It is relatively common to beat the market for 1–3 years at a time. That can largely be explained by luck. But the data clearly shows that even professional fund managers are unable to beat the market consistently over a longer period of time, like 10–15 years.
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%.
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. Its overall gain was over 140 times greater than the S&P 500's.
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.
According to this data, there have only been three years since 2001 where a majority of active funds beat the S&P 500 index: 2005, 2007, and 2009. This highlights the difficulty of beating the market, and why you should always do your research before investing in an actively-managed fund.
I put my personal 401(k) and a lot of my mutual fund investing in four types of mutual funds: growth, growth and income, aggressive growth, and international. I personally spread mine in 25% of those four.
$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.
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.
Warren Buffett
1314 Buffett's investing style of discipline, patience, and value has consistently outperformed the market for decades.
Yes, you may be able to beat the market, but with investment fees, taxes, and human emotion working against you, you're more likely to do so through luck than skill. If you can merely match the S&P 500, minus a small fee, you'll be doing better than most investors.
This does not mean that an investor/manager can not beat the market. In fact, a handful of investors/managers do every year. It is just impossible to identify which managers will fall into that category each year in advance. And history shows it is not worth the risk to try.
The FTSE All-World index is an international equity index, which tracks stocks from developed and emerging markets worldwide.
Warren Buffett has long recommended a low-fee S&P 500 tracker fund to amateur investors. Chamath Palihapitiya says it's become riskier as a few stocks now have an outsize pull on the index. Buffett mostly steers clear of tech names, but Apple has been his No. 1 stock for years.
If you have a lower risk tolerance or are approaching retirement, relying solely on the S&P 500 could lead to uncomfortable swings in your portfolio value. Over time, this volatility can cause issues both emotionally and mathematically. It can be stressful to see large swings in your investments.
MarketWatch reported that original top-down estimates for the S&P 500 in 2024 ranged from 4,200 at JPMorgan to 5,400 at Yardeni Research, with a median target of 5,000.
As of December 2024, in the previous 30 Years, the Warren Buffett Portfolio obtained a 10.37% compound annual return, with a 13.67% standard deviation.
NYSE: BRK.
Berkshire Hathaway differs from other investment firms, like hedge funds. Anyone can invest in Berkshire Hathaway if they have enough money to buy at least one Class B share (more than $450 in late 2024).