As a huge fan of Buffett, I must point to the fact that can materially change this comparison in the years to come:<p>- stock market returns were abnormally high for the past 15 years<p>- Berkshire is sitting on a huge pile of cash, ready to invest<p>This is a very similar scenario to what people were saying in 1999 - Buffett is done etc. I highly recommend reading his biography - "The Snowball" and especially the preface when they describe the speech he gave in 1999, about stock market levels and valuations. Mind blowing, knowing what happened later.
So it seems that Buffet, ironically, does not follow his own advice of simply buying an ETF and holding it.<p>Also, I know some "celebrity traders" in Poland who advertise their IKE (think of it like a Polish version of Roth IRA account), where out of 170,000 PLN cash savings over 10-12 years they can get 1,800,000 PLN (for the average return of 37% per year) - how's that for beating the market?
Anyone with a well balanced portfolio of asset classes lost to the "market", which I suppose we mean the S&P 500. Bonds prices were killed the last year or two. I would argue the S&P, being about 25% tech stocks, is not as diversified as people think. Tech did great the last 20 years, and maybe they will continue. But it is risky to JUST invest in the S&P.
From the data in the article, the underperformance has really set in during the last 6 years. It’s a progressive decline.<p>Pandemic market distortion maybe ? Warren and Charlie just getting long in the tooth and slowing down ? Are the up-and-coming managers at BH (are there any ?) calling more of the shots and getting it wrong ?
Berkshire's huge pile of cash is more than likely the <i>reason</i> for the latter-day under-performance.<p>In its early years, its cash pile was obviously much more modest, and it was easier to find opportunities which would fit Buffett's investment criteria while also moving the needle from an ROI standpoint.<p>But now that cash pile has grown substantially. It's orders of magnitude harder to find investments which move a $100 billion needle, and Buffett is unwilling to lower his standards such that he can find businesses to spend his cash on.<p>Hence Berkshire has little other choice but to park its un-deployed assets in relatively low-performing but liquid accounts, ready to invest if needed but otherwise not doing much for the bottom line in the meantime.<p>TL;DR- Berkshire may be a "victim" of its own success.
I get completely different numbers (although the tldr is no less alarming). Does someone want to check my work? <a href="https://gist.github.com/RantyDave/41ac164cfcf527a91d3b97c8dd19ed3c" rel="nofollow noreferrer">https://gist.github.com/RantyDave/41ac164cfcf527a91d3b97c8dd...</a>