Buffett's 10 year bet proves: Buy the index and beat investment professionals

Buffett's 10 year bet proves: Buy the index and beat investment professionals

Berkshire's gain in net worth during 2017 was USD65.3 billion, of which USD36 billion came from Berkshire's operations with remaining USD29 billion coming from the tax overhaul. Underwriting results for 2017 included estimated pre-tax losses of approximately $3.0 billion ($1.95 billion after-tax), primarily attributable to three major hurricanes in the USA and Puerto Rico and wildfires in California. The businessman noted that the Tax Cuts and Jobs Act, signed by President Donald Trump in December, will not only benefit his firm Berkshire Hathaway, but also provide a "tailwind" for US businesses.

Buffett concluded with a little advice to fellow investors: "Though markets are generally rational, they occasionally do insane things". Berkshire Hathaway will also pays IAG for its share of operating costs and also pays a percentage-based fee which recognises the value to Berkshire (through NICO) of accessing IAG's strong core insurance franchise (ie its brands).

"So far this year, we've been a net buyer" of stocks, he added.

"[Investing partner] Charlie [Munger] and I believe that from time to time Berkshire will have opportunities to make very large purchases", Buffett wrote.

"The less the prudence with which others conduct their affairs, the greater the prudence with which we must conduct our own", Buffett wrote.

Cramer, who said he watched every minute of Buffett's CNBC appearance, described it as "the most important three hours you're going to get about securities analysis".

"During our 10-year bet, the 200-plus hedge fund managers that were involved certainly made tens of thousands of buy and sell decisions".

Buffett's re/insurance businesses generated after-tax losses from underwriting of $2.2 billion in 2017 compared to after-tax gains of $1.4 billion in 2016 and $1.2 billion in 2015.

Needless to say, the low-priced S&P 500 outperformed the hedge funds.

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His autobiography, "Just As I Am", published in 1997 appeared simultaneously on the three top best-seller lists in one week. Adults and children stood behind wooden barricades and yellow tape along a route that included parts of Interstate 40.

Basically in 2007 he bet $1 million that an S&P 500 tracker fund - with no active management from him or anybody else - would outperform a collection of the brightest hedge fund managers chosen by Wall Street experts. Buffett reminds us that, "Performance comes, performance goes".

Buffett likes to buy companies "cheaper than they are", Cramer said.

A few big takeaways from the letter for all investors.

The 17-page missive issued Saturday morning is eagerly awaited by investors, shareholders and others who find the billionaire's advice, insights and approach to life appealing.

Neither has signaled any intention of stepping down soon, though Berkshire last month named two additional vice chairmen who could eventually succeed Buffett as chief executive.

Buffett, 87, did not divulge much details on his successor.

Annual shareholder letters are usually meant to pump the stock of the company concerned.

Warren Buffett's just released his annual letter to Berkshire Hathaway shareholders, and it included a list of the biggest stock investments held by the company.

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