Berkshire Hathaway Chairman Warren Buffett garnered more votes than any other member of the 2018 IA 25 and topped the portfolio category. This popularity speaks to Buffett’s incredible investing success and deep sense of integrity.
Berkshire’s per-share book value has a 19% yearly compound growth rate for the last 53 years. In ‘17, its shares rose 21.9% vs. 20.9% for the index, including dividends. Plus, as Buffett points out, the firm’s figures are post-tax, while those of the index are pre-tax.
In business and life, the Oracle of Omaha keeps the right perspective, offering investors unwavering honesty about the ups and downs of the market and the need to avoid greed. “Our aversion to leverage has dampened our returns over the years. But [business partner] Charlie [Munger] and I sleep well. Both of us believe it is insane to risk what you have and need in order to obtain what you don’t need,” Buffett explained in his latest letter to shareholders.
While he unemotionally evaluates potential investments, the investment guru also looks at them as entities run by people for people — rather than just numbers. “Charlie and I view the marketable common stocks that Berkshire owns as interests in businesses, not as ticker symbols to be bought or sold based on their ‘chart’ patterns, the ‘target’ prices of analysts or the opinions of media pundits.”
One investment expert noted that Buffett’s uncanny ability to pick and manage investments is a powerful argument against the view that active management is dead, adding that Berkshire Hathaway’s 20.8% annual returns from 1965-2016 were more than double the annual return of the S&P 500 over that same period.
Buffett has learned what it takes to keep the right market view: “Stocks surge and swoon, seemingly untethered to any year-to-year buildup in their underlying value,” he said. “Over time, however, Ben Graham’s oft-quoted maxim proves true: ‘In the short run, the market is a voting machine; in the long run, however, it becomes a weighing machine.’”
Liz Ann Sonders shares regular and sober market analysis with advisors and investors, keeping them up to date on short-term trends and educated on broader issues. (She has more than 52,300 followers on Twitter.)