Warren Buffett’s track record at Berkshire Hathaway is stellar.
But the CEO of rising robo-advisor Betterment says Buffett’s advice to most investors — that they should buy S&P index funds and hold them — “doesn’t work anymore.”
In fact, “It’s not actually making the most of your money. You can do a lot better than that,” CEO Jon Stein, said Sunday on CNBC’s “On the Money.”
The Oracle of Omaha has a strong track record. The market value of the company’s shares has roared ahead at a compound annual growth rate of 20.8% since 1965 — more than double the S&P 500’s 9.7%.
In 2016, Berkshire shares soared 23.4%, beating the S&P’s 12.0% improvement. A year earlier, the shares dropped 12.5%, while the S&P gained 1.4%.
But not everyone can afford Berkshire shares or to invest as it does. So the Oracle of Omaha frequently advises investors to consider Vanguard’s “ultra-low-cost index funds,” as he described them in his latest letter to shareholders.
The funds have netted company founder John Bogle “only a tiny percentage of the wealth that has typically flowed to managers who have promised their investors large rewards while delivering them nothing,” he explained.
Not So Fast