2025, in the thread "Re: OT, out", Umm asked the members: "Do you think it is because America is made up of magical soil that makes businesses based in America magically profitable?" This week it is put to everyone again. The button below opens the small thread re-asking it - read what others have said so far, then give your own answer as an ordinary reply.
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Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
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Author: mungofitch ✹✺🐝 SILVER
SHREWD
  😊 😞

Number: of 22351 
Subject: Re: Buffett interview 2019. BRK vs SPY
Date: 07/21/23 2:34 PM
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No. of Recommendations: 14
It is a very close tie in this stretch: roughly a tie in terms of value creation, and roughly a tie in terms of price return.
Both picks became a little bit more expensive, but by roughly the same small amount.

The S&P has had an astounding run of profitability, and in that sense has barely become more expensive since that interview in spring 2019.
Smoothed real earnings for the S&P have been rising 5.34%/year in the last five years, the highest rate in about 65 years.
(the high rate is due to great margin improvement - real sales rose at 2.83%/year in the same stretch)
Since the interview, smoothed real earnings are up 5.8%/year plus dividends of 1.68% for value creation rate of inflation + 7.48%/year, which is historically phenomenal.

To get a sense of how fast that rise in profitability is: during the average five year stretch since 1960, the smoothed real earnings of the S&P 500 rose 2.27%/year.

Berkshire's book value rose inflation + 6.9%/year to March 2023, or about inflation + 7.8%/year to estimated June 2023, so almost exactly the same value creation rate as the S&P 500 in this stretch.

About the only excuse a Berkshire perma-bull could cite is that Berkshire's value growth rate wasn't an outlier, and the S&P's appears to have been : )

Jim
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This community has written 21,861 posts about Berkshire Hathaway. The article-length ones it recommended most:
BRK: Why Not XOM? · 62 recs · 2024
Second quarter comments · 60 recs · 2023
Berkshire's Profit Contributors · 58 recs · 2023
Summary of 2Q 2026 · 55 recs · 2026
3Q Summary · 53 recs · 2024
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