Warren Buffett

#4: Warren Buffett is not an Index Hugger

Two weeks ago, the Financial Times (FT) Unhedged Newsletter (URL) joined many others to write about Warren Buffett and Berkshire Hathaway (BRK) in the week of its famous annual general meeting in Omaha. The FT also published an outstanding series on the future of Berkshire Hathaway without the now 93 year-old legendary CEO and Chairman (URL).

I stumbled across some statements in the two Unhedged Newsletters “Warren Buffett: The world’s richest index-hugger” (URL) and “Berkshire’s next move” (URL) from May 6 and 7, respectively. I have nothing qualified to say about Buffett’s succession, but I do believe the statement that Warren Buffett is an index hugger deserves some more discussion.

  • Berkshire Hathaway’s returns over the last 21 years
  • Berkshire Hathaway’s “risk” over the last 21 years
  • What is risk?
  • Berkshire Hathaway in good and bad markets
  • Is Warren Buffett an index hugger?

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AgPa #43: Buffett’s Alpha

Buffett’s Alpha (2018)
Andrea Frazzini, David Kabiller, Lasse Heje Pedersen
Financial Analysts Journal 74(4), URL

In this week’s AGNOSTIC Paper, the authors use the major factor premiums to examine one of the best long-term investment track records in the world – Warren Buffett and Berkshire Hathaway. The latest annual report just came out a few days ago and (as usual) summarizes Berkshire’s performance on the first page. From 1965 to 2022, Berkshire returned 19.8% per year versus 9.9% for the S&P 500. That’s a 24,708% cumulative return for the S&P 500, and an unbelievable 3,787,464% return for Berkshire. There are some investors who achieved even better results over shorter time periods. But to the best of my knowledge, there is no 58-year track record that is even remotely comparable to Buffett.

  • How good is Berkshire? Damn good…
  • The Buffett Style: cheap stocks with high-quality and low-risk
  • Don’t practice what you preach – Buffett’s Leverage…
  • Systematizing Buffett and Berkshire

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AgPa #10: Concentrated Stock Markets (1/7)

Do stocks outperform Treasury bills? (2018)
Hendrik Bessembinder
Journal of Financial Economics 129(3), 440-457, URL

I try to be careful with superlatives, but I think that this week’s AGNOSTIC Paper(s) are a must-read for everyone seriously interested in stock markets.

A few very successful companies drive the entire US market while the majority of stocks underperform even risk-free treasuries. Moreover, the most frequent lifetime return for U.S. companies is -100%. Those brutal empirical facts have strong implications for investors.


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