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by refurb 978 days ago
I’m not sure either of statements really excuses the underperformance.

You either beat the market or you don’t. It’s relative. He could lose money but if he loses less than the broad market, he outperformed.

And sitting on a pile of cash is a negative, a lost opportunity.

That said 20 years is arbitrary, however it’s not an insignificant period of time. It’s two decades!

But my final point is that Buffet isn’t an investor in the way regular people are. He doesn’t passively put his money into companies. He often buys controlling stakes in a company - either taking them over entirely or getting a board set where he can change the way the company operates.

Comparing BH return with your average Joe is like comparing a casual gambler with one who does it professionally and often find edges nobody else has.
2 comments
adammarples 978 days ago
When making a comparison like that, the endpoints really matter. How many of the last 20 years has he been beating the market? And the next 10? Today is at an extreme in valuations and of course everyone who is betting on a fall will look bad until suddenly they don't. It's currently not possible to say whether sitting on cash is stupid or wise, the next few years will bear that out one way or another.
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refurb 977 days ago
The next 10? I don't know, I can't predict the future. And finding out 10 years from now he didn't beat the market for 30 years, is half a lifetime of investing (most of your adult life). Not like you can go back and fix that.

It's 20 years of failing to beat a simple "invest in indexes and forget it". So basically an adult who followed index investing for the last 20 years can say "I have higher returns than Buffet".

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adammarples 977 days ago
Is it really 20 years of failing to beat the market, or is it that, this year, his average over 20 years has failed to beat the market? He may well have been up on the market most of the time until the last 2-3 years of blowout toppiness in which the market doubled. Those are different things, which is why calculating an average which includes extreme is not always helpful.
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RishitJain 977 days ago
Exactly my point in the article.
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RishitJain 977 days ago
As always, Buffett said it best, "By periodically investing in an index fund, the know-nothing investor can actually out-perform most investment professionals."

More here: https://monevator.com/warren-buffett-passive-investing

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