For investors feeling slightly buffeted in 2015 so was Warren…..
According to an FT article on 29th December 2015 Warren Buffett was heading into the New Year facing his worst year relative to the wider US stock market since 2009.
For the man known as the Oracle of Omaha this under-performance came in his Golden Anniversary year at the helm of his conglomerate Berkshire Hathaway with its share price down 11% with two trading days left before year end versus the S&P 500 total return including dividends at c. 3% up on 29th December.
Buffett is known for his long-term take on the stock market, echoing his mentor Benjamin Graham’s view that in the short term the stock market is a “voting machine” whereas in the long run it is a “weighing machine”. This approach stood him in good stead in the era of “irrational exuberance “ that was the dot com boom and bust from which he emerged with an ever stronger reputation and likewise in the recent Financial Crisis Here at MASECO we also include tilts in our portfolio to the type of value companies favoured by Graham and Buffett.
For those who wonder why Buffet is regularly touted as the most successful investor of all time, a clue may be gleaned from his annual letter to shareholders this year in which he estimated the increase in Berkshire Hathaway’s per-share intrinsic value over the last 50 years as roughly equal to the 1,826,163% gain in the market price of the company’s shares!