Author Topic: Buffett, Bogle and Berkshire shareholders  (Read 10056 times)

longinvestor

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Re: Buffett, Bogle and Berkshire shareholders
« Reply #20 on: November 06, 2019, 04:50:19 PM »
In another 37 trading days, with current price momentum, something looks likelier to happen. On Dec 31, 2019, when the clock strikes midnight, weíll get to see the 10 year performance of Berkshire versus the S&P. The narrative, in my current estimation, is likely going to shift from Berkshire trailed to Berkshire beat. Delta of ~+2% annually. The irony is that the numerical reason for this shift did not occur in 2019 or 18 or...but in 2010. The Index swung back wildly to the + side that single year to deliver a whopping +27% advantage over Berkshire. We had to wait 10 years to see that sand to be washed out!

Besides this, beating the index during itís best ever decade will be quite something. Berkshire is supposed to trail during such periods!

Canít wait. Hopefully I am correct!

« Last Edit: November 06, 2019, 05:00:01 PM by longinvestor »


scorpioncapital

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Re: Buffett, Bogle and Berkshire shareholders
« Reply #21 on: November 07, 2019, 02:55:40 AM »
I get maybe 315% for the SP500 total return and 328% for Berkshire last 10 years to date. It's so close to call a triple that one can probably say it's the same thing. I'd be very curious to see a 10 year period where the divergence is more striking.


Dynamic

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Re: Buffett, Bogle and Berkshire shareholders
« Reply #22 on: November 07, 2019, 04:54:17 AM »
Trailing 10 years: Nov 6th 2009 - Nov 6th 2019 from Yahoo Finance historical prices using their ticker symbols adjusted for split:
^SP500TR 6219.10 in 2019 vs 1756.07 in 2009. Ratio = 3.5415 = 13.48% cagr before tax
BRK-B 222.00 in 2019 vs 68.50. Ratio = 3.2409 = 12.48% cagr before tax
$242.59 would have matched the index (+12.3% difference)

Dec 31st 2009 to Nov 6th 2019: = 9.852 years.
^SP500TR 6219.10 in 2019 vs 1837.50 in 2009. Ratio = 3.3845 = 13.17% cagr before tax
BRK-B 222.00 in 2019 vs 65.72 Ratio = 3.3780 = 13.15% cagr before tax
$222.43 would have matched the index. 0.19% difference from yesterday's close. For me withholding tax on dividends would have made the S&P500 worse.

So we are basically into rounding error on the calendar decade to date and it's quite possible that Berkshire can outpace the index by more than 0.19% by the end of the year, especially if sentiment towards it has changed and the stocks it holds continue to outpace the index

By my calculation, since end of Q3 the Berkshire portfolio is up about 7.2% versus 3.4% for SP500 or 3.5% for SP500TR (dividends reinvested) and 6.7% for Berkshire stock, continuing the price outperformance during Q3. The portfolio plus KHC holding market value is up 7.6%, incidentally in those 5 weeks or so.

If Apple and the banks keep rerating upwards to the end of the year, and KHC too, that could be reflected in the price of Berkshire by more than 0.19% even if analysts continue to underestimate the Berkshire portfolio gains as they did last quarter.

So it's certainly feasible for Berkshire to do marginally better than the index over a 10 calendar year period and a calendar decade coming out of a major systemic shock, where we're told that value has underperformed as a style, and such a period without any more than a brief flirtation with a 20% drop from its peak that would be called a bear market (the index dropped by a fraction more than 20% from last year's September peak to 24th December intraday, I seem to recall, then rebounded, so not being a closing price it's probably not quite classified as a bear market).

What will be really interesting is whether Berkshire can significantly exceed the index performance when this bull run comes to an end. By significantly, I probably mean 10-30% in total outperformance over a decade, not much more, though timing of the end points could also make a major difference.

Berkshire offers so many advantages to me over an S&P500 index fund (trust, low debt, ability to value it and assess its trading range, sufficient diversification, no dividends to pay tax on), that I'm quite happy to accept roughly market matching performance over a decade or so of buy-and-hold plus occasionally switching some of my portfolio into high conviction ideas, and sleep very well knowing it's being managed honestly and competently for the long term. It remains my default investment for a large portion of my wealth while I'm waiting for the next big idea, or to switch back into when my last big idea reaches rather high valuations that make me nervous about the downside risk, and I cannot foresee it losing its appeal as the major part of my portfolio for at least one or two decades unless I find something even better, even though I may retire within 2-5 years. It should be a very good vehicle to continue safely compounding faster than inflation plus my draw-down rate in retirement. That would leave me room to take sizeable positions in other high conviction ideas to increase my financial security or my spending power.
« Last Edit: November 07, 2019, 06:09:22 AM by Dynamic »

longinvestor

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Re: Buffett, Bogle and Berkshire shareholders
« Reply #23 on: November 07, 2019, 08:46:44 AM »
I get maybe 315% for the SP500 total return and 328% for Berkshire last 10 years to date. It's so close to call a triple that one can probably say it's the same thing. I'd be very curious to see a 10 year period where the divergence is more striking.

I got ahead of myself by a year. My bad! To wash off the single year pendulum swing in 2010, the ten year clock ends 12/31/2020. Duh. Plus too many assumptions to make about the next 13+ months.

I will wait!