With inspiration from dividends20, I was a bit curious, so I took a look at trailing 5-year, 10-year, 15-year, 20-year, 25-year, and 30-year returns of BRK-A vs SPY (the ETF, with dividends included). Because I was using Yahoo Finance and I wanted to remember where I was starting and stopping, I used calendar years. And because I think in terms of CAGR, Iām going to list the CAGRs. I also took a look at returns if one rebalanced between BRK-A and SPY at the beginning of each year. The two investments have a positive correlation, but at a correlation of 0.6 for annual returns, itās not super-high. In some periods, rebalancing annually would have given a better return than holding either investment by itself.
In looking at the returns, I would have wanted to be in BRK-A in those first 10 years, i.e., 1995-2004. Since the beginning of 2005, I really canāt see a huge difference one way or the otherā¦? I was actually surprised at how close they were.
Even a little bit of compounding over the years can really add up. So looking at the totality of Brk. It would have been much better to have invested in Brk. Brk is blue, S&P is Red.
I have never invested in BRK but nobody can say he isnāt a very good investor. If he had 20 more years I might have invested in him now because itās always when people doubt him that he takes off again. Investing goes in cycles and Value investing is just out right now. But sooner or later it will be back and growth will be on a haitus.
But even though I admire Warren I do not worship him like some people do others. Some people just need someone to save them because they donāt have the guts to save themselves.
Call me crazy, but Iāve done exceedingly well with BRK-b. Bought a bunch of it for myself and family in 2011 in the $60s. Pretty good. Recommended to a good friend around 2015 to buy lots of it at $129. Pretty good. Bought a short term ātradeā position in 2019 at $195ā¦ and just kept it as it climbed. And recommended to family to do the same, which they did. Not bad. Inherited shares in 2022 at $286. Iāll take it. I have no idea how this compares to S&Pā¦donāt really care. It certainly has contributed to my overall portfolio trouncing the S&P the last 25 years or so. Warren Buffett is one of the best human beings to ever play this game of the stock market, hand down.
conifer
Dividends ruined the s&p comparison. I have millions in tax deferred w/brk!!! The government loaning you millions is something an ignorant indexer will never enjoy or comprehend. Dividends are evil w/29 years compounding!!!
Not āevilā per se. But doing comparisons without taking into account ācompounding with a tax dragā versus ācompounding without a tax dragā isnāt a proper comparison. This is especially true over longer periods of time.
Nobody said Berkshire is tax free. The point is comparing something that has a constant ātax dragā to something that doesnāt have a constant ātax dragā will have different compounding results. Especially over the very long term.
Most of the time, yes. But due to oddities in US tax law, very often some portion of it might end up becoming tax free due to the basis step up at death.
And because I think in terms of CAGR, Iām going to list the CAGRs. I also took a look at returns if one rebalanced between BRK-A and SPY at the beginning of each year. The two investments have a positive correlation, but at a correlation of 0.6 for annual returns, itās not super-high. In some periods, rebalancing annually would have given a better return than holding either investment by itself.