Always interesting to see how Buffett is doing, especially in this new 21st century world.
Ignore the headline:
Just look at this bit:
…Buffett said the last eight years or so have been a tough environment for active investors to beat the S&P 500 index. In fact, he told CNBC that Berkshire investment managers Ted Weschler and Todd Combs have trailed the S&P 500 by a “tiny bit” since each joined the company…
However, Buffett pointed out that Combs and Weschler — both former hedge fund managers, and each managing about $13 billion of the Berkshire portfolio — have done better in the market than he has over the same time period.
Maybe I’m reading this wrong, but it does seem that neither Buffett nor two of his investment mangers have even equalled the S&P 500 during the last 8 years.
This is the +/- of BRK/A vs S&P 500 since 2009
The past decade has favored growth style investing and not the value style he is famous for. Four years of underperformance and 3 of just barely beating the S&P.
It’s also difficult for them to move the needle without hitting the “uncertainty principle”. If one of us buys a few thousand shares of the average company, it means a lot to us, but doesn’t affect the stock’s price much. If Berkshire buys a few million shares of one of the modest companies we chat about here - well, come to think of it, there may not be that many shares in existence on some of these companies …
If Berkshire buys a few million shares of one of the modest companies we chat about here - well, come to think of it, there may not be that many shares in existence on some of these companies …
Yeah, there definitely is a law of large numbers at play here. Buffett himself said as much a while back.
While we’re on Buffett, turns out that after buying $2.1B of Oracle in Q3 last year, he sold it all in Q4. He said (https://www.bloomberg.com/news/articles/2019-02-25/buffett-d… ):
“I’ve followed it from the standpoint of reading about it, but I felt I didn’t understand the business,” Buffett said Monday in an interview on CNBC. “Then after I started buying it, I felt I still don’t understand the business. I actually changed my mind in terms of understanding it…Oracle is a great business, but I don’t think, particularly after my experience with IBM, I don’t think I understand exactly where the cloud is going.”
There’s no denying what Buffett has accomplished, but the world he knew has changed. It’s not just IBM or Oracle, looks at what has just happened with Kraft Heinz. I read an article saying the brands are “Cuban Missile Crises brands” - the brands that you’d stock in your fallout shelter back in the day (if you have to Google “Cuban Missile Crises” or “fallout shelter” you’re young enough to have made my point).