Tuesday, June 30, 2009

Buffett's Record

Cool interactive chart of Buffett's record going back to the 1950's:

It shows if a person put $10k in the Buffett partnership in the 50's and held until today it would be worth ~$ 300,000,000. Many early investors in the partnership have never sold their shares.

If alternatively, that person decided to put $ 10k into the S&P 500, it would be worth ~$ 1.4 million today.

Multiple studies have shown most professional money managers, in fact, don't even get a return as good as the S&P 500 over the long run.

The problem is that many pros can have a good 5-10 year run...which unfortunately draws money in from investors during a bull market when everyone looks like a genius. Great investors separate themselves during bear markets and over time periods much longer than 5-10 years.

"You make most of your money in a bear market, you just don't realize it at the time." - Shelby Davis

Better to be not too impressed by fund managers boasting about 3, 5 or even 10 year performance.

Check out the chart.


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