Originally Posted by NW-Bound
Just saw a headline on the Web proclaiming "2019 was Warren Buffett's worst year in a decade". 11% return in 2019, compared to the S&P of 31+%.
Hey, I have Berkshire Hathaway too. It used to be 5% of my porfolio, but was trimmed down to 2.5% in 2019. I have not paid much attention to it, just as I don't with my mutual funds.
Well, it's another position that held me back, else I would do even better than 27.62% that I had overall. It's OK. Its value will show when the market tumbles. I've got to have some contrarian stocks in the mix.
I've owned Berkshire since 2006, and since then it's returned nearly 300% versus the S&P return of 150%. It makes up nearly 15% of the equities portion of my portfolio. But its value-oriented approach lagged badly the growth-biased S&P 500 in 2019, trailing the index by nearly 18%. And that's *with* a sizable investment in Apple. And when you do a little digging, it's performance over the past decade is troubling; while it beat the S&P 500 in 2008, 2012, 2014, 2016, 2017, and 2018, it has underperformed the S&P in the past one, three, five, and ten-year time spans. I'm sure it's nearly $150 billion in cash is creating a significant drag on performance.
I'm guilty of considering Berkshire something of an S&P 500 index fund substitute in my portfolio - something that should outperform the index slightly in a down market due to its value orientation, and perhaps significantly outperform the index during a recovery due to its ability to deploy that enormous cash reserve to scoop up underpriced bargains in a major correction or recession. But recent history didn't really prove that out– it outperformed the index by about 5% in 2008, but slightly underperformed in 2009, and didn't beat the index again until 2012.
I'm still a big fan of Buffett and his approach to investing, but I'm wondering if perhaps it's no longer relative in this age of rapid change, technology growth, and passive index investing, not to mention the sheer size of Berkshire.