HACKER Q&A
📣 TekMol

Why is Warren Buffet considered a great investor?


I like watching interviews with Warren Buffet. He seems pretty smart and reasonable.

But I cannot get over the fact, that over the last 20 years, Berkshire Hathaway had a 7% annualized ROI while a simple Nasdaq fund had 8%.

He talks so much about being smart, analyzing assets, investing in things you know something about, waiting for good valuations, margin of safety etc etc. But what for? Investing in a more or less random selection of tech companies would have had a better return.

Am I missing something?

  👤 blacksqr Accepted Answer ✓
Reason: he has the best total average annual investment return of all time for any individual. Over 20% since 1965.

https://www.fool.com/investing/2019/12/22/5-reasons-warren-b...

👤 superbcarrot
Mainly because of his track record - he has done very well over a very long period of time.

> over the last 20 years, Berkshire Hathaway had a 7% annualized ROI while a simple Nasdaq fund had 8%.

> He talks so much about (...) investing in things you know something about

This kind of answers your question. The most successful companies over the past 20 years have been in tech. Buffet admits that he doesn't understand tech and that's why he isn't willing to invest. He doesn't mind missing out on opportunities and he also isn't interesting in learning.

👤 relaunched
Tracking against an index is somewhat meaningful, but sort of misses the point. Berkshire Hathaway manages about $800 billion dollars in assets.

If you are trying to figure out what to do with your 401(k) or a portfolio of 10k-$10m, index funds are great. If you are in charge of managing almost $1 trillion in assets, it's a completely different ballgame. What's they've done is amazing - every move they make in the public markets is a huge signal and has market manipulating implications. You can't really compare them to an index fund and learn anything meaningful, unless you are comparing putting your $10k into either Berkshire or an index fund.

👤 gabrielsroka
> over the last 20 years

20 years is an interesting time horizon for the NASDAQ -- it crashed in March 2000. If you go back 30 years you'll note that Berkshire actually outperformed NASDAQ by quite a bit.

👤 fiftyacorn
He's considered the greatest investor because he was able to apply Ben Graham's principles, and laterly Phil fisher during the prime years of value investing

I'd say in the past 20 years we've seen states propping up their markets more with QE so we don't see the same crashes. Information is also more available to all

👤 uberman
Hindsight is 20/20 as they say and looking forward investing in "random tech stocks" is not likely to produce stellar returns. I think if there is a key takeaway it is:

It is a challenge to top index funds and most professional advisors have a hard time besting them.

👤 firebones
https://www.nasdaq.com/articles/5-reasons-warren-buffett-did...
👤 logicslave
He was ahead of his time and came up with the use of financial indicators for investing. He hasnt done anything novel in 30 years, just has a very large capital base.