Warren Buffett's Berkshire Hathaway outperforms S&P 500 in 2024.
Invesco QQQ Trust (QQQ)
The Invesco QQQ Trust is a go-to ETF that tracks the Nasdaq-100 index. It's outperformed the S&P 500 in eight out of the past 10 years, all for a reasonable 0.2% expense ratio. It beats the S&P's one-year return, and it thrashed the S&P soundly in full-year 2023.
S&P 500 Investment Time Machine
Imagine you put $1,000 into either fund 10 years ago. You'd be up to roughly 126.4% — or $3,282 — from VOO and 126.9% — or $3,302 — from SPY. That's not exactly wealthy, but it shows how you can more than triple your money by holding an asset with relatively low long-term risk.
Class A shares historically tend to slightly outperform Class B shares, though this is by no means a guaranteed outcome in the future. Class A shares offer a long-term investment but little chance of a stock split down the line. Investors looking for flexibility might prefer to invest in Berkshire's Class B shares.
Looking at the S&P 500 from 2013 to mid-2023, the average S&P 500 return for the last 10 years is 12.39% (9.48% when adjusted for inflation), which is also higher than the annual average return of 10%.
$10,000 invested in the S&P 500 at the beginning of 2000 would have grown to $32,527 over 20 years — an average return of 6.07% per year.
How the Rule of 72 Works. For example, the Rule of 72 states that $1 invested at an annual fixed interest rate of 10% would take 7.2 years ((72 ÷ 10) = 7.2) to grow to $2. In reality, a 10% investment will take 7.3 years to double (1.107.3 = 2). The Rule of 72 is reasonably accurate for low rates of return.
In his 2013 letter to shareholders, Buffett revealed that his will advises his trustee to allocate 10% of the cash in short-term government bonds and 90% in a very-low cost S&P 500 index fund.
According to the Invesco website and its public filings, QQQ has generated a return of 156.77% compared to the S&P 500 Index's 107.92%. QQQ's 10-year returns of 421.53% radically outpace the S&P 500 Index's 250.02% and a $10,000 investment in QQQ 10 years ago would be worth $52,153 today.
SPY is more expensive with a Total Expense Ratio (TER) of 0.0945%, versus 0.03% for VOO. SPY is up 28.31% year-to-date (YTD) with +$7.13B in YTD flows. VOO performs better with 28.36% YTD performance, and +$103.99B in YTD flows.
The abovementioned argument, coupled with BRK-B trading at the higher end of its historical range, led the author to the conclusion that BRK-B is overvalued relative to the market.
Top Warren Buffett Stocks
Coca-Cola (KO), 400 million. Kraft Heinz (KHC), 325.6 million. Apple (AAPL), 300 million. Occidental Petroleum (OXY), 264.3 million.
Although there's no telling where BRK. B shares could be 20, 30 or 40 years from now, it's possible to get a rough idea of the 10-year horizon. By some forecasts, shares of Berkshire could trade as high as $900 by 2034.
Try Flipping Things
Another way to double your $2,000 in 24 hours is by flipping items. This method involves buying items at a lower price and selling them for a profit. You can start by looking for items that are in high demand or have a high resale value. One popular option is to start a retail arbitrage business.
As the name implies, the Rule of 42 is an investing strategy that calls for you to include at least 42 different equities and other assets in your portfolio. You can have more if you want, but you should have no less than 42 — and only a small amount of money invested in each.
Buy $4000 worth of goods at wholesale, resell them with a 150% markup. Pay your taxes. Done. Invest some of the money in tools and supplies and provide a service.
Keep It Simple:- Consider using low-cost index funds or ETFs to build your investment portfolio. These can provide diversification and potentially higher returns over the long term. Understand and Manage Risk:- While aiming for a 20% return, it's important to understand the associated risks.
$3,000 X 12 months = $36,000 per year. $36,000 / 6% dividend yield = $600,000. On the other hand, if you're more risk-averse and prefer a portfolio yielding 2%, you'd need to invest $1.8 million to reach the $3,000 per month target: $3,000 X 12 months = $36,000 per year.
The S&P 500 lost decade - 2000 to 2010
During this decade, S&P 500 investors had to deal with two market downturns - the aftermath of the .com bubble and the Global Financial Crisis (GFC). This led to the S&P 500 having a negative return over the decade (01/01/2000 - 31/12/2009).
Usually, any Sharpe ratio greater than 1.0 is considered acceptable to good by investors. A ratio higher than 2.0 is rated as very good. A ratio of 3.0 or higher is considered excellent. A ratio under 1.0 is considered sub-optimal.