Buffett is not perfect, despite having produced an average yearly return of 20.1% over 57 years. In the future, Berkshire Hathaway will almost probably have years with a negative return, just as it has in the past.
Ten Year Stock Price Total Return for Berkshire Hathaway is calculated as follows: Last Close Price [ 453.56 ] / Adj Prior Close Price [ 149.17 ] (-) 1 (=) Total Return [ 204.1% ] Prior price dividend adjustment factor is 1.00.
Better performance track record
More importantly, though, Berkshire has handily beaten the S&P 500 over the long term. Between 1965 (when Buffett gained control of the company) and 2023, Berkshire's compounded average annual return was 19.8% compared to only 10.2% for the S&P 500.
The 90/10 rule in investing is a comment made by Warren Buffett regarding asset allocation. The rule stipulates investing 90% of one's investment capital toward low-cost stock-based index funds and the remainder 10% to short-term government bonds.
Many novice investors lose money chasing big returns. And that's why Buffett's first rule of investing is “don't lose money”. The thing is, if an investors makes a poor investment decision and the value of that asset — stock — goes down 50%, the investment has to go 100% up to get back to where it started.
Junk Bonds
Junk bonds are high-yield corporate bonds issued by companies with lower credit ratings. Because of their higher risk of default, they offer higher interest rates, potentially providing returns over 10%. During economic growth periods, the risk of default decreases, making junk bonds particularly attractive.
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.
Even Warren Buffett, who has beaten the market by huge margins over decades, hasn't managed to do so every year. That said, he has a stellar long-term track record. Consider this: From the year when Buffett took over Berkshire Hathaway through the end of 2023, the S&P 500 gained 31,223%.
Berkshire Hathaway (BRK. A -2.20%) (BRK. B -2.03%) is often considered a reliable stock for conservative long-term investors. The conglomerate is led by Warren Buffett, who famously said his favorite holding period for a stock is "forever."
Although Warren Buffett is a billionaire now, that wasn't always the case. In fact, you should know that 99% of Buffett's net worth was accumulated after he turned 65 years old.
Buffett recommended to the Board of Directors the amount of his compensation. Mr. Buffett's annual compensation has been $100,000 for more than 35 years and Mr. Buffett has advised the Committee that he would not expect or desire such compensation to increase in the future.”
$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).
An impressive return on investment (ROI) after five years typically means gains that significantly outpace inflation and other common benchmarks. For stocks, this might be around 10-15% per year. For more conservative investments, anything above 6-8% annually is considered strong.
In the second quarter of 2024, Buffett again bought more shares of Chubb, Occidental, the two Liberty Media Sirius XM tracking stocks, and Sirius XM. He also initiated new positions in aerospace and electronics company Heico and cosmetics retailer Ulta Beauty.
Warren Buffett says he'd give up an extra year of his life to be able to eat anything he wants. Famously a fan of junk food, the 92-year-old has said he drinks 5 cans of Coke a day and eats McDonald's daily. "I always tell people: I found everything I like to eat by the time I was six," he told CNBC.
According to a recent filing with the US Securities and Exchange Commission, the investment company run by Wall Street legend Warren Buffett now holds no stock in Snowflake, which achieved a $120 billion post-IPO valuation in 2020.
Currently, Treasuries maturing in less than a year yield more than CDs. However, at maturities of one year and beyond, CDs yield a little more before taxes. Therefore, all things considered, it likely makes more sense to choose Treasuries over CDs for shorter-term investments, but it depends on your situation.