Buffett headed Berkshire Hathaway 52 years ago. Since 1965, the annual growth of the S & P 500 averaged 9.7%, including dividends. Over the same period, the average annual growth of the S & P 500 was 20.8%. In other words, if you invested $ 10,000 in S & P, you would get $ 10,970 in a year. The same amount invested in Berkshire, would bring you $ 12,080.
For 52 years, $ 10,000 invested in the S & P 500, would have grown by $ 1.28 million, and in Berkshire Hathaway – $ 197 million, which is 155 times more.
It’s amazing that Buffett and his team do not use any complex investment strategies to achieve such results. They are only guided by the following principles:
• Constant improvement of the potential of the branches. For 52 years, the book value of Berkshire per share was reduced only 2 times.
• Increase in profits through acquisitions.
• Benefit from the company’s investment growth.
• Reverse share buy-out when they are traded at a discount to the book value.
However, Warren Buffett himself in his annual letter to the shareholders stressed that Berkshire is becoming too big to maintain the previous dynamics. If the company’s shares added 20.8% and in the next 50 years, market capitalization would reach $ 7.400 trillion, which is 30 times higher than the total capital of the entire population of the planet.
However, using the same strategy as in the past 50 years, Berkshire may still be ahead of the market, but no longer with such an impressive margin as before.