Barron’s says Berkshire stock will probably move higher over the next few years, but it predicts some financials, and even the S&P 500 stock index, will do better, “especially if Buffett’s glorious tenure ends.”Source: CNBC.com
It’s interesting that this statistic from the BrkHath Chairman’s letter is not reprinted.
- Since 1965-2006 (41 years) Berkshire has outpaced the S&P500 by 11% per year on average. (21.4% CAGR versus 10.4% CAGR)
- Less risk / std deviation in return over time than the S&P 500.
- In same span, BrkHath’s Book value was down 1 year on an absolute level : 2001. S&P had 10 down years during same span.
Several points that I think about.
- Investment firms unlike say software firms can be more driven by the top few people. This argues that after Buffett and Munger leave that the firm’s growth will slow.
- On the other hand, having a firm that’s only had shrinking book value once in 40 years is a big, big achievement. That’s the kind of thing that gets at discipline and gets at an organization–not just a few individuals–being oriented and well-structured in their approach.
- Similarly to do it again and again at lower risk than the S&P 500 is a testament to a discipline and approach that given it’s long time horizion, I’ve got to think spans beyond the two key leaders there.
A final note. Even after the past week’s Barron’s sell off, check out this chart comparing BrkA to S&P500 on YTD basis. BRK.A 23% v. S&P 3%.
Disclaimer: I am a shareholder, so bias may exist.