How Fares the Sage? from Phil McDonnell

May 4, 2010 |

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.

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.