Last week I addressed your question, “Do I think Warren Buffett is the greatest investor ever?” To answer this question, I put some facts on the table and compared the results of Berkshire Hathaway to just investing in the market since the most recent market reversal that began in March of 2009, plus comparisons for 2013. Today I will present a bigger picture of Mr. Buffett’s returns to help answer your question.
I designed a longer term chart, comparing price performance of Berkshire Hathaway vs. just investing in the market. I went as far back as my charting system allows (1994) to pick up the price of (BRK/A and will compare Berkshire Hathaway (BRK/A) vs. the market ($SPX) along with two additional ETFs, the SPDR S&P 500 main ETF (SPY) and the RYDEX S&P 500 Equal Weight ETF (RSP). In addition, ETFs, SPY and RSP include dividends while Berkshire Hathaway currently does not.
During this 20 year timeframe, the general market had a 274 percent return. You can see Buffet’s Berkshire Hathaway (BRK/A) grossly outperformed the market with a fantastic 767 percent return, a difference of 493 percent. In addition, the equal weight ETF (RSP) had an outstanding return of 493 percent, 219 percent more than the general market but 274 percent less than Berkshire Hathaway. In addition, Berkshire did outperform the general market ETF (SPY) by a whopping 332 percent. This averages out to 16.6 percent a year.
With so many items to consider, I find it virtually impossible to prove who the “Best Investor of All Time” is. I do believe many have attributes that would put them in the running. Four facts; no matter the timeframe, one cannot go back in time to take advantage of any of these returns, past performance does not dictate future returns. Buffett’s (BRK/A) performance has not been as effective as just investing in the market with either SPY or RSP since March 2009. Today, we saw BRK/A’s performance smoked the competition in the longer run.
Nevertheless, Mr. Buffett has many, many positives including his impressive work ethic that investors of all ages can benefit from and, in my book, is worthy of this very prestigious title.
Next week, my goal is to answer some of your questions on Bitcoins, and see what the fuss is all about!
Plan your work, work your plan and learn to share your harvest!