I tell them I own BRK and plan to own it for a long time, and sometimes I wonder why myself. First of all, it’s really big now so it’s japanese housewives currency trading to be hard to grow the way they used to. 500 billion, it’s going to be hard to keep growing at a high pace. 2000 before they all came crashing down.
1 trillion companies hit that wall and come crashing down. In any case, BRK is just too big to get too much alpha going forward. Buffett created the performance of the last half a century, but he is clearly not going to lead the charge for the 50 years. This doesn’t mean BRK can’t outperform. Buffett hired some great managers to help manage the equity portfolio, but their historical performance is sort of irrelevant too.
Those guys posted great returns with a much, much smaller capital base. And there aren’t a lot of those. And people say that BRK hasn’t even been performing all that well lately, underperforming in the past five years. The rolling five-year BPS growth vs. People often point to this to show that the era of BRK outperformance is over. P 500 index had a lot of catching up to do compared to BRK. Looking only at the above table of the last five years misses a lot of crucial information.
Having said that, it’s true that the supergrowth of BRK ended back in 1998, but has been a steady grower since then. Check out the below log chart since 1980. You can see two clearly different eras in terms of performance. Since then, things have flattened out a little, but the returns aren’t that bad at all. Of course, we know how great the performance has been since 1965. But check out the past five years. P 500 total return, but outperformed based in BRK’s stock price.
If you look at all the time periods, though, BRK has outperformed both on a price and BPS basis in most time periods. P 500 index since the 1989, 1999 and 2007 market peaks, and also on a price basis in most of those time periods. Not like it used to be, but not bad! How many funds can you name that has done as well?