Berkshire Hathaway Shares Down 5% As Barron’s Says Sell, But Bulls See Buying Opportunity – Warren Buffett Watch – CNBC.com

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.

Berkshire Hathaway Shares Down 5% As Barron’s Says Sell, But Bulls See Buying Opportunity – Warren Buffett Watch – CNBC.com

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