How Fares the Sage? from Phil McDonnell
He has made his investors' fortunes…
How has Mr. Buffet actually been doing? On July 1, 1998 BRK-A was 78,000. Today it is about 115,000 per share.
That is a gain of 43% over roughly 12 years — about 2.8% per annum compounded.
Dr. McDonnell is the author of Optimal Portfolio Modeling, Wiley, 2008.
Kim Zussman writes:
Regressing the last 10 year's monthly returns for BRK-A vs SPY (with dividends, etc), BRK-A's alpha is positive but not significant:
Coefficients Standard Error t Stat P-value
Intercept 0.008 0.005 1.583 0.116
Slope 0.436 0.106 4.113 0.000
However slope (beta) is 0.44, so you could say BRK-A out-gained SPY with less market exposure.
Rocky Humbert comments:
Math is fun. BRK-A has outperformed AAPL!
Total compounded returns (dividends reinvested) since 12/31/87:
BRK-A 18.2%
GE 10.4%
AAPL 15.5%
MSFT 22.7%
SPX 9.66%
And this is all-the-more-remarkable when one considers that AAPL returned 123% over the past 12 months.
As I said, "math is fun."
Rocky Humbert, quantitative analyst, speculator and master chef, blogs as OneHonestMan.